How much should you keep in checking?

The usual answers are a month of expenses or a round number. The real one is a date.

Ask around and you'll get the same handful of answers. A month of expenses. Two paychecks. A thousand dollars, because that's what the emergency fund advice says. None of them is wrong, exactly. They just answer a different question. None of them knows when your rent comes out, when you get paid, or that your car insurance lands three days before you do.

The number you need is smaller and more specific than any of those: how much has to be sitting in checking on the worst day of your month so that nothing bounces and you don't end up moving money around at the last minute.

The worst day has a date

Most months have one day where the balance is lower than on any other. It's usually somewhere in the middle, after a run of bills has cleared and before the next check lands. If you have enough on that day, you have enough all month. If you don't, no amount of "average monthly expenses" arithmetic helps, because averages don't know about the 14th.

Here's a month that looks fine at both ends and isn't fine in the middle.

A month that ends above where it started, and the day in the middle that decides how it felt.
DayWhat happenedBalance
1stPaycheck$2,600
3rdRent, $1,150$1,450
9thCar payment and insurance, $415$1,035
14thGroceries, gas, a subscription, $280$755
15thPaycheckBack above where it started

The month starts at $2,600 and ends higher. The day that decides whether it felt calm is the 14th, at $755. If the least you're comfortable seeing in the account is $500, that month was fine. If it's $800, the same month felt tight, and nothing went wrong to make it so.

Pick a floor, then find the day

Two numbers, and they do different jobs.

The floor is the amount you never want the balance to go under. Some people set it at zero and lean on overdraft protection. Most people want more than that, because a floor of zero means you only hear about a problem once you're already in it. There's no formula for it. A few hundred dollars is common. Enough to absorb one surprise bill is a decent rule if you want one.

The low point is the day your balance gets closest to that floor, and finding it takes a calendar with your paychecks and bills on their actual dates.

In Forecast Commander the floor is a field on each account. On a checking account it's called the Safety Floor.

The add account form: an Account Name field, an Account Classification dropdown showing Checking Account, and Starting Balance and Safety Floor fields side by side, above Cancel and Create Account buttons.The add account form: an Account Name field, an Account Classification dropdown showing Checking Account, and Starting Balance and Safety Floor fields side by side, above Cancel and Create Account buttons.
The floor is the fourth field on the account. Live capture, demo data.

Once it's set, everything that warns you is measured against it: the sentence at the top of the Command Center, the dashed line on the chart, and the red day on the calendar when there is one.

The chart view, headed Cash Flow Trajectory Curve with a 90 day projection, and a line beneath naming the safety threshold it is drawn against. A legend names four things: the projected curve, the available balance, the safety floor and activity days. A blue stepped line runs left to right from the start of the budget period, rising on paydays and falling between them, with the available balance as a dashed green line just beneath it; a shaded band marks the budget period, a dashed vertical line marks today, a dashed red safety floor runs across the bottom, and a dot sits on every day with activity, green where the day's items add up to money in and red where they add up to money out. Beneath the chart, a Daily Net Change strip: a green bar above its line for each day that added money and a red bar below it for each day that took money away.The chart view, headed Cash Flow Trajectory Curve with a 90 day projection, and a line beneath naming the safety threshold it is drawn against. A legend names four things: the projected curve, the available balance, the safety floor and activity days. A blue stepped line runs left to right from the start of the budget period, rising on paydays and falling between them, with the available balance as a dashed green line just beneath it; a shaded band marks the budget period, a dashed vertical line marks today, a dashed red safety floor runs across the bottom, and a dot sits on every day with activity, green where the day's items add up to money in and red where they add up to money out. Beneath the chart, a Daily Net Change strip: a green bar above its line for each day that added money and a red bar below it for each day that took money away.
The balance as a line, with the floor drawn under it. Where the line comes closest is the day.

What to do with the answer

If your low point clears the floor with plenty of room, you're keeping more in checking than you need to. That isn't a disaster, but it's money that could be earning something or paying something down.

If it doesn't clear, you have three moves. Move a bill's due date, since many billers let you pick one. Move money in before that day. Or lower the floor for a month and decide whether you can live with how that feels. What you don't have to do is carry a whole month of expenses in checking to solve a problem that lives on one day.

When the number changes

Rent goes up, a subscription gets added, a paycheck shifts a day. Each of those moves the low point a little. So keep the calendar: the app redoes the arithmetic every time something changes, and the sentence at the top tells you the new date.

Start your 35-day trial

The 35-day trial is free and needs no card, and the floor is a field on the first account you add. Read about the safety floor.

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