What to Do With That Extra Cash in Your Checking Account

Because of inflation, that money is losing purchasing power, so don’t let it sit on the sidelines. Here are three ways to put it to work for you.

A young man smiles as he looks at his laptop screen and his smartphone in his living room.
(Image credit: Getty Images)

Many people are wary to invest, but if you have extra cash sitting around, you can still make it work for you.

In the latest Quarterly Market Perceptions Study from Allianz Life, just 19% of Americans said they are comfortable with current market conditions and ready to invest now. That is down from 26% last quarter and 29% at this time last year.

What’s more, 64% said they would rather have their money sit in cash than endure market swings.

This feeling is likely driven by worry about market volatility and the risk of a recession. The majority of Americans (77%) said they think the market will continue to be very volatile in 2023. And 62% said they worry a major recession is right around the corner.

Listen, don’t have your money just sit in cash on the sideline not working for you. Instead, consider making decisions that can set you up for a more secure financial future. Financial consultants recommend that you have up to three months’ worth of expenses in cash set aside as an emergency fund — this is likely sound advice and not the cash we’re discussing here.

The risks posed by inflation or a prolonged market downturn are real. And for people approaching or in retirement, the tolerance for risk is likely lower than those who have years ahead to rebuild their portfolio if a recession hits. But, leaving money in cash doesn’t address one of Americans’ largest concerns these days — inflation. With today’s inflation, you are likely losing purchasing power letting your money sit in an everyday checking account.

Here are three things to consider doing with your money instead.

Kelly LaVigne, J.D.
Vice President, Advanced Markets, Allianz Life

Kelly LaVigne is vice president of advanced markets for Allianz Life Insurance Co., where he is responsible for the development of programs that assist financial professionals in serving clients with retirement, estate planning and tax-related strategies.