I have $12K in my checking account, but the bank told me it’s too much. Is that true? How to make the most of your money

The answers to those questions might depend on just one thing.

Keep enough to cover monthly bills

First and foremost, assess your own finances — figure out how much you need to live on each month. If you don’t already have a budget, then calculate your expenditures across the board: mortgage or rent, car payments, utilities, groceries and any other miscellaneous expenses.

As for the bank, the reason they don’t want you to keep $12K in a checking account is simple: They’d much rather you invest it with them instead.

Although you could keep all your funds in a checking account, this misses out on earning interest that competes with inflation. It also means you’re not tapping into institutional resources through the stock market via a brokerage account, not to mention retirement accounts.

Keep in mind that some monthly costs are unavoidable, especially for transportation and the roof over your head. While you can’t completely control some of these expenses, insurance is one area where you might be able to trim some of your monthly costs.

Here’s where to start if you’re looking to funnel as much money as possible from your checking account to your savings or investments.

Cut down on car insurance costs

The costs of owning a car have been on the rise across the board, and insurance is no exception. The average cost of auto insurance has risen 88% over the last decade, according to data from the U.S. Bureau of Labor Statistics (1).

And Americans are clearly looking for better options. Nearly 30% of Americans either dropped or traded down their insurance policies in 2025, according to a survey by independent insurance agency Guardian Service Holdings (2). Auto insurance was the most commonly pared back compared to home and health insurance.

Reducing or eliminating your coverage can be a dangerous gamble, though. Before making drastic decisions, consider shopping around for a better rate and policy.

With OfficialCarInsurance.com, you can compare rates for free.

Just answer a few quick questions and the platform will sort through leading insurance companies in your area, including top providers like Progressive, Allstate and GEICO, ensuring you find the lowest rate possible for you.

It’s also important to note that, typically, you can cancel your policy at any time — not just when the term is up for renewal. Just watch out for any early cancellation fees.

Don’t overpay for home insurance

Home prices and housing costs have also been rising steadily. The median sales price of a U.S. house has risen by 42% over the last decade (3). Meanwhile, renters' and homeowners' insurance increased by 16% for that same period (4).

Whether you are a homeowner or are currently saving up for a mortgage — home insurance costs are something you need to budget for.

OfficialHomeInsurance.com takes the hassle out of shopping for home insurance. In just under 2 minutes, you can explore competitive rates from top insurance providers, all in one place. OfficialHomeInsurance makes it easy to find the coverage you need at a price that fits your budget.

The side-by-side comparison is helping homeowners save an average of $482 on their home insurance policies.

Calculating the magic number

Many financial experts recommend keeping enough money in your checking account to cover one to two months’ worth of expenses.

So, if your bills work out to $2,500 a month, you’d want to have about $5,000 in your checking account. If you’re a seasonal or gig worker, you may want a bit more, just in case you’re having a slow month (or you’re stuck waiting to get paid).

It’s a good idea to have a bit of a buffer so your account doesn’t dip below $0 or the minimum balance, and you end up paying fees.

Make your extra cash work for you instead

While it’s important to have a buffer, you don’t want too much of a buffer. If you live on about $2,500 per month but have $12,000 sitting in your checking account, that money likely isn’t working for you. In fact, with rising inflation, your money would lose value over time.

That’s in part because most checking accounts don’t offer high interest rates. Savings accounts, on the other hand, can earn you more interest. And that’s why it could be worth shifting some of your checking account money into a savings account instead.

For instance, the national average interest rate on a checking account in the U.S. is just 0.07%, according to the FDIC (5).

Ideally, you want to earn enough interest to at least keep up with inflation — and, better yet, make a profit. The rate of inflation is 2.7% as of December 2025, which is significantly higher than the median interest rates offered by large banks (6).

Rather than using a low-interest checking account, you could keep your money in a readily accessible, high-yield account, such as a Wealthfront Cash Account.

This can be a great place to grow your emergency funds, offering both competitive interest rates and easy access to your cash when you need it.

A Wealthfront Cash Account currently offers a base variable APY of 3.30%, and new clients can get a 0.75% boost during their first three months on up to $150,000 for a total APY of 4.05%. That’s ten times the national deposit savings rate, according to the FDIC’s January report.