Everyone should work towards being able to keep minimum 6 mos of burn in their checking account. Ideally more.

Checking account earns no interest. That's a foolish waste of money

Until it's right there when you need it. It's not called an emergency fund for nothing

Any way you slice it 6 months living expenses earning no interest is a huge expense. For the average person putting that away at 30 means delaying retirement by around 2 years. Worse you need to keep adding money in to keep up with inflation.

It’s reasonable to keep 6 weeks of living expenses on hand, but the rest doesn’t need to be in cash as long as you can quickly liquidate it.

Agree, the only requirement is sufficiently liquid, feel free to earn as much as possible given that constraint

If you can't withdraw money from your mutual fund, or put a charge on your credit card, paying rent for 6months is the least of your worries.

You could put it in a savings account where it earns .01% interest (which is what my bank is paying right now).

So that 250K would earn you a cool $25 in a year.

Ally still offers 0.5% fwiw, which would be $1250. Doesn’t keep up with inflation, but better than $25.

Business savings accounts generally give crappier rates than individual ones. I’m not aware of any major bank that gives anything greater than .05%.

Geez people - “checking account” should have been a relatively obvious figure of speech meaning “bank account”, or “cash and cash equivalents”.

https://en.wikipedia.org/wiki/Cash_and_cash_equivalents

When you pull a balance report for proving personal or business funds, your bank includes checking, money market, savings, etc., the literal type doesn’t matter as much.

(Also, for replies saying the 6 months worth should only be in a higher return higher risk account — things that can lose significant value — well, ideally, no, that’s what you do with everything beyond your six months cash and cash equivalents reserve, or carefully understand your risk exposure and ensure black swan deviations would still leave you above your reserve.)

Keep as much as you need to give you time to liquidate other things (like stocks or mutual funds). Especially with inflation as high as it is, keeping that much money in a checking account is just boneheaded.

>Keep as much as you need to give you time to liquidate other things

And what if there's a crash and your savings takes a 40% haircut?

>And what if there's a crash and your savings takes a 40% haircut?

Also, it's worth noting that there is likely a strong correlation between a financial market crash and sudden unemployment or other issues.

Then as long as you had 6mo of living expenses, you'll still have 3mo left over. Plus all the extra months you got from previous appreciation.

Why would you want that in a checking account rather than an instant access cash saving account though? Savings interest rates suck atm, but might as well get whatever you can on it.

Not sure how they are in the US, but I've gotten 0.01% last year on my cash savings account. It's not worth keeping money there. The time you spend moving it from there to your primary account eats the interest.

You can quite easily get .5% from anything called a High Yield Savings account. They are FDIC insured. You used to be able to get as high as 1.5%, though with fed rates dropped to 0 that has gone away.

But .5% is still 50x higher than .01 (and many multiple times higher after a few years of compounding interest).

If you have a 15k rainy day fund, you're easily throwing out 1k a decade by keeping it in checkings.

I use marcus, not affiliated but here: https://www.marcus.com/us/en/savings/high-yield-savings

Edit: missed the part about you not being in the US. Not sure what options you have, but to any americans reading this, use high yield savings!

> You used to be able to get as high as 1.5%,

How young are you?

https://www.bankrate.com/banking/cds/historical-cd-interest-...

Because it was a figure of speech for “bank account”.

being able to and Actually doing it is costing (assuming 2k monthly) 600 a year in earned interest.

people shouldnt do things they dont have to