Talking about money still feels awkward for many families and friend groups, which is why most of us aren’t sure what a reasonable amount to hold (or aim for) really is.
Fortunately, there’s a simple way to figure out the exact dollar amount you ought to keep in your checking account:
Keep one to two months’ worth of living expenses. That’s all. So if your monthly outgoings — including rent, utilities, groceries, planned kid activities and debt payments — total $5,000, you should have $5,000 to $10,000 sitting in your checking account.
One tip: it’s usually not wise to store more than two months’ worth of expenses in checking. If you can keep it closer to a single month, even better. Why? Because checking accounts typically pay almost no interest, whereas your money could earn significantly more elsewhere.
Once you’ve set aside one to two months’ worth of expenses to cover bills, here are the first moves to make with your cash:
1. Invest 15 Cents into the Market
If you feel like you can’t begin investing after building an emergency cushion, you’re in good company.
What about 15 cents? Yes, we know what you’re thinking: 15 cents? How could that make any difference?
Those spare coins from your morning coffee and weekly grocery trips can add up to more than $1,000 over time.
That’s what happened when a Savinly reader, Jeremy Kolodziej, opened an investment account with Acorns. The app’s round-up feature bumps each purchase up to the next dollar and funnels the spare change into investments, helping him unconsciously save $1,076 in roughly 20 months.
“It’s like a digital piggy bank,” he says. “You barely notice it.” He used the accumulated change to fund two vacations.
Plus, Acorns invested the funds for him, letting his money grow without having to study stock charts or manage trades.
The app costs $1 per month for balances under $1 million, and you’ll receive a $5 bonus when you sign up.
2. Reevaluate Your Car Insurance
When was the last time you compared auto insurance quotes? There’s a good chance you’re paying way too much for your current policy.
If it’s been over six months since your last comparison, shop around again.
Using an online marketplace like SmartFinancial could get you premiums as low as $22 per month — potentially saving you more than $700 a year.
It only takes a minute to receive quotes from several insurers, so you can compare the best offers side-by-side. Yep — in about 60 seconds you might cut your costs by $715 this year. That’s a notable boost to your savings.
If you haven’t shopped for auto insurance recently, check how much you could save by switching plans.
3. Get Up to $1.5 Million in Life Coverage; Rates from Just $20/Month
Sometimes you need to spend a little to protect a lot. Buying life insurance to guard your family’s financial future is one of those investments. It’s a sensible monthly expense once your checking and emergency funds are secure.
Have you considered how your loved ones would cope without your income? How would bills get paid? How would children continue schooling? Now is a smart moment to plan ahead by researching a term life policy.
You might think you don’t have time or money for that, but the application can take just minutes — and you could leave your family up to $1.5 million with a provider called Bestow.
Premiums begin around $20 per month. The reassurance of knowing your family is protected is invaluable.
If you’re younger than 54 and want a quick life insurance estimate without a medical exam or leaving 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.
