Chequeing account balance

[jamesbe]

Just an interesting topic for some fun.

Co-worker was saying he moves all his money into his savings account and never has a balance of more than $200 in his chequeing account. I asked him about mortgage payments, insurance etc etc. He said he just has a calendar notification and every 2 weeks / monthly etc he moves the money into his chequeing for that payment that is about to come out.

That seems like way too much work to me, and if you forget well I guess you overdraft and lose all the extra savings you got out of the savings account.

For me I need to keep at least $3000 - $5000 in my chequeing account or I have the hebee-jebees it just freaks me out. I see my chequeing account as a place that holds money for bills and any spending I may need to do (like purchase some paint to paint my living room or whatever). I use my credit card for everything and pay monthly but will not buy it if the money isn't available to spend in the first place.

What do others do? I consider my savings as "emergency" I have an emergency savings I never touch and a small savings for quicker emergencies that I wish to never touch .

[Four Pillars]

I do exactly like you do. Having extra cash makes life a lot easier.

[HaroldCrump]

Given how little "savings" accounts pay these days, I see no reason to cut it so close.
It's not like we are missing out on 10% monthly interest by keeping more cash in a chequing account.

[the-royal-mail]

Ah yes, the bare bones balance!

Funny you should ask this, as just this morning I was doing my planning for the next 3 years and seeing where my tiers stand. So this concept is fresh in my mind.

Outside of the tiered savings, I would always aim to keep a basic float of $2000 in my POSA. Even if all of my 3 tiers disappeared right now, my goal would be to always keep around $2000 in the POSA. The reason for this is as a float, in case a rent cheque gets cashed before a paycheque goes in, if a wayward bill payment occurs, if I forget something, if I have a large CC bill one month etc. There are lots of things that can occur and keeping a basic float of less than $2000 is a risk most here should not be willing to take.

As for your friend, he's probably been brainwashed by people who admonish those who have money "wasting away in a savings account".

For everything else, there's Chargex.

[Plugging Along]

We do the same thing. We have our operational money in our checking, and move real savings and investment into the respective accounts.

[Barwelle]

I keep 4-5,000 in my daily banking account. I used to have most of it in savings for the interest, and keep less than $500 in my chequing for incidental purchases, and only transfer money into it when I paid bills... but then I sat down one day and calculated the interest on the savings account in that bank. They pay a stellar 0.25%.

Now my paycheque goes into chequing, and I have automatic withdrawals going to a 1.35% HISA from that account as well. I just let about $2,000 sit in savings, and the rest in chequing and if I notice it's building up, I send it to HISA instead of the savings account. Like Harold says, it's not worth the effort to keep a tighter grip on where the money is in chequing vs. regular savings. Even the "H"ISA is not worth much effort, though I think I'm going to reduce my daily banking account to $2-3000. (I don't pay rent at the moment so monthly recurring expenses are low, but I share the same thoughts about wanting to have a cushion of money available in a moment's notice.)

[Eclectic12]

Just an interesting topic for some fun.

Co-worker was saying he moves all his money into his savings account and never has a balance of more than $200 in his chequeing account. I asked him about mortgage payments, insurance etc etc. He said he just has a calendar notification and every 2 weeks / monthly etc he moves the money into his chequeing for that payment that is about to come out.

That seems like way too much work to me, and if you forget well I guess you overdraft and lose all the extra savings you got out of the savings account.

[ ... ]

What do others do? I consider my savings as "emergency" I have an emergency savings I never touch and a small savings for quicker emergencies that I wish to never touch .

The work depends on what one's bank offers. I've programmed transfers from Savings to Chequing as sequence for a year at a time. It's a basic "start this date, once a month and end that date" procedure. With a yearly review - it's not too bad, IMO.

It also helps that my pay is deposited on Thursday and the mortgage comes out on Monday - on the same bi-weekly cycle.


As for me, my float depends on what bills coming up. I usually around $300 to $500 or so in the chequing account. If I make a mistake, I can transfer from savings or TFSA next day or in an emergency, from LoC today then use the savings to pay back the LoC.

I'm usually running about $0.09 in interest about every year and a half to avoid an overdraft fee for a mistake.


My "savings emergency" fund is with a different institution so I'm not tempted to dip into it.


Cheers

[mrPPincer]

one of the highest paying HISAs right now (2.1%) is a chequeing account.
http://www.acceleratefinancial.ca/products/savings.aspx

One free withdrawal per month, cheques and ETF withdrawals are free, but debit machine withdrawals have an additional charge.
You could set up direct deposit or deposit using their CU bank card at any credit union.
so, if you guys are keeping that much in chequeing just for emergencies etc., I'd say they could definitely be worth looking into.

[crazyjackcsa]

I leave anywhere from $2,000 - $5,000 in the chequing account, or about a full month of expenses. When the account hits 5k, I bounce 3 grand over to the HISA and start again.

[slacker]

Why would you keep more money than necessary wasting away in a account that pays nothing? Money in a chequeing account is a waste, and that's the end of it.