Savings of 2K, better spot than checking

[Anonymous]

Anonymous wrote:

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.

DP: Given this, I would keep a 5k cushion, but that just means when you have a lot, put everything extra in the savings. If you ever dip below the 5k, just move some of those savings back over--usually takes 3-5 days so you just have to anticipate.

[Anonymous]

Anonymous wrote: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.

I think this is the best answer. You don't need to move over the $2K into savings account...start with $1K. Then try to move over a small amount of money to savings every paycheck. It's good practice.