How much $$$ should you keep in your checking/savings account before putting the rest in investments, stocks?

April 27, 2009, 3:36 pm

Kiz M asked:

Do you know what is approximately a normal amount of money to have in your savings/checking account?

I think lots of people don’t like to keep much cash available in a savings/checking account — instead they prefer to put it in investments like stocks, bonds, mutual funds, retirement plans, etc.

But you still have to have some spending money available, of course, so I was wondering what’s an average amount to have? Do you have any idea?

edward I:

At least a month’s budget, including cash expenditures and misc.
If you invest in vehicles that you cannot access for emergencies, then consider the term of those and reserve enough over that amount of time. A savings account should be used.

April 28, 2009, 3:31 pm

Milanese:

I’d say six months worth of expenses is the minimum.

April 30, 2009, 8:39 pm

The Shadow:

A professional financial planner would likely tell you to have 3-6 months worth of normal expenses in reserve. (I keep at least six months worth.) You never know if something unforeseen may happen such as an accident or layoff. A cash reserve will help you get through those tough times. (I’ve been laid off three times in six years, so I can tell you from experience how invaluable this can be!)

If you don’t have cash reserves, an emergency could force you to sell stocks at a loss if you need the money during a downturn in the market.

May 4, 2009, 4:45 am

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