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how much money do you keep in your main account?

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piggy bankHow much money do you keep in your current or checking account?

At the moment for various reasons, I have 3 current accounts, but all of them run at near empty. By this I mean that deliberately by the end of the month they are at or close to zero - ready to be filled up with the next months pay.

There are some inherent drawbacks to this system - like if I need to write a cheque for a large budgeted purchase then I have to transfer money from my savings account first. It also means that in the event of a bank error not in my favour, I’m going to end up overdrawn. I also have to make sure that I get paid any expenses, which I put on a credit card, get paid before the bill comes in.

I’m pretty sure that if I had a float in there though, it would get spent. I’m much better off with the out of sight, out of mind aspect to my savings. Also, I’m pretty used to the zero-budgeting, zero-balance concept, and although I have a high interest current account, I make more money by using my savings account.

What do you do, and how is it working for you?

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32 comments for “how much money do you keep in your main account?”

  1. I dunno how it works in the UK, but one of the big shocks to me when I moved to Canada is that almost no banks offer free chequing and ATM withdrawals; they all charge monthly fees. And the few banks that do offer free chequing require you to keep a large balance; the only bank I could find with free chequing and ATM withdrawls required me to maintain a minimum balance of $2,500. So I did that for years, until they too finally did away with free chequing. By force of habit I still maintain at least $1,000 in that account, even though I don’t have to, but it serves as a sort of “floor” beneath which I feel like I don’t have enough money on hand to handle any emergencies that might come up.

    Posted by brad | February 6, 2008, 12:16 pm
  2. I’m a terrible one for leaving too much in my current account- often having 1-2k ’spare’ (ie, not going to come out in scheduled payments). I moved to a higher rate interest current account some years ago, but am seriously thinking about moving to a highest rate account. the quandary is that I like ethical banking with Smile, but Halifax are less hassle.

    Posted by Pippin | February 6, 2008, 12:41 pm
  3. I’m probably not the best example, as I’m currently using my overdraft, but when I pay that off, I’ll be keeping very little in my current account - any spare cash will be invested, initially to build up some emergency savings, and then to help pay off my mortgage.

    Posted by Rob Lewis | February 6, 2008, 1:16 pm
  4. @brad:
    High street banking in the UK is incredibly competitive if you do it right. Pretty much all banks offer free chequing, and ATM withdrawals from all banks (including rivals), and there are quite a few that offer high interest rates on top of that. But if they didn’t I guess I’d be keeping more of a float.

    I get round this problem by having a budget and then moving as much as possible into savings automatically. I’m with Halifax at the moment for my current account having switched from Barclays about a year ago, I feel the need to have one with bank branches near to work so I don’t think there’s an ethical one that would really work for me.

    Paying off the overdraft is always good. If you’re not on one already, have you looked at switching to an account that offers a temporary (3-6 months) interest free overdraft?

    Posted by plonkee | February 6, 2008, 1:26 pm
  5. I do what you do and keep my balances as close to zero as they can reasonably go so that I can make the most on my money.

    One thing I do to help with my planning is to use a cash flow spreadsheet. I have all my bills and income outlined in my spreadsheet so that I know when there is a bigger bill coming up and can leave money there accordingly. Thus, sometimes I’ll have more than usual in my checking, but it’s almost always less than a month at a time. My finances don’t roll over at the end of the month the same way that yours sound like they do, probably because I have various unique bills that come every few months, or ever six or twelve. The projection helps me keep the right amount of money in the right place with the minimum of moving it around.

    Posted by Caro | February 6, 2008, 3:25 pm
  6. My main account is my online checking account with Electric Orange from ING. I have my salary direct deposited there so that is the money that stays in there.

    I have one account that I have paper checks in but that only has $20 in it. I do all my banking online and have not had to write a paper check in months so I do not keep any more than $20 in there.

    All bills are auto paid either through ING or on a credit card and that card is auto paid through ING.

    So my answer is I keep MOST of my money in my (high interest bearing) checking account (online).

    Posted by lulugal11 | February 6, 2008, 5:01 pm
  7. My credit union has a minimum balance of $500, at which point you earn minimal interest. I keep a $1000 “floor” in there. That way, if a large bill comes up, I don’t have to worry about dropping below the minimum balance. All extra money goes to our ING savings account!

    Posted by Becky@FamilyandFinances | February 6, 2008, 5:38 pm
  8. After bills I leave $300 in checking for Medical (Drugs and appointments). Rest to savings.

    Posted by RacerX | February 6, 2008, 6:44 pm
  9. I usually have about $150-200 after bills in the main account, but with $1000 in a savings account and $10,000 in a brokerage account. Liquidity for any contingency.

    Posted by Randall | February 6, 2008, 7:54 pm
  10. About enough for the next 2 months of expenses. I don’t like the potential of being overdrawn. But I hate to spend money, so having it there doesn’t seem to be a problem.

    Posted by Mrs. Micah | February 6, 2008, 7:58 pm
  11. I keep a £100 balance since the Alliance & Leicester started charging 50p a day (max £5 a month) in overdraft charges.

    Posted by nomorespending | February 6, 2008, 8:43 pm
  12. It seems like quite a few people keep a balance in to stop themselves going overdrawn. I’m always more worried that I’ll accidentally spend the money than have a cash flow issue. That’s not to say that I never have cash flow issues, just that they don’t seem to worry me as much.

    Posted by plonkee | February 6, 2008, 8:55 pm
  13. I basically use the zero based budgeting idea, with almost every dime from my landbased acct being funneled through ING for savings, bills, everyday expenses, etc. I’ll usually have a $1 left in the landbased checking acct 2 days after payday!
    It works because paychecks are direct deposited, so no checking acct fees, and I have a CC tied to the landbased acct in the crazy case of an overdraft. Since I started using ING for everything that hasn’t happened.
    I keep the landbased account because ING requires it, to have instant access to cash in an [real] emergency, and to have an easy way to deposit random income that comes along.

    Posted by stngy1 | February 6, 2008, 9:47 pm
  14. Too much! I currently have about $4700 in my checking account which is way too much to have especially when I am only earning .05% interest. I think I am going to start zeroing out my account and only leave the money I need for budgeted spending for the month.

    Posted by SingleGuyMoney | February 6, 2008, 10:57 pm
  15. I always cut it close as well. Luckily with an ING savings and checking you can transfer quickly. It is harder if your savings is in a different bank than your checking account.


    Posted by Lisa | February 6, 2008, 11:40 pm
  16. Unfortunately, out of sheer laziness, around 3k because I need to have 2k min or I’ll get dinged with fees. The sad part is that I have mistimed it quite a few times and gone below that… grrr! And I have a no balance account too - just haven’t gotten around to transferring… since August!

    Posted by mariam | February 7, 2008, 12:57 am
  17. My no-fee bank doesn’t have a minimum balance (brad should check out PC Financial in Canada, if he can), but I like to keep a $500 cushion in case I lose track of my money. Most of my spending is on a credit card that I pay off each month, so I very rarely spend below the $500. (I try to pretend the $500 isn’t there - if I have $550 in the account, I would only “let” myself spend a max of $50 on debit.)

    Posted by Victory | February 7, 2008, 2:42 am
  18. Since I get most of my income near the start of each semester, I generally move what I’ve planned to save into my savings account right away and try to leave enough in checking to cover my budget for the whole semester plus $400 since if my balance drops below that there’s a $4 monthly fee.

    I might earn a bit more interest by putting everything in savings and then transferring money back when I need it to pay bills, but I prefer to have a reasonable sum of money available immediately since waiting four days for a transfer to go through could be a problem in a real emergency. It’s less hassle to do it this way, and the amounts aren’t large enough to make a big difference.

    Posted by E.C. | February 7, 2008, 4:04 am
  19. I do the same way that you do. If I need to purchase something pricey and need to dig money out of savings, I just go ahead and do it. It doesn’t happen regularly so I’m ok with that setup. I also try to zero it out every end of pay period, which is per fortnight here in NZ.

    Posted by Tasha | February 7, 2008, 9:34 am
  20. @Victory: PC Financial is, like too many other things here, available everywhere in Canada except the province of Québec, which happens to be where I live. :-(

    Posted by brad | February 7, 2008, 12:10 pm
  21. We have to keep quite a bit in ours…we pay a bunch of mortgages and rental expenses for our houses every month, so I guess we are the exception. Otherwise, I think I’d only keep $1k extra in there.

    Many banks and credit unions also offer free overdraft protection as well. I say free, because if you don’t use it, it costs nothing…and if you do happen to dip under, you don’t have any embarrassing returned check fees and the interest is typically very low. I once…okay many years ago…made an accounting error and ended up paying only $5 for a weekend’s worth of being in overdraft. I would’ve paid much more in fees had I not had it!

    Posted by Veteran Military Wife at Life Lessons of a Military Wife | February 7, 2008, 3:29 pm
  22. About $4000 or so, just in case a big expense came up and/or I needed to access a wad of cash.

    Posted by David | February 7, 2008, 7:24 pm
  23. Someone asked me a week or so ago how much I had in my current account and I had to say nothing. If any thing, I am usually overdrawn on my current account which is not that great either.

    Posted by Lisa Clark | February 8, 2008, 10:44 am
  24. It’s interesting to learn that in Canada you can’t get no-fee checking — and scary, because you know sooner or later US institutions will realize they can gang up on consumers like that, too.

    I keep a $500 “cushion” in my main checking account, plus I have overdraft protection in the amount of one month’s net salary (my beloved employer has been known to fail to issue pay on time…or at all). Once the paychecks do come in, I transfer monthly savings and tax set-asides to a savings account.

    Then I transfer the amount I’ve budgeted for all other regularly recurring expenses (utilities, insurance) to a money-market checking account (earns more interest than regular checking). I charge all my routine costs (groceries, gasoline, household, etc. etc. etc.) on a single credit card and then pay that amount in full from the money-market checking account. This account drops to 0 at the end of the credit card’s billing cycle.

    I leave enough in the ordinary checking account to cover utilities and insurance payments, which are all made through automatic EFTs. The regular checking account never drops below $500; any amount above that remaining at the end of a pay cycle (which is different from the credit-card billing cycle and different from the monthly billing cycle for recurring costs) goes into savings.

    This scheme allows me to cope with biweekly pay in a monthly billing environment — so far it has worked well.

    Posted by Funny about Money | February 8, 2008, 1:54 pm
  25. thank you guys for all the tips. i currently have 1 checking account and pay all my bills from there. it looks like i am going to try something new based on some of the responses here.

    Posted by getoutofdebt08 | February 9, 2008, 10:23 pm
  26. In my main account I tend to just keep the minimum to pay my monthly bills. I usually keep the rest lying in my money market so it can collect a little bit more interest.

    Depending on what I make for the month (my income changes becuase of business), I generally keep 1.5-2k in my main account.

    Posted by Tom | February 10, 2008, 9:30 pm
  27. I keep current expenses plus $1000 US in my main checking account, current spending plus $500 in my ‘daily use’ account. Both of those “floor” are the minimum that the banks require to earn interest on the account and also function as self provided overdraft protection. I periodically zero out to that minimum (once a quarter or so) by transfering the funds to savings.

    There’s a long story why two banks, but the short version is that the credit union (main account) has good rates and loan terms, but is not very convienent. And the daily use bank has lousy rates, but is located in my office building and has safe deposit boxes for people with accounts there. It’s great being able to run across the lobby over my lunch hour.

    Posted by threadbndr | February 14, 2008, 10:43 pm
  28. It seems so hard to maintain a fair balance in you checking account, especially when you have so many expenses being paid from it, such as charge card payments, utilities, etc. I always try to keep a running balance but it never seems to work. Perhaps the savings theory is a good one.

    Posted by Instant Charge Card | July 10, 2008, 12:41 pm

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