It’s essential to keep your hard-earned money where it can make money for you. That means having accounts that pay interest. Checking accounts don’t always pay interest or it’s very low, especially in the average checking account. So, if you have too much money in a checking account, you could be losing. Here are four signs you’re keeping too much money in your checking account.
1. Your Income Has Changed
If you’re used to living paycheck to paycheck and needing to access your money quickly, you’ve probably been leaving money in a checking account. But your finances have changed, and you should, too. It is important to align your investments with your financial goals. You’re now keeping too much money in your checking account. Consider moving excess money to an emergency fund savings account. If you have one, then consider investing the excess. You might also want to consider a balanced investment portfolio for the excess money.
2. You Have No Big Expenses Coming Up
If you don’t have a big expense for which you’ll need the money and it’s just sitting there earning nothing, you probably have too much in your checking account. You risk spending it on frivolous items you don’t need when you have too much money in your checking account. Consider moving your extra money to a high-yield savings account. Additionally, consider opening a money market account to earn interest for future financial goals.
3. Your Checking Account Has More Money than Your Expenses
3)Checking Account More Money than Your Expenses
If you’ve paid all your expenses and have enough money for one or more other months’ expenses, you’re keeping too much money in your checking account. The checking account shouldn’t be a place to store money. It doesn’t earn anything for you. Consider other options like investing or high-yield savings accounts, or setting up automatic transfers to savings, retirement, and investment accounts. Higher interest rates in these accounts can significantly boost your financial growth.
4. You’re Missing Out on High Yield Savings Account Opportunities
If you have a lot of money in your checking account but aren’t taking advantage of your employer’s 401(k) plan, you have too much money in your checking account. A 401(k) that your employer matches is like free money, and contributing to such retirement accounts is crucial for long-term financial stability. You are not earning that in your checking account. If you are in a 401(k) plan, consider a Roth plan or another way to make that excess money go toward your retirement. Additionally, consider supplemental retirement savings options like a health savings account for future financial security.
Conclusion
Be vigilant about where your money is and how it can go to work for you by earning interest. Don’t just store money in your checking account. Keeping an excessive amount of money in a low-yield account can result in missing out on valuable interest earnings.
