How Much Should You Keep in Checking vs. Savings?

Woman wearing a yellow sweater looks over her checking and savings accounts online to see if she has enough saved.

Both checking and savings accounts allow you to access your money easily, so what's the main difference between the two—and how should you allocate your money between them? They're both important parts of your financial picture, although they serve slightly different purposes. Here's how they fit into your money scheme—and what kind of balance you should be maintaining in each.

What is a Checking Account?

At its most basic, a checking account is an account where you can store your cash that allows deposits and withdrawals. A checking account is considered very liquid, meaning that it’s easy to get to your money—you can withdraw money via an ATM, by writing checks, or by visiting the bank and withdrawing cash from an in-person teller. You can also set up electronic debits from your checking account, such as a recurring bill that gets paid directly from the account. Usually, deposits and withdrawals are unlimited.

Fees on checking accounts are typically low, although there may be a monthly account fee, as well as a fee for overdrafting the account or writing too many checks. Some accounts also require a minimum balance.

How Much Money Should You Keep in a Checking Account?

Although about half of standard checking accounts earn interest, according to Bankrate, often you don’t earn much on the cash, so there’s no advantage to keeping a big cushion beyond what you’d need to pay your bills. That said, it’s probably a good idea to keep one to two months of expenses in your checking account. That’s because even financially attentive people occasionally lose track, and overdrawing your account can result in fees.

Among people with checking accounts, the average person had about $2,900 stashed away, according to a 2019 NerdWallet survey.

What is a Savings Account?

Like a checking account, a savings account is a place where you can store your money and make withdrawals and deposits—although generally not with the same unlimited freedom. They tend to pay interest, meaning that the money you keep there earns interest each month. Legally, savings accounts limit your withdrawals to six per month—an effort to encourage consumers to keep their hands off their savings. You may, however, be able to access money beyond your six withdrawals (and without incurring fees) by going directly to a bank teller or ATM.

A savings account is useful because it provides a separation between your normal spending money (in a checking account) and the money you’re saving for emergencies or unexpected expenses. If all of your cash is in one account, it can be tempting to spend it. Keeping your savings separate can help.

How Much Money Should You Keep in a Savings Account?

Your savings account will probably act as your emergency fund—the spot where you store the cash you’d need if you lost your job or needed to pay for an unexpected home repair. To be safe, you should keep three to six months of living expenses in your savings account. Note: This doesn’t mean three to six months of income—just the cash to cover what you’d absolutely need to spend if you lost your job. That includes your rent or mortgage, insurance, utilities, cell phone, debt payments and food.

You may need to keep more in the account if you’re self-employed or own a business—both situations that warrant a larger safety net.

Daunted? Don’t be. Start by setting up an automatic withdrawal from your checking account to your savings account on paydays and let the money start accruing. Start with a reasonable goal—$500 or $1,000 in savings—and work toward that first.

How to Find the Best Bank Accounts

Choosing a bank account for yourself requires doing some research. You'll want to find the following and choose the account that compares most favorably with the others:

  • What monthly fees, if any, does the bank charge for the account?
  • Does the account earn interest? What's the rate?
  • Does the bank have a large (and convenient) ATM network?
  • How is the bank's website and/or mobile app? Do you find it easy to navigate?

Go for the checking and savings accounts that check the most boxes—lowest fees, highest interest rate, ATMs that work for you, and a website or app that you like. Doing your due diligence ensures that your money will be in the best spot for you.

The views expressed by the author are not necessarily those of Fifth Third Bank, National Association, and are solely the opinions of the author. This article is for informational purposes only. It does not constitute the rendering of legal, accounting, or other professional services by Fifth Third Bank, National Association, or any of their subsidiaries or affiliates, and are provided without any warranty whatsoever. Deposit and credit products provided by Fifth Third Bank, Member FDIC.