How Much Money Should You Keep In Your Savings Account? (2024)

FAQs

How Much Money Should You Keep In Your Savings Account? ›

You should keep enough money in checking to cover your monthly bills with some wiggle room – about a month of expenses. That's much lower than the three to six months' worth of expenses you should keep in your savings account for emergencies.

For savings, aim to keep three to six months' worth of expenses in a high-yield savings account, but note that any amount can be beneficial in a financial emergency. For checking, an ideal amount is generally one to two months' worth of living expenses plus a 30% buffer.

A healthy, average savings account balance varies by age, income and personal goals, but generally, you should have enough to cover three to six months of expenses.

Put 20% of your income into savings

As well as putting money aside for a 'rainy day', there are lots of things you could save up for, such as home refurbishments, a holiday, a new car, or even a deposit on your first home.

Saving $5,000 in an emergency fund can be enough for some people, but it is unlikely sufficient for a family.

Reserve 20% of your income for savings, including contributing to retirement funds and building an emergency fund. This ensures you are prepared for unexpected expenses and can work towards your long-term financial goals.

But it is possible to live well even on a small amount of money. Surviving on $1,000 a month requires careful budgeting, prioritizing essential expenses, and finding ways to save money. Cutting down on housing costs by sharing living spaces or finding affordable options is crucial.

Rule of thumb? Aim to have three to six months' worth of expenses set aside. To figure out how much you should have saved for emergencies, simply multiply the amount of money you spend each month on expenses by either three or six months to get your target goal amount.

How much does the average American have in savings? Excluding retirement assets, the average American has $65,100 in savings, according to Northwestern Mutual's 2023 Planning & Progress Study. When looking at retirement savings, almost half of Americans don't have any money saved for retirement at all.

Savers say they typically set aside $985, on average, in a normal month, according to the survey. The median amount reported is $250. This includes money put in traditional savings vehicles such as certificates of deposit and savings accounts, but also kept as cash at home.

How much savings should I have at my age? ›

By age 35, aim to save one to one-and-a-half times your current salary for retirement. By age 50, that goal is three-and-a-half to six times your salary. By age 60, your retirement savings goal may be six to 11-times your salary.

How much is too much? The general rule is to have three to six months' worth of living expenses (rent, utilities, food, car payments, etc.)

Some strategies call for having 10 to 12 times your final working year's salary or specific multiples of your annual income that increase as you age. Consider when you want to retire, goals, annual salary, expected annual raises, inflation, investment portfolio performance and potential healthcare expenses.

Generally, experts recommend saving three to six months' worth of living expenses in an emergency fund. Ginty, however, suggests that people with children or dependents save more than that. “If you're a single parent, I'd recommend at least six months, but somewhere between six and 12 months.

As of May 2023, more than 1 in 5 Americans have no emergency savings. Nearly one in three (30 percent) people in 2023 had some emergency savings, but not enough to cover three months of expenses. This is up from 27 percent of people in 2022. Note: Not all percentages total 100 due to rounding.

Most financial planners advise saving 10% to 15% of annual income. A savings goal of $500 a month amounts to 12% of your income, which is considered an appropriate amount for that income level. Assuming your income increases by an average of 4% per year, this automatically increases your savings amount by 4%.

Having $20,000 in a savings account is a good starting point if you want to create a sizable emergency fund. When the occasional rainy day comes along, you'll be financially prepared for it. Of course, $20,000 may only go so far if you find yourself in an extreme situation.

There's no one-size-fits-all number in your bank or investment account that means you've achieved this stability, but $100,000 is a good amount to aim for. For most people, it's not anywhere near enough to retire on, but accumulating that much cash is usually a sign that something's going right with your finances.

First things first: There's nothing wrong with keeping $10,000 in a savings account. If you're working with a reputable bank, your money will have Federal Deposit Insurance Corporation (FDIC) insurance up to $250,000 per person per account ($500,000 for joint accounts). This protects your money even if the bank fails.