Ramit Sethi says 'people with a lot of money' often keep this much cash in their checking account — and it's a very common mistake. Are you doing it, too?

He says this practice is often a sign of financial anxiety among the affluent: “When I talk to wealthy people who worry about money, one big tipoff is that — almost always — they keep a small amount in their checking account.”

Why they do it

Sethi, who hosts the “I Will Teach You To Be Rich” podcast, says there are two underlying reasons why wealthy individuals keep small sums in their checking accounts.

“It’s usually driven by: 1. They used to not have enough, so all extra money was being used; 2. They think they should invest all excess cash and money sitting in checking is being ‘wasted’,” he explained.

This mindset appears sensible. It's logical to assume that if your checking account has sufficient funds for upcoming transactions, you can allocate any surplus to a savings account for interest accrual or invest it elsewhere for potentially higher returns.

Sethi, however, argues that this mentality can prevent individuals from achieving their desired outcomes: “Unfortunately, their beliefs are not getting them the results they want!”

The solution

Sethi’s solution is straightforward: “Just keep more in your checking account.”

He contends that keeping an additional $5,000 or $10,000 in a checking account won’t significantly impact a wealthy individual’s financial situation. Meanwhile, this strategy can provide a buffer that allows them to operate with more flexibility than a strict monthly budget might permit.

Sethi observes a noticeable shift in sentiment when individuals follow this strategy: “When they make this change, they instantly feel better about their money.”

He points out that there is a psychological advantage to seeing a higher balance in one’s checking account, regardless of one's financial status.

“Remember that most people — wealthy and non-wealthy alike — derive a sense of comfort from what they see in their checking account,” he wrote.

While Sethi’s post has received more than 642,000 views on X, not everyone agrees with this approach. One X user asked whether that $10,000 would be better kept in a higher-yield account earning 2.7% or more.