How Much Money Should You Keep in Your Checking Account?

You should generally keep enough money in your checking account to cover your regular bills and everyday spending until your next paycheque, plus a small buffer.

In Canada, these accounts are usually called chequing accounts. Money you will not need for everyday expenses may be better kept in a savings account where it can earn interest.

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How Much Should You Keep in Your Checking Account?

There is no single amount that works for everyone.

A practical approach is to keep enough for:

• Upcoming bills
• Groceries
• Transportation
• Rent or mortgage payments
• Other regular spending
• A small additional buffer

For example, if you normally spend $3,000 each month, you might keep enough to comfortably cover those expenses rather than leaving $15,000 or $20,000 sitting in an account that earns little or no interest.

Should You Keep One Month of Expenses in Checking?

Keeping around one month of expenses in your checking account can be a useful starting point.

If your income is predictable and you closely track your spending, you may be comfortable keeping less.

You may want a larger cushion if:

• Your income changes from month to month
• Your bills vary significantly
• Several large payments come out automatically
• You frequently come close to a zero balance

The goal is to avoid constantly worrying about whether upcoming transactions will clear.

Why Shouldn't You Keep Too Much Money in Checking?

Many checking accounts pay little or no interest.

Leaving significantly more money than you need for everyday spending can mean missing the opportunity to earn interest elsewhere.

Savings accounts are specifically designed for money you are setting aside and generally pay interest on deposits.

Keep your spending money accessible while putting longer-term savings somewhere more suitable.

How Much of a Buffer Should You Keep?

Your buffer should be large enough to handle small mistakes or unexpected expenses without causing your account to go negative.

For some people, that might be a few hundred dollars.

For others, especially those with larger automatic payments, a larger cushion may make sense.

The right amount depends on how much money regularly moves through your account.

Should Your Emergency Fund Be in Your Checking Account?

Usually not.

Your emergency fund should be easy to access, but keeping it separate from your everyday spending account can make it less tempting to use.

The Financial Consumer Agency of Canada recommends using a separate savings account that earns interest and allows easy access to your money. It suggests working toward roughly three to six months of regular expenses for an emergency fund.

What Happens If You Keep Too Little Money in Checking?

Keeping your balance too low can cause problems when bills or automatic payments come out.

You could face:

• Declined transactions
• Non-sufficient funds fees
• Missed bill payments
• Overdraft charges
• Difficulty managing automatic payments

Overdraft protection can cover certain transactions when your balance is too low, but it may come with interest and fees.

A small cash buffer can help you avoid relying on overdraft.

Where Should Extra Money Go?

Once you have enough in your checking account for regular expenses and your buffer, extra money can be directed toward financial priorities such as:

• An emergency fund
• High interest savings
• Paying down high interest debt
• Short-term savings goals
• Retirement savings
• Investments

How Much Is Too Much to Keep in a Checking Account?

There is no specific dollar amount that is automatically too much.

Instead, ask whether you expect to spend the money soon.

If you have substantially more than you need for your upcoming expenses and cash buffer, consider whether the excess could be earning interest or helping you reach another financial goal.