6 Things To Do Now if You Have More Than $5,000 in Your Checking Account

Being fiscally responsible means saving some money, where possible. But there’s such a thing as having too much in the bank.

When you reach certain milestones, like having more than $5,000 in your checking account, it’s a good idea to put your money to work for you so it’s not sitting stagnant.

So, what should you do if you have this tidy sum in your account? When I worked for a financial planner years ago, they cautioned me never to let money sit. Rather put it to work for you, and here are just some of the things I did to boost my financial standing.

Avoid Keeping Too Much in Your Checking Account

The FDIC insures up to $250,000, but that doesn’t mean you should ever really keep that much in your checking account, or anywhere close to it. Rather, keep at least 30 days worth of expenses within and then move the rest.

Money sitting in your checking account isn’t doing any good and if you have extra money, you really should put it to work for you. There are always ways to grow your balance. It’s how you choose to do it that matters.

1. Pay off Existing Debts

That’s right. Don’t go throw a huge party or take a lavish vacation. Instead, pay off some of your high-interest debt if you have it. That might mean a credit card or a personal loan. If you have multiple credit cards, attack the ones costing you more in interest first.

While it’s not as fun as a shopping spree or cruise, paying down your debts will afford you the opportunity to do those kinds of things more in the future.

2. Save, Save, Save

It sounds so boring, I know. But honestly, saving is paving the way to financial freedom. But don’t make the rookie mistake of keeping your money in your savings account, especially if it’s a low- or no-interest account.

There are high-yield accounts that often have some restrictions, such as a minimum daily balance and a limited number of withdrawals. Or, if you’re looking for a long-term savings solution, you could invest in a Certificate of Deposit (CD) or a money market account. Both have their perks and only you can decide what’s best for you.

3. Look at Long-Term Investments

If you’re confident that you’re not going to need that money anytime soon, then consider long-term investments where you can ride the market. These include stocks and bonds, mutual funds, and exchange-traded funds, also called ETFs.

Don’t be afraid to call in a financial expert if you’re not sure where to start. It’s not worth risking losing the money when there are plenty of qualified planners and brokers who can help.

4. Prepare for the Future

Retirement may seem a long way off for some, but the reality is time flies so quickly, it’ll be here before you know it. And that’s not the time to be caught penniless. The time to prepare is now. Whether you have a 401k, or a traditional or Roth IRA, make sure you max out your contributions whenever you can.

If you have no desire to spend the rest of your life working and plans to not just survive but enjoy your retirement, as one should, toss more at your retirement accounts.

5. Open a Brokerage Account

A brokerage account is not to be confused with a bank account. It’s opened through a brokerage company and the money within is used for the sole purpose of investing. With this, you can open the door — if you’re new to it — and handle multiple types of assets such as mutual funds, stocks, and bonds.

There are many brokers, such as Charles Schwab, public, and Robinhood, to choose from. Just do your research and make sure you understand the options available to you.

6. Do Something for Yourself

This is a no-brainer because if you’re so restrictive with your spending, it’s just another form of deprivation, and we all know how that goes. Instead, go ahead and treat yourself, you’ve worked hard. You deserve it.

Just maybe don’t spend all of your extra. Save some for a rainy day and then save some more for the future.

When Not To Move the $5,000

This has to be said. If your monthly expenses hover around $5,000 a month, then don’t cut it close by investing the money you need to pay your bills. Rather, take a look at your budget and see if there are areas where you can trim the fat, so to speak.

That will allow you to decrease your monthly expenses and have more financial freedom, plus the opportunity to take advantage of some of the investments we mentioned.

How Much To Invest

Here’s the thing. That amount is going to be subjective, because all of our financial situations are different. What’s expendable for Warren Buffet, for example, definitely isn’t expendable for the average American.

Be fiscally smart and make sure you have enough money in the bank to cover your expenses. Then, make sure you have enough to pad your emergency fund, money that you can draw on when you need it. High-yield savings accounts, for example, are a good bet. Tying up money in a long-term investment that’ll take years to mature… only if you have the emergency fund.