Here's Why I Keep Extra Cash in My Checking Account -- Even When I Can Transfer Easily From Savings

It's a system that makes sense for me.

I'm the sort of person who gets stressed out when I'm unable to save money. Even if there's a month when I'm hit with a giant unplanned bill, like a car or home repair, I tend to get down on myself if money doesn't manage to land in my savings account.

But as much as I don't like not saving, I also don't like raiding my savings account unless it's absolutely necessary. And that's why I make a point to keep more money than I need for upcoming bills in my checking account -- even though doing so means forgoing interest on that cash.

It's all about what sits best mentally

As a general rule, it's a good idea to keep a little extra money in your checking account beyond what your monthly bills cost you. First of all, you never know when a glitch within your company's payroll system might delay your paycheck, so it's a good idea to have extra cash on hand so you can pay your bills without stress.

But I like to keep several extra thousand dollars in my checking account. That way, if an unplanned expense pops up, I can take a withdrawal from there before having to tap my savings.

Now I'll be the first to admit that this system doesn't make a lot of financial sense. Since I bank online, I can instantly transfer money out of my savings account and into my checking account.

So, let's say that after paying my bills, I only have $1,000 left in my checking account, but I run into a home repair that costs $4,000. I can transfer another $3,000 on the spot if needed and then write a check against it.

But while that's a good option logistically -- namely because it allows me to earn interest on that extra money by keeping it in a savings account, not a checking account -- mentally, it isn't. Even though I know the purpose of having savings is to have funds to tap in an emergency, it bothers me to pull from my savings. And so I try to avoid it when possible by keeping more money than I need in my checking account.

The only exception is the separate savings account I have earmarked for vacations. It doesn't bug me to tap that account because it's expressly designed to pay for trips, and also, to be used up shortly after it's funded.

Rather, it bothers me to touch my emergency and longer-term savings. And so I figure it's worth giving up a small amount of interest earned on that money to spare myself that mental stress.

Do what's best for you

From a financial standpoint, if you can transfer money instantly between your savings and checking account, then it may not pay to pad the latter account so much. But if you're like me and it upsets you to take savings account withdrawals, then overfunding your checking account could be a much better move for your mental health.