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Your checking account is only one part of a smart banking setup.
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An ATM installation at Art Basel Miami Beach is displaying and ranking people’s bank balances.
Typically, experts recommend keeping only a small part of your money in checking.
The rest should go into savings and investments depending on your risk tolerance, timeline, and goals.
An ATM installation at Art Basel Miami Beach is displaying attendees’ bank account balances for everyone to see.
Shown in a viral video posted on Twitter by Joel Franco, the ATM is an art installation by Brooklyn-based group MSCHF that invites spectators to swipe their debit card, then displays their picture along with their balance, which is ranked on a leaderboard. So far, a man with $2.9 million is top of the leaderboard, reports Insider’s Pete Syme, while someone with $48,000 couldn’t crack the top 20.
An ATM is typically used in conjunction with a checking account, which would mean people have tens of thousands — even millions — readily accessible. But what about the rest of us? How much are we supposed to have in our checking accounts?
A checking account shouldn’t hold all your money
A checking account is only one part of a smart banking setup. It serves as an intermediary for your money: Your paycheck might be deposited there, your bills will be paid from there, and it’s where you withdraw cash. While it’s better than keeping your cash under your mattress, experts typically don’t recommend keeping all — or even close to all — of your money in checking.
Financial planner Marci Bair of Bair Financial Planning in San Diego, California, previously told Insider that anyone with a steady income should keep “no more than about two months of expenses” in checking at any given time. That’s because while you want enough money in your account to cover your monthly bills, there’s greater opportunity for your money to grow elsewhere, like in retirement accounts, brokerage accounts, CDs, or high-yield savings accounts.
See Insider’s picks for the best checking accounts »
How you decide which money goes where depends on your goals, your timeline, and your risk tolerance. For instance, you’d invest retirement savings because you have decades to weather market fluctuations. But if you need the money in the next five years, you might opt for high-yield savings to keep it close at hand. High-yield checking is an option, but even the high-yield option doesn’t pay as much interest as savings (currently around 3%), CDs (currently around 4%), or the stock market (which has returned about 14% over the past 10 years).
And remember: You can have multiple accounts of any kind. Personal finance expert and author Tiffany Aliche previously told Insider that she recommends anyone have four bank accounts for a low-effort, high-reward budgeting strategy: two checking accounts, and two savings accounts. One checking account is for bills, and the other is for spending via debit card. One savings account is for your emergency fund, and the second is for other goals. And that doesn’t even touch investments.
So, back to Art Basel: Should you keep $2.9 million in checking?
It depends on how much you’re spending a month.