Savings of 2K, better spot than checking

[Anonymous]

Question: What would you suggest for 2K savings that we want access to?

Currently, it sits in our checking account for 2 purposes
-Part of a larger emergency fund
-The modest emergency fund sits there to help with cash flow. We don't have to worry about when large payments hit, when income exactly arrives.

But 2K of it, we realize, or maybe even more.. we don't need sitting there. We still want it accessible as part of the emergency fund. But it's not needed as we analyzed the last 12 months. Easy to do, we figured out the lowest the balance ever got was precisely $2,123, and that was really abnormal. Must have been a late paycheck / bigger bi-annual bills just hit or something. Probably not even necessary to be that low, but again, we don't worry due to the extra money sitting in checking.

[Anonymous]

Our lowest balances the past 12 months:
4,351
7,611
6,990
4,281
2,123*lowest
9,602
4,901
6,239
13,267
10,278
10,314

Any other suggestions on cash flow / emergency fund / savings v. checking?

[Anonymous]

I always keep $15k in my checking account. Otherwise I’d be uncomfortable. I guess I could do a savings account with easy movement but in the past it hasn’t seemed worth it.

[Anonymous]

Just leave it. Even at 5% interest, it's only $100 a year

[Anonymous]

Anonymous wrote:Just leave it. Even at 5% interest, it's only $100 a year

Ok this makes sense.

Our intuition before was to keep it all there. All expenditures could hit on the 1st of the month (That would be crazy), and the paychecks could be late, and we'd still be ok.

Sometimes our cash flow gets up to $19k, so it *feels* like we're missing out on savings interest, but that money is dedicated to bills, and we want to leave it alone I guess.

[Anonymous]

Follow up question, at what point could it be worth it to divide the emergency fund between checking (where it is now) and savings (still very transferrable).

Say, I re-assess in 6 months and notice the balance never ever goes below X, when you do push some of it in savings?

[Anonymous]

Anonymous wrote:Follow up question, at what point could it be worth it to divide the emergency fund between checking (where it is now) and savings (still very transferrable).

Say, I re-assess in 6 months and notice the balance never ever goes below X, when you do push some of it in savings?

Noting that a PP said 15K is their threshhold.

[Anonymous]

I'd play around with the 2K. Just do this a few times:
sign up for accounts with bonuses, and sign up for accounts with 5%

Bonus accounts don't usually have high returns, but you could make $30-$100 on each account.

For the work of opening and closing, it's just free money. Then sit it in a savings account. I say do it, because if it's there for 10 years, better to be making $1000+, than just sitting in your account. Then, maybe your circumstances have changed, and you can transfer it to a kids account if you have kids.

I say, play and have fun with it. You're right it's just sitting there.

[Anonymous]

I always put extra in a savings account--they are earning 5%. It's just a matter of principle for me whether it's 100, 1000, or 10000. Plus, you stick it there and you'll likely find you spend a little less too. The habit to optimize is what will make you wealthier, not the specific amounts.

[Anonymous]

Fierce pays 5.25 percent on checking

[Anonymous]

Anonymous wrote:I'd play around with the 2K. Just do this a few times:
sign up for accounts with bonuses, and sign up for accounts with 5%

Bonus accounts don't usually have high returns, but you could make $30-$100 on each account.

For the work of opening and closing, it's just free money. Then sit it in a savings account. I say do it, because if it's there for 10 years, better to be making $1000+, than just sitting in your account. Then, maybe your circumstances have changed, and you can transfer it to a kids account if you have kids.

I say, play and have fun with it. You're right it's just sitting there.

Look - there is a fidelity bonus for $50 or higher balances. They'll give you $100. Now, that money will be in a brokerage, but I say take $50 of your $2,000 and do this.

There is a wealthfront bonus of $30, but it only requires a $500 balance. And for how long? It has 4.8% right now, just leave $500 in there for a while. Can always transfer it back out if you have a major house repair/etc.

[Anonymous]

Anonymous wrote:Fierce pays 5.25 percent on checking

This is great. I had been thinking, why don't I find a checking where the full $2K or up to $19K can be earning? But, I didn't think there would be one high enough to merit the trouble.
Or, can't I give my savings router and account # for some of these bills (unlikely).
I'll look into this.

-OP

[Anonymous]

Anonymous wrote:Fierce pays 5.25 percent on checking

As of July 2023, someone wrote a review, no web or Android for managing account. No Joint debit cards. So DH and I would have to open separate accounts, manage separately. Seems like then I have to manage a crazier flow, and that's annoying.

[Anonymous]

I try to keep $5,000 in my checking as my baseline. Every month, I shift $ over $5,000 to a high-yield savings account. Every quarter, I assess whether I should allocate the "extra" money in the high-yield savings account to an extra expense (such as a semi-discretionary home improvement project), invest it, or keep it in "emergency" savings.

OP, are your bills and paychecks really (ever) a surprise? Such that you couldn't transfer money from a high-yield savings account to cover them? That's how I handle a month with unusually high expenses.

[Anonymous]

Anonymous wrote:I try to keep $5,000 in my checking as my baseline. Every month, I shift $ over $5,000 to a high-yield savings account. Every quarter, I assess whether I should allocate the "extra" money in the high-yield savings account to an extra expense (such as a semi-discretionary home improvement project), invest it, or keep it in "emergency" savings.

OP, are your bills and paychecks really (ever) a surprise? Such that you couldn't transfer money from a high-yield savings account to cover them? That's how I handle a month with unusually high expenses.

So, do you ever dip below $5K? Is that where you base your extra money from? The lowest point in the month?

The way we are paid, it's complicated to assume the income will arrive. DH is paid ONCE a month. Usually the first Friday. However, it could be the 2nd or 3rd Friday, depending on what is going on in the month (Previous month #s aren't ready yet? He is paid on commission. First week falls on a holiday?)

I'm a contractor and so I never have a reliable date. If I settle into a contract, I sort of know, but even then, those are billed by job. So it could be random. And, if I'm switching contracts, pay is always delayed 2-3 weeks from start.