The average household has $10,618 in their checking account, according to the latest edition of the three-times-a-decade Federal Reserve Board Survey of Consumer Finances (SCF). But how much is enough for you? In this article, we'll take a closer look at the data, and what you should keep in mind when deciding how much is enough to keep in your checking account.
American households' checking account behavior
As mentioned, the latest edition (2019) of the SCF found that the average household had $10,618 in their checking account. While this may have changed a little in the past few years, it should still be a solid ballpark estimate.
What's more, the median checking account balance was just $2,000 -- meaning that half of households had less and half had more. I'll spare you the math lesson, but when a median is much lower than the average of a set of numbers, it means the data is being skewed by larger values.
In simple terms, it means there are some people with a lot of money in checking. For our purposes, the median is a better indicator of what the typical household keeps in their checking account.
There are a few other interesting statistics from the checking account data:
- The highest checking account balances are held by older Americans. The average household headed by someone aged 75 or older has $17,299 in checking.
- Households led by college graduates have more than twice the overall average in their checking accounts.
- Households with two adults (like a married couple, for example) have more than $14,000 in their checking accounts on average, compared with less than $6,000 for adults living alone.
How much should you keep in your checking account?
When it comes to your cash, aside from your investments and emergency savings, there's a balancing act between keeping enough in your readily accessible checking account and maximizing the amount in your savings account that typically pays a better interest rate.
In a nutshell, the goal is to keep enough in your checking account that you don't have to worry about whether there is enough to cover bills and day-to-day expenses, but not so much that you have too much of your money sitting there earning little or no interest. After all, you definitely want to avoid overdrafts, and have enough money to be able to access cash when you need it.
On the other hand, there are some excellent high-yield savings accounts that offer yields of 4% or more right now, so you could be missing out on hundreds of dollars of essentially free money if you have too much in checking.
A general rule of thumb used by financial advisors is that you should try to keep one to two months of your living expenses in your checking account. A good way to figure out your living expenses is to access your last few months' worth of checking account statements and take an average of how much money flows out of your checking account in the average month.
So, if your monthly bills and general spending add up to about $5,000 in the typical month, you should aim to keep your checking account balance between $5,000 and $10,000.
The bottom line is that right-sizing your checking account balance if it isn't already could be a smart financial move. If you don't have enough in checking, consider letting some of your deposits build up before transferring any more to savings or investing accounts. And if you have too much, explore some of the higher-yield options available to you like savings accounts or CDs.
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FAQs
The Average American Keeps This Much in Their Checking Account -- How Do You Compare? The average household has $10,618 in their checking account, according to the latest edition of the three-times-a-decade Federal Reserve Board Survey of Consumer Finances (SCF).
What does the average American keep in their checking account? ›
Average household checking account balance by age
| Age range of reference person | Average checking account balance in 2022 | Median checking account balance in 2022 |
|---|
| Under 35 | $7,355.53 | $1,600.00 |
| 35 to 44 | $15,309.92 | $2,500.00 |
| 45 to 54 | $20,155.22 | $3,400.00 |
| 55 to 64 | $17,515.35 | $3,500.00 |
2 more rowsOct 18, 2023
The general rule of thumb is to try to have one or two months' of living expenses in it at all times. Some experts recommend adding 30 percent to this number as an extra cushion.
How much does an average person have in their bank account? ›
The median transaction account balance is $8,000, according to the Federal Reserve's Survey of Consumer Finances (SCF), with the most recently published data from 2022. Transaction accounts include savings, checking, money market and call accounts, as well as prepaid debit cards.
How do you compare checking accounts? ›
Comparing checking accounts: 7 top features to look for
- Look for an account with no monthly fee.
- Compare accounts with low minimum balance requirements.
- Find an account that refunds ATM fees.
- Compare digital offerings.
- Consider a high-yield checking account.
- Take advantage of sign-up bonuses.
- Consider FDIC insurance limits.
Nearly Half of Americans Don't Have $500 in Savings
According to the survey, 49% of Americans have $500 or less in their savings account, with 36% reporting they have less than $100 saved up. This means that a small financial upset can cause these households to end up in debt — or more debt.
How much money do millionaires keep in a checking account? ›
“Millionaires' checking accounts are all over the place,” Thompson said. “Some clients will only keep enough to pay for immediate expenses (e.g., $10,000) and others will have $150,000 in checking on any given day.”
How much is too much money in a checking account? ›
Unless your bank requires a minimum balance, you don't need to worry about certain thresholds. On the other hand, if you are prone to overdraft fees, then add a little cushion for yourself. Even with a cushion, Cole recommends keeping no more than two months of living expenses in your checking account.
How much cash is too much in savings? ›
How much is too much? The general rule is to have three to six months' worth of living expenses (rent, utilities, food, car payments, etc.) saved up for emergencies, such as unexpected medical bills or immediate home or car repairs. The guidelines fluctuate depending on each individual's circ*mstance.
How much is normal to have in bank account? ›
A common rule of thumb for how much to keep in checking is one to two months' worth of expenses. If your monthly expenses are $4,000, for instance, you'd want to keep $8,000 in checking. Keeping one to two months' of expenses in checking can help you to stay ahead of monthly bills.
The Federal Reserve also measures median and mean (average) savings across other types of financial assets. According to the data, the average 70-year-old has approximately: $60,000 in transaction accounts (including checking and savings) $127,000 in certificate of deposit (CD) accounts.
How much should I have saved for retirement by age 60? ›
By age 35, aim to save one to one-and-a-half times your current salary for retirement. By age 50, that goal is three-and-a-half to six times your salary. By age 60, your retirement savings goal may be six to 11-times your salary. Ranges increase with age to account for a wide variety of incomes and situations.
Is $20,000 a good amount of savings? ›
All in all, depositing $20,000 in a savings account can be wise if you have a short-term plan for the money. Your deposit will be safe and you can generate decent amounts of interest in the meantime.
Who is the best bank to bank with? ›
Best-of 2024 Banking Winners:
- Alliant Credit Union: Best credit union.
- Ally Bank: Best bank; best CDs.
- Charles Schwab Bank: Best for ATM access.
- Chase: Best for sign-up bonuses; best for branch access.
- Discover® Bank: Best online banking experience.
Best Banks of June 2024
- Capital One 360 Checking: Best online checking account.
- Chase Total Checking®: Best for a large branch network.
- Axos Bank Rewards Checking: Best for online account options.
- Discover® Bank: Best for doing all of your banking at one place.
- Synchrony Bank: Best high-yield savings account.
Step-by-Step Guide for Reconciling Bank Statements
- Compare Your Current Available Balance. ...
- Compare Transactions. ...
- Account for Bank Adjustments. ...
- Include Pending or Unaccounted Transactions in Your Bank Balance. ...
- Investigate Discrepancies. ...
- Compare Both Balances.
Average Daily Balance is the total amount of daily balances in your account divided by the number of days in the month. To avoid incurring any service charges, a Minimum Average Daily Balance needs to be maintained in your account.
How much does the average American have in their bank account in 2024? ›
Age/Life Stage
| Age | Average Savings Account Balance |
|---|
| Less than 35 years old | $20,540 |
| 35 to 44 | $41,540 |
| 45 to 54 | $71,130 |
| 55 to 64 | $75,520 |
2 more rowsApr 23, 2024
How Many Americans Are Living Paycheck to Paycheck? A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year. In other words, more than three-quarters of Americans struggle to save or invest after paying for their monthly expenses.
How much money does the average bank keep on hand? ›
Banks tend to keep only enough cash in the vault to meet their anticipated transaction needs. Very small banks may only keep $50,000 or less on hand, while larger banks might keep as much as $200,000 or more available for transactions. This surprises many people who assume bank vaults are always full of cash.
