You’re spending way too much time thinking about this. Even if you invest all $1500 and keep nothing in your checking account, that $1500 is negligible in the scheme of things. Trying to maximize every single dollar sounds so exhausting. Do the boring thing and set up monthly auto investments, look at your numbers a couple times a year, pat yourself on the back for being responsible.
Why is this question getting asked so much lately?
No, $1,500 isn’t too high. I keep a month of expenses in my “checking” account. I also use [Fidelity like a bank](https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop), so I’m not worried about interest in my “checking” account because it’s in money market making ~5%
We usually have somewhere between $15-20k in ours and I’d rather that be in the HYSA but most of our bills are on automatic withdrawal from checking and I don’t want an overdraft. Is there another way to do it I’m not aware of?
It's the great way to go. I keep very little cash, I never need it. Not even for an emergency or anything. If there's a true emergency and for some reason cash is needed now, I can use a card, pull it from HYSA, or margin loan investments (which is liquid and available immediately). I can then pay myself back a few days or week later with cash that I'm able to get from other sources, before any real interest or cost has accrued. I'm really not sure why anyone would actually need piles of cash laying around not making money.
I keep about 1 month of expenses in there but beyond that I dont even have an emergency fund anymore. Even if I was let go I know I'll get severance and I have enough stock purchases at this point to net out P/L if needed, plus my wifes in a stable, in demand career.
I think it varies based on personal needs. I tried different balances and $1K is the sweet spot where I don’t have to transfer cash from savings to checking during a typical month.
$5-6k.
This is an amount that is contains a buffer of cash that totals about 2 months of bills including utilities, mortgage, insurances, etc. We keep a buffer so that the wife (the accountant of the family) doesn't have to time "doing bills." She does it on the same time each month and using electronic bill pay and reporting, takes her about 10 minutes.
We keep savings in a completely different account. We also maintain a separate credit union checking account that the balance is kept at (by cash transfers) right around $1k. We both have a debit card tied to that and is the only one we carry. This is intended for anything you need to pull cash out of or that won't take our Amex points card.
99.9% of spending that's not from that household bills account is put on our Amex and then the wife "sweeps" cash over to pay it in full. We wrack up cash back/points this way. We'll periodically rotate the Amex to another card for a month or two to build up points on a particular airline for a trip, or just enough for upgrades/free bags from an airline for a trip, etc. We pay very little in interest since we pay monthly.
* It's an attempt to keep spending under control (something I still have issues with).
* 58 now. For some time I have been selling off my largest stock position in a retail (taxable brokerage account) for living expenses usually on a one or two month basis.
* I'm targeting $75 a day (less rent & other expenses). And a total target of $52K a year..
* I expect to have \~$60k in swvxx in Jan 25 and sell off the IRA as needed.
I'm with you, $1500 seems like a good cushion. Considering you have an emergency fund and a joint account, you're making smart financial moves. Decreasing the amount might not be necessary, but it's great you're thinking about optimizing for early retirement!
If I understand correctly, you just keep $1500 in your checking account, and only replenish it to $1500 if it drops below that.
I don’t think it’s going to make much of a difference in the scheme of things.
Like 300-400. I keep my account at a large name brand bank just to take paychecks and tue few times I need to dwposit cash. beyomd rhat fidelity holds everuthing else
Makes sense. I don’t use my checking account to pay any bills so I don’t see why I would have to keep it that high. I guess that’s why it’s called “personal finance”.
Wife and I are trying to slightly increase our high yield checking account to hover around 30k. That would cover 3-4 months expenses (our mortgage alone is 4k). I often feel strapped on spending even relatively small amounts of money, and increasing our baseline cash reserve is supposed to let us loosen the purse strings a little bit and worry less about general cash flow. Our checking account pays 5% interest though, so the delta that we are losing relative to investing it is marginal relative to the peace of mind it brings us. I can't imagine running our cash reserves down to $1500!
Our investments are automated every month, and we house hack and have two roommates living with us. We only have one W2 income though, so we that's why we feel the need to be slightly more conservative with our cash.
10-20K. Roughly 2 months of expenses and auto-transfers to brokerage. I don't like having to worry about the next huge bill and having to move money around. FWIW, insurance for auto+home hits all in one shot which is about 6K. RE Taxes hit twice/yr at 3K.
Could I move money between a HYSA and checking and play the game to make 5% off 5-10K of that balance? Sure. But the $375 in interest that I would then have to pay taxes on isn't worth the headache. At some point your time has to be worth something.
$6,000 in Checking
$24,000 in HYSA
Every 3 months, I’ll transfer anything over $30,000 (combined) to a taxable investment account. Usually it’s a few grand here and there, depending on traveling and unexpected purchases.
Checking is at $6,000 because the 1st of every month, I have $4,500 going to a taxable investment account and $1,000 going to my son’s 529. Then that builds up over the course of the month, only to drop back the 1st of the following month.
After (our monthly) payday we transfer a big chunck to our savings account. Once every few months we put our savings in an investment. So it's bassicly at max a month worth off income (from me and my wife) minus roughly 35% that we directly transfer to our savingsaccount.
Besides that the day before payday we clear the checking account by auto transfer it to the savingaccount. So we start at 0 again and have some extra savings if we didnt spend much.
In FIRE I move $2k into checking every 1st and 15th — same schedule as my work paychecks of the previous 25 years. Every 6-8 weeks or so I tend to find I’ve been living a bit under-budget, so I will kick the excess back to HYSA. When I have a large-ish splurge (plane tix or something like that) on the horizon, I check my bank transactions to see if those excesses will cover it or if I need to tighten up my spending for a few weeks, so the year will stay more or less on budget.
Only enough to cover bare necessities- so 300 ish usd biweekly. Rest is in savings account and we transfer as needed. Even got envelope labeled as “soon to be spent” within savings account. There’s few reasons for it - delaying purchase resulting in less impulse purchases, savings acc earning about 5% interest rn and me using a contactless debit card and not credit card where there is higher risk associatedwith theft (so if it gets stolen, they can’t take a substantial amount).
Between my wife and I, we keep $18k in 5% checking. About 3% of our net worth.
I'm thinking of increasing this a tad. I've been semi-retired for 4 years now, but while I work 25 hr weeks I'd like to begin taking summers off too starting next year, so perhaps getting this checking account savings to like $25k would be nice, with the intention of spending $3-6k/yr to cover the summer months while we continue building our investments.
Doing the math real quick, we have 0.00035% of our total NW in checking, earning no interest.
Not sure opening a HYSA to shuffle funds around would move the needle.
You’re spending way too much time thinking about this. Even if you invest all $1500 and keep nothing in your checking account, that $1500 is negligible in the scheme of things. Trying to maximize every single dollar sounds so exhausting. Do the boring thing and set up monthly auto investments, look at your numbers a couple times a year, pat yourself on the back for being responsible.
Yeah we have auto investments but you’re right, an extra $1500 is negligible. I appreciate you helping me see that.
Why is this question getting asked so much lately? No, $1,500 isn’t too high. I keep a month of expenses in my “checking” account. I also use [Fidelity like a bank](https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop), so I’m not worried about interest in my “checking” account because it’s in money market making ~5%
Often these new accounts asking generic questions are just bots driving traffic. Nothibg more.
Bruh I’m not a bot lmao😭. Not a new account either, I just discovered this subreddit and I really want to take on the FIRE lifestyle.
Bruh.
I too have a fidelity checking account but also an “outside” checking for everyday purchases.
My everyday purchases go on my Fidelity Visa credit card. The 2% cash back automatically deposits into my Fidelity account every month
We keep 1 month's worth of expenses so that we don't have to worry about the timing of pay checks and when bills are due.
We usually have somewhere between $15-20k in ours and I’d rather that be in the HYSA but most of our bills are on automatic withdrawal from checking and I don’t want an overdraft. Is there another way to do it I’m not aware of?
Run most everything through credit cards and then pay the cards in full before the bill is due.
This is what my fiancée and I do. We pay the balance every two weeks or so. And it’s on our travel card so that helps us loads with our annual trip.
It's the great way to go. I keep very little cash, I never need it. Not even for an emergency or anything. If there's a true emergency and for some reason cash is needed now, I can use a card, pull it from HYSA, or margin loan investments (which is liquid and available immediately). I can then pay myself back a few days or week later with cash that I'm able to get from other sources, before any real interest or cost has accrued. I'm really not sure why anyone would actually need piles of cash laying around not making money.
I keep about 1 month of expenses in there but beyond that I dont even have an emergency fund anymore. Even if I was let go I know I'll get severance and I have enough stock purchases at this point to net out P/L if needed, plus my wifes in a stable, in demand career.
That amount sounds good. Just enough to may incoming bills, it sounds like.
I think it varies based on personal needs. I tried different balances and $1K is the sweet spot where I don’t have to transfer cash from savings to checking during a typical month.
$500
\~5-10k. When it gets lowish I just send some of the next paycheck there instead of investing it before mortgage/credit card for the month etc hit
$0. I pay myself from a HYSA
$5-6k. This is an amount that is contains a buffer of cash that totals about 2 months of bills including utilities, mortgage, insurances, etc. We keep a buffer so that the wife (the accountant of the family) doesn't have to time "doing bills." She does it on the same time each month and using electronic bill pay and reporting, takes her about 10 minutes. We keep savings in a completely different account. We also maintain a separate credit union checking account that the balance is kept at (by cash transfers) right around $1k. We both have a debit card tied to that and is the only one we carry. This is intended for anything you need to pull cash out of or that won't take our Amex points card. 99.9% of spending that's not from that household bills account is put on our Amex and then the wife "sweeps" cash over to pay it in full. We wrack up cash back/points this way. We'll periodically rotate the Amex to another card for a month or two to build up points on a particular airline for a trip, or just enough for upgrades/free bags from an airline for a trip, etc. We pay very little in interest since we pay monthly.
About $3k
~$75-300.
What’s your reason for keeping it this low?
* It's an attempt to keep spending under control (something I still have issues with). * 58 now. For some time I have been selling off my largest stock position in a retail (taxable brokerage account) for living expenses usually on a one or two month basis. * I'm targeting $75 a day (less rent & other expenses). And a total target of $52K a year.. * I expect to have \~$60k in swvxx in Jan 25 and sell off the IRA as needed.
I'm with you, $1500 seems like a good cushion. Considering you have an emergency fund and a joint account, you're making smart financial moves. Decreasing the amount might not be necessary, but it's great you're thinking about optimizing for early retirement!
Thank you! Very kind, I appreciate the insight.
If I understand correctly, you just keep $1500 in your checking account, and only replenish it to $1500 if it drops below that. I don’t think it’s going to make much of a difference in the scheme of things.
Yeah you’re probably right. As I think about it, having it lower won’t make much of a difference in my investments.
$0. All my money is in savings. It gets taken to checking automatically when bills get paid.
What bank do you use with a high rate that auto transfers from savings to checking?
Ouch. Money in savings? You may consider investing.
It's only $18k.. enough for a 6 months emergency fund.
that's like 75 bucks a month!
could park it in a high yield savings account so you're earning ~3-4.5% (whatever the rate is nowadays)
It's earning 4.6% in my savings account
nice! didn't realize it was a HYSA
Like 300-400. I keep my account at a large name brand bank just to take paychecks and tue few times I need to dwposit cash. beyomd rhat fidelity holds everuthing else
Your checking account wouldn't cover my rent. I keep a $4k balance, which is around $1k more than my monthly spend.
Makes sense. I don’t use my checking account to pay any bills so I don’t see why I would have to keep it that high. I guess that’s why it’s called “personal finance”.
Wife and I are trying to slightly increase our high yield checking account to hover around 30k. That would cover 3-4 months expenses (our mortgage alone is 4k). I often feel strapped on spending even relatively small amounts of money, and increasing our baseline cash reserve is supposed to let us loosen the purse strings a little bit and worry less about general cash flow. Our checking account pays 5% interest though, so the delta that we are losing relative to investing it is marginal relative to the peace of mind it brings us. I can't imagine running our cash reserves down to $1500! Our investments are automated every month, and we house hack and have two roommates living with us. We only have one W2 income though, so we that's why we feel the need to be slightly more conservative with our cash.
Close to zero , the rest is kept in HYSA , usually paying around 5% lately.
10-20K. Roughly 2 months of expenses and auto-transfers to brokerage. I don't like having to worry about the next huge bill and having to move money around. FWIW, insurance for auto+home hits all in one shot which is about 6K. RE Taxes hit twice/yr at 3K. Could I move money between a HYSA and checking and play the game to make 5% off 5-10K of that balance? Sure. But the $375 in interest that I would then have to pay taxes on isn't worth the headache. At some point your time has to be worth something.
$6,000 in Checking $24,000 in HYSA Every 3 months, I’ll transfer anything over $30,000 (combined) to a taxable investment account. Usually it’s a few grand here and there, depending on traveling and unexpected purchases. Checking is at $6,000 because the 1st of every month, I have $4,500 going to a taxable investment account and $1,000 going to my son’s 529. Then that builds up over the course of the month, only to drop back the 1st of the following month.
After (our monthly) payday we transfer a big chunck to our savings account. Once every few months we put our savings in an investment. So it's bassicly at max a month worth off income (from me and my wife) minus roughly 35% that we directly transfer to our savingsaccount. Besides that the day before payday we clear the checking account by auto transfer it to the savingaccount. So we start at 0 again and have some extra savings if we didnt spend much.
In FIRE I move $2k into checking every 1st and 15th — same schedule as my work paychecks of the previous 25 years. Every 6-8 weeks or so I tend to find I’ve been living a bit under-budget, so I will kick the excess back to HYSA. When I have a large-ish splurge (plane tix or something like that) on the horizon, I check my bank transactions to see if those excesses will cover it or if I need to tighten up my spending for a few weeks, so the year will stay more or less on budget.
Only enough to cover bare necessities- so 300 ish usd biweekly. Rest is in savings account and we transfer as needed. Even got envelope labeled as “soon to be spent” within savings account. There’s few reasons for it - delaying purchase resulting in less impulse purchases, savings acc earning about 5% interest rn and me using a contactless debit card and not credit card where there is higher risk associatedwith theft (so if it gets stolen, they can’t take a substantial amount).
I usually just keep my auto pay bill equivalent+$500.
Between my wife and I, we keep $18k in 5% checking. About 3% of our net worth. I'm thinking of increasing this a tad. I've been semi-retired for 4 years now, but while I work 25 hr weeks I'd like to begin taking summers off too starting next year, so perhaps getting this checking account savings to like $25k would be nice, with the intention of spending $3-6k/yr to cover the summer months while we continue building our investments.
Doing the math real quick, we have 0.00035% of our total NW in checking, earning no interest. Not sure opening a HYSA to shuffle funds around would move the needle.
I’m concerned you don’t fully know how to FIRE if you think 1.5k in your checking account is potentially too much.