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). 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.