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How to Make the Most of Your Cash (And Your Expenses)

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What we’ll cover:

  • Don’t keep more in your checking than you need to; generally, 4 – 8 weeks of monthly expenses
  • If you’re not optimizing your savings, you could have cash drag and it could cost you over time
  • Consider using different savings accounts for different goals and purposes
  • You could earn money on everyday expenses with cards that give you points, cash or miles

While a good percentage of us live close to a cashless existence, we may have piles of cash in accounts and banks online or locally (anyone remember paper savings bonds?). 

If this is you, that’s fantastic! But we have to ask: Is your money essentially gathering dust, or is it doing stuff, like earning as much interest as possible? And, are your expenses pulling their weight, cash-back or points wise?

If not, or you’re just curious about how to up your game, we’ve got three places to start:

1. Ask yourself: Do you have too much money in your checking account?

A robust account balance is rarely a bad thing, but if you’ve got more cash than you need in a checking account that’s earning little to no interest, your savings and other accounts could be underpowered. In short: You could be missing out on the opportunity to bulk up your finances. 

What qualifies as “too much” cash? The answer depends on a word that’s got a bad rep: budget. Stick with us here because having a budget doesn’t have to mean cutting back. Particularly in this case, having a budget could be key to earning more interest because it could help you identify if you have too much cash hanging around. (If you’ve been meaning to get a budget or give yours a tune up, we’ve got some ideas for how to get started here.)

So back to the question – how much money should you keep in your checking account? You should generally have enough to cover 4 to 8 weeks of known monthly expenses, plus a little extra that will cover those expenses that tend to crop up. 

Keep in mind: If your checking account has a minimum balance requirement, add it to what you’ve already calculated above.

2. Ask yourself: Are you saving in the right types of accounts?

It’s really easy to underestimate what’s going on with this question because when we’re talking about saving, we mean doing more than just socking away money as opposed to spending it.

What we’re really asking is this: are you using as many different types of savings mechanisms as you can so your money can make as much as it can?

If you’re not – and no judgment here – your money is under performing. In parent-speak, it’s not living up to its potential, and, quite frankly, could be doing more.

Example: How not using our Online Savings Account could mean your money is missing out.

Say you have cash languishing in a traditional savings account – sure it may be earning a little bit of interest, but maybe not as much as it could if it were in a high-yield savings account. With our high yield savings calculator, for example, you can compare how different APYs could impact your savings. 

Annual Percentage Yield (APY) as of January 31, 2023. APY may change at any time before or after account is opened. Maximum balance limits apply

This calculator is for illustrative purposes only and may not apply to your individual circumstances. Calculated values assume that principal and interest remain on deposit and are rounded to the nearest dollar. All APYS are subject to change.

Rates of the selected banks reflect New York savings rates for similar products at the select banks with a minimum balance of $2,500. Rates may vary by state and do not account for bonus, special or promotional APYs. National Average is based on the APY average for high yield savings accounts with a minimum balance of at least $2,500 offered by the top 50 US banks (ranked by total deposits). Rates of selected banks and the National Average as reported by Informa Financial Intelligence, Informa has obtained the data from the various financial institutions that its tracks and its accuracy cannot be guaranteed. This calculator does not include all savings accounts available in the marketplace.

Our rate as of January 31, 2023.
Comparison banks’ rates as of January 24, 2023.
National Average rate effective as of January 24, 2023.