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Here’s Why I Keep Extra Cash in My Checking Account — Even When I Can Transfer Easily From Savings – The Motley Fool

Image source: Getty Images

It’s a system that makes sense for me.


Image source: Getty Images

It’s a system that makes sense for me.

Key points

  • Some people have no qualms about dipping into their savings.
  • Since that’s something I hate doing, I try to avoid it when possible.
  • It’s a lot easier for my state of mind to pay for unplanned expenses from my checking account instead.

I’m the sort of person who gets stressed out when I’m unable to save money. Even if there’s a month when I’m hit with a giant unplanned bill, like a car or home repair, I tend to get down on myself if money doesn’t manage to land in my savings account.

But as much as I don’t like not saving, I also don’t like raiding my savings account unless it’s absolutely necessary. And that’s why I make a point to keep more money than I need for upcoming bills in my checking account — even though doing so means forgoing interest on that cash.

It’s all about what sits best mentally

As a general rule, it’s a good idea to keep a little extra money in your checking account beyond what your monthly bills cost you. First of all, you never know when a glitch within your company’s payroll system might delay your paycheck, so it’s a good idea to have extra cash on hand so you can pay your bills without stress.

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But I like to keep several extra thousand dollars in my checking account. That way, if an unplanned expense pops up, I can take a withdrawal from there before having to tap my savings.

Now I’ll be the first to admit that this system doesn’t make a lot of financial sense. Since I bank online, I can instantly transfer money out of my savings account and into my checking account.

So, let’s say that after paying my bills, I only have $1,000 left in my checking account, but I run into a home repair that costs $4,000. I can transfer another $3,000 on the spot if needed and then write a check against it.

But while that’s a good option logistically — namely because it allows me to earn interest on that …….


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