How Much Money to Keep in Checking vs. Savings Accounts 2023

Learn how much money should you keep in your checking and savings accounts in this article.
Published on
February 20, 2023
Presented by Givers
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Knowing how much money to allocate to checking and savings accounts can be tricky for a family caregiver. Depending on your financial situation, budgeting needs, savings account highest rates, and caregiving wages, the fund's ratio between these two accounts may vary drastically. Let's explore strategies for balancing your funds between checking and savings accounts.

Deciding how much money to keep in your accounts

The amount of money to keep in a checking versus savings account depends on your financial situation, goals, and spending habits.

Checking account

Your checking account allows you to access your funds, usually with a debit card easily. While checking accounts have lower interest, they enable you to access cash quickly and are ideal for emergencies. 

One drawback of checking accounts is overdraft fees. The bank will charge you a fee when you take out more money than you have in your checking account, and sometimes the cost can be very high. Keeping an eye on how much is in your checking out at all times will reduce overdraw fees. Additionally, if more than one person has a debit card, make sure that you set up limits ahead of time to prevent withdrawing too much from your checking account.

Savings account

Your savings account holds the bulk of your finances. Most savings accounts have variable interest rates. What does this mean? Each year the Federal Reserve adjusts interest rates to manage the economy. Finding the savings account's highest rates will help you earn a little income or at least keep up moderately with inflation. 

The Federal Reserve has slowly raised interest rates to stop inflation and suppress wage growth. This means interest rates will be higher in 2023 than in previous years. However, a recession or other major economic turn can quickly change rates. 

Which should have more money: checkings or savings? 

Unexpected costs are a reality for every caregiver, so ensure you have enough cash in your savings account to cover them. This could include medical bills, car repairs to natural disasters, and illness-related expenses. 

Your emergency fund should cover at least three months of essential expenses, so factor this into the mix when deciding your optimal checking vs. savings ratio. Once you have an emergency fund of three to six months of income, move any additional funds to pay down debt or save for retirement, like a 401K and IRA. 

The amount you should keep for savings accounts will depend on your goals. If you're saving for a short-term goal, like a vacation or a down payment on a house, you might keep three to six months' expenses in a savings account. If you're saving for a long-term goal, like retirement, consider investing in stocks, bonds, or other securities that can generate higher returns over time.

As a general guideline, keeping enough money in your checking account is recommended to cover your monthly expenses, plus some extra for unexpected expenses or emergencies. Depending on your circumstances, this might be anywhere from one to three months' expenses.


Who are you caring for?

Balance your budget

Before determining the precise dollar amount that should go into each account, be sure to balance your budget. Keep track of monthly expenses and all income. Be thorough and accurate. Consider your lifestyle costs: 

  • Mortgage or rent
  • Transportation and gas
  • Groceries
  • Medication and medical costs
  • Loans
  • Credit card debt
  • Other

Subtract your total expenses from your total income: 


If your result is negative, you must balance your budget. This might mean cutting expenses, increasing your income, or making drastic lifestyle changes. You want to end up balanced or positive after calculating your budget. 

Ten percent of your budget should go to savings. Your caregiving wages may not allow you to save ten percent each month. Or you may have incredible debt that needs addressing first. That's okay. Build up a small emergency fund of $500 first. Setting aside several monthly dollars will grow an emergency fund over time. This money should go to the savings account and remain untouched except for emergencies. 

Ideally, you need an emergency fund that covers at least three to six months of expenses in your savings account. Then your checking account should have three months covered so you can easily access your account for regular daily expenses. Keep sufficient funds in your checking account if you are worried about overdraft fees. 

Set up an emergency fund in your savings account

Setting up an emergency fund is a wise move that can have many positive impacts, not least the peace of mind that comes with knowing you have extra cash to cover any financial surprises that may arise. An emergency fund can help you manage all unforeseen expenses without draining your checking account, whether an unexpected medical bill or a costly repair job.

How much is too much in a savings account?

What if you or your care recipient have significant income? The FDIC only insures up to $250,000 in funds. Any amount over that should be used for investment, paying down debt, or spread over several FDIC-insured banks. Different investment options include: 

  • Stocks
  • Bonds
  • Mutual funds
  • Precious metals
  • Real estate investment

Continuously diversify your investment portfolio. Avoid having all your finances in only one investment or institution, especially in these economically volatile times. Carefully research any investment.


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How to find the best bank accounts

Finding the best bank account can be daunting, and with so many options available, it can take a lot of work to know where to start. However, following a few simple tips, you can find a bank account that meets your needs and helps you reach your financial goals.

Determine your needs

Before you start your search, take some time to identify what you're looking for in a bank account. Are you looking for a high-interest savings account, low fees, or easy access to ATMs? Understanding your needs will help you narrow down your search.


Once you know what you're looking for, it's time to start your research. Look up different banks and their account offerings. Compare their fees, interest rates, and services offered.

Consider online banks

Online banks are becoming increasingly popular due to their low fees and high-interest rates. However, they may not have physical branches or ATMs like traditional banks. If you're comfortable with online banking, consider an online bank.

Check for fees

Fees can quickly eat into your savings, so it's essential to read the fine print and check for any monthly maintenance fees, ATM fees, or minimum balance requirements. Make sure you understand the fee structure before opening an account.

Compare APYs offered and compounding frequency

An Annual Percentage Yield (APY) is the interest earned on a bank account or investment over one year, expressed as a percentage of the account's principal balance. APY is an important factor to consider when choosing the best bank account, especially if you're looking for a savings account or certificate of deposit (CD) where you plan to keep your money for an extended period. APY considers the compounding of interest, which means that the interest earned on an account is added to the account balance and makes interest itself, resulting in a higher return over time.

Look for perks

Some banks offer perks such as cash-back rewards, discounts on other services, or free checking accounts if you meet specific requirements. Consider whether these perks are important to you when making your decision.

Consider customer service

Choosing a bank with a good reputation for customer service is essential. Read reviews and ask friends or family for recommendations. You want a responsive and helpful bank if you have any issues.

Open an account and try it out

Once you've narrowed down your choices, it's time to open an account and try it out. See how easy it is to use and access your money, and whether it meets your needs and expectations.

By following these tips, you can find a bank account that works for you and helps you achieve your savings goals. Remember to take your time and research to make an informed decision.

Ultimately, the right balance between checking and savings accounts for family caregivers will depend on your financial situation and goals. It's essential to regularly review and adjust your budget and savings plan as needed to ensure you're making progress toward your financial goals.

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