How Much Should You Keep in Your Bank Account? It Might Be Less Than You Think

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Money is still a bit of a taboo topic among families and friends, which is why many of us don’t know what a normal amount is to have (or aim for).

But thankfully, there’s an easy calculation to know the exact dollar amount you need to have on-hand in your checking account:

It’s one or two months of your living expenses. That’s it! So if between rent, utilities, groceries, budgeted fun stuff for your kids and debt payments, you spend $5,000 each month, then you should have $5,000 to $10,000 in your checking account.

Here’s some advice: It might not be smart to keep more than two months’ worth of expenses in your checking account. If you can keep it closer to one month, that’s even better. Why? Because it’s likely earning you next to zero in interest, when you could be making way more with your money elsewhere.

Here are the first things you should do with your money once you have one to two months’ worth of expenses saved to cover your bills:

1. Invest 15 Cents Into the Stock Market

If you feel like you don’t have enough money to start investing after you’ve put money in your emergency fund, you’re not alone.

How about 15 cents? Yeah, we know what you’re thinking: 15 cents? How’s that going to do me any good?

Well, that leftover change from your morning coffee and evening grocery hauls could turn into more than $1,000.

That’s what happened when Penny Hoarder reader Jeremy Kolodziej opened an investment account with Acorns. The app’s round-up feature bumps each of your purchases up to the nearest dollar and puts the spare change into the stock market, which helped him mindlessly save $1,076 in about 20 months.

“It’s a virtual coin jar,” he says. “You don’t even think about it.” He used the spare change to pay for two vacations.

Plus, Acorns invested the money for him, allowing him to grow his savings — without studying stock prices or managing trades.

The app is $1 a month for balances under $1 million, and you’ll get a $5 bonus when you sign up.

2. Cancel Your Car Insurance

When was the last time you compared car insurance rates? Chances are you’re seriously overpaying with your current policy.

If it’s been more than six months since your last car insurance quote, you should look again.

And if you look through a digital marketplace called SmartFinancial, you could be getting rates as low as $22 a month — and saving yourself more than $700 a year.

It takes one minute to get quotes from multiple insurers, so you can see all the best rates side-by-side. Yep — in just one minute you could save yourself $715 this year. That’s some major cash back in your pocket.

So if you haven’t checked car insurance rates in a while, see how much you can save with a new policy.

3. Secure Up to $1.5 Million in Life Insurance; Rates Start at Just $20/Month

Sometimes you need to spend some money to make some money. Getting life insurance in case something happens to you is one of those cases. It’s a good place to invest a few bucks every month, once your checking account and emergency funds are in a good spot.

Like, have you thought about how your family would manage without your income after you’re gone? How they’ll pay the bills? Send the kids through school? Now’s a good time to start planning for the future by looking into a term life insurance policy.

You’re probably thinking: I don’t have the time or money for that. But your application can take minutes — and you could leave your family up to $1.5 million with a company called Bestow.

Rates start at just $20 a month. The peace of mind knowing your family is taken care of is priceless.

If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.

*Bestow: Policies are issued by Bestow Life Insurance Company, Dallas, TX on policy form series BLI-ITPOL. Bestow Life Insurance products may not be available in all states. Policy limitations or restrictions may apply. Not available in New York. Our application asks lifestyle and health questions to determine eligibility in order to avoid requiring a medical exam. Prices start at $10/month based on an 18-year-old male rated Preferred Plus NT for a $100k policy for a 10-year term. Rates will vary based on underwriting review.