Money Foundations · 8 min read
Where Cash Should Live
The spread between the best and worst place to hold cash is roughly $2,400 a year on $60,000.
Reviewed by Jonathan Shafer, DO, July 2026. Disclosure: the reviewer is the founder and owner of Attending Financial LLC. This is education, not individualized financial advice.
The $60,000 sitting in checking
A typical attending household lets $40,000–80,000 accumulate in a checking account paying essentially nothing. Nobody decided that — it just piled up between residency and the first busy years. At a big-bank rate of 0.05 percent, $60,000 earns about $30 a year. In a high-yield savings account paying around 4 percent, the same dollars earn about $2,400. Same money, same FDIC insurance, same one-week effort to move it. This module is the ten-minute version of what the money already sitting in your accounts should be doing.
High-yield savings account (HYSA)
A savings account — usually at an online bank — paying an interest rate near the Federal Reserve’s short-term rate, instead of the near-zero rate at branch banks. Same FDIC insurance, same liquidity; the difference is overhead and whether the bank is counting on your inertia.
Start with the single highest-yield-per-minute move in personal finance.
Why it matters: The gap between a big-bank savings rate (~0.5 percent) and a competitive HYSA (~4 percent in 2026 — it moves with the Fed) is not a rounding error. On a physician-sized emergency fund it is one to two thousand dollars a year, every year, for one afternoon of setup.
The five parking spots
Tap each card. Every dollar of cash you hold lives in one of these — each trades yield against access.
Checking
For money in motion — one to two months of outflows. Pays ~0 percent by design. Anything beyond the monthly buffer parked here is a silent donation to the bank.
High-yield savings
The emergency-fund home. FDIC-insured, next-day access, market-rate interest (~4 percent in 2026, floats with the Fed). The default answer to “where should my cash be?”
Money market — fund vs account
Two different things with one name. A money market ACCOUNT is a bank product with FDIC insurance. A money market FUND is a brokerage investment holding T-bills — not FDIC-insured (SIPC covers broker failure, not the investment). Yields are similar; know which one you own.
Certificates of deposit (CDs)
You lock money for a term (3 months–5 years) for a fixed rate, FDIC-insured. Early withdrawal costs months of interest. Useful when you want to lock today’s rate for a known future expense — not for the emergency fund.
Treasury bills
Short-term loans to the U.S. government, backed by its full faith and credit. Interest is exempt from STATE income tax — a real edge for physicians in California, New York, or New Jersey. Bought at a brokerage or TreasuryDirect.
$250,000 per depositor, per insured bank, per ownership category
Deposit insurance is the reason a bank account is different in kind from an investment. If the bank fails, you are made whole — automatically, usually within days.
Source: FDIC (NCUA provides the same coverage at credit unions)
The name collision that catches everyone
This distinction shows up on real balance sheets — including physicians’.
Which of these is NOT FDIC-insured?
A money market FUND is an investment — a mutual fund holding short-term government debt. It is very low risk, but it is not a deposit: no FDIC. SIPC protects you if the brokerage itself fails, not against the fund losing value. The other three are insured deposits.
The cost of parking in the wrong spot
A $45,000 emergency fund, held for one year.
Bottom line: About $1,800 a year for changing where the same dollars sleep — with identical insurance and identical access. There is no other hour in finance that pays a physician this well.
The $80,000 checking account
Two years into your attending job, $80,000 has accumulated in checking. Monthly outflows are about $12,000.
What do you do with it?
Leave it — it feels safe and available
It is safe from the market and exposed to inflation. At ~3 percent inflation and ~0 percent interest, this "safe" pile loses about $2,400 of purchasing power a year, invisibly.
Move all $80,000 into the market
Now you have no cash buffer, and a bad month — a disability gap, a roof, a job transition — forces you to sell investments at whatever price the market is quoting that day. Cash has a job; the job is not growth.
Tier it: ~$15k checking buffer, 3–6 months of essentials in an HYSA, invest the rest — the better choice
Correct. One month-plus of outflows stays in checking for friction-free bills. Your emergency fund — 3 to 6 months of essential expenses — moves to an HYSA where it earns market rate. Everything above that is long-term money, and the arithmetic favors investing it over holding it as cash.
The parking spots, side by side
Rates are illustrative 2026 figures — the relationships between rows are the durable part.
| Vehicle | Yield (2026, approx.) | Access | Insurance |
|---|---|---|---|
| Checking | ~0% | Instant | FDIC |
| Big-bank savings | ~0.5% | Instant | FDIC |
| High-yield savings | ~4% | 1 day | FDIC |
| Money market fund | ~4% | 1–2 days | SIPC only |
| 12-month CD | ~4% locked | Locked (penalty) | FDIC |
| Treasury bills | ~4%, state-tax-free | At maturity / sale | U.S. Treasury |
What to do this week
- Checking holds one to two months of outflows — no more. It pays nothing by design.
- The emergency fund — 3 to 6 months of essential expenses — commonly sits in a high-yield savings account with FDIC insurance.
- Money market fund ≠ money market account. The fund is an investment (no FDIC); the account is a deposit.
- CDs and T-bills lock a rate for a known date; T-bill interest skips state income tax — real money in high-tax states.
- FDIC covers $250,000 per depositor, per bank, per ownership category. A physician couple can structure well past $500,000 of coverage at one bank.
Do this next: Open your banking app and find the actual APY on your savings account. If it starts with a zero, multiply everything beyond your checking buffer by the gap to a ~4 percent HYSA — that is what leaving it there costs each year.
Residency curriculum · lesson 13 of 38
Next: Disability Insurance for Physicians.
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Create a free account to continue →Keep reading
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