Many banks encourage people to open both types of accounts and offer perks for doing so. The arrangement makes it easy to transfer funds from one account to the other. It also raises the question of how much money to keep in each one.
Because a checking account acts as a way station for your money, the ideal amount to keep in the account varies from person to person. It depends, in part, on the amount of monthly bills a person needs to cover. That’s a good starting point for an average balance. There also is the question of maintaining a certain minimum balance to avoid fees and gain perks.
Some people prefer to keep the minimum amount in a checking account, because there is little or no interest paid on the balance. Some adhere to a rule that calls for keeping enough to cover two months’ worth of expenses, plus another 30% of monthly expenses as an emergency buffer.
Many experts recommend keeping three to six months’ worth of living expenses in your savings account. This can cover the cost of living in case your income drops unexpectedly. If you are laid off, you have your hours at work reduced, or you need to take time off for an extended period of time due to illness, you can rest easy knowing your monthly expenses will be covered while you figure out your next steps.