Experts Advise Optimal Cash Allocation Between Checking Accounts and Savings in Israel

Financial advisors emphasize that there is no one-size-fits-all amount to keep in a checking account versus savings, as individual circumstances vary. Checking accounts should primarily cover monthly expenses and provide a short-term safety buffer, rather than serve as a permanent cash reserve. For example, a family spending 20,000 shekels monthly might keep 25,000 to 30,000 shekels in their checking account, while transferring the rest to savings or deposits.

Holding large sums in checking accounts results in lost potential returns and erosion due to inflation. A sum of 100,000 shekels could yield about 3% annually in a conservative investment, equating to a 3,000 shekel loss if left idle in a checking account. However, moving all funds into fixed deposits or the stock market risks liquidity issues and market volatility. The recommended approach divides funds into three layers: money for the upcoming month, an emergency fund covering several months of expenses, and medium- to long-term savings.

For instance, someone with 150,000 shekels in checking but monthly expenses of 15,000 shekels likely holds too much cash, while holding only 5,000 shekels against 20,000 shekels in monthly expenses is risky. The goal is balancing liquidity, security, and returns. Conservative investment options include one-year government bonds (Makam) yielding 3.22% to 3.31% with 15% tax on nominal gains, and money market funds taxed 25% on real gains after inflation, with low management fees and daily liquidity.

Though returns on deposits and conservative instruments are modest, they outperform idle cash in checking accounts. Ultimately, leaving excess money in checking accounts results in a loss of value over time. This guidance was published on August 29, 2026, by Bizportal.