I’d like a $1,000 buffer in my checking account moving forward. I’ve typically always kept a buffer so I do not have to worry about overdraft issues. I also keep a spreadsheet of daily cash flows so I know how much is in the account at all times. Recently my buffer has been $500 but I want to get it up to $1,000 moving forward.
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There should always be a little more in your checking account than you actually need. This is to guard against things like deposits coming in late or payments accidentally going out more than once. The normal suggestion is to have one full month of expenses in the account. I have not kept this in the past because of the low interest rates on checking. I could keep my money in a savings account and earn a lot more!
Now that my budget is really working for me and I have good control over cash flows I think I can increase the buffer. I plan on keeping a $1,000 buffer in my checking account from now on. This will make tracking my cash flows easier and I will not have to do transfers from savings to checking to account for poor timing of cash flows.
How much of a buffer do you keep in checking?