How Much Should I Have in Savings? - NerdWallet (2024)

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How much savings should I have?

There is no one-size-fits-all answer to the question of how much money you should have in your savings account. The standard recommendation is to have enough to cover three to six months’ worth of basic expenses. As a goal, that number can be steep. In reality, you can benefit from saving any amount.

When it comes to setting your target, the right number for you will take into account your expenses and how much you’re able to save consistently.

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Find your target savings number

To determine how much you need in savings, it helps to know how much you’ll need to keep up with your most important bills for a few months if you lose income. To start, figure out how much you typically spend to pay your bills. You can do this by reviewing recent bank and credit card statements.

Consider the essential expenses, such as rent or mortgage payments, insurance premiums, loan and other debt payments, as well as spending on groceries and transportation. Don’t include expenses that you’d cut in an emergency, such as concerts.

» Need help paying bills? Read more on how to prioritize your bills and find help

Save consistently

Say your core monthly expenses total about $3,000. Having enough saved to cover three to six months' worth of expenses means you’ll need to have between $9,000 and $18,000 saved. You can use this savings goal calculator to see how much you'd need to save every month to save up for your goal, depending on when you hope to achieve it.

If putting away that amount of money is daunting, try not to focus on the end amount. Saving money consistently, regardless of amount, is how you can build financial security. If you get paid once a week and you’re able to save $25 with each paycheck, you’ll have about $650 saved after six months. That could potentially pay for an unexpected expense without your having to take on debt.

Consider setting up a recurring auto transfer from your checking to your savings account. As long as it won't cause you to overdraft your account, it's a good tool for maintaining consistency.

» For more savings tips, read NerdWallet’s guide on how to make a savings plan

🤓Nerdy Tip

Savings accounts at banks are federally insured by the Federal Deposit Insurance Corp. (and by the National Credit Union Administration for credit union accounts), up to $250,000 per depositor, for each ownership category (such as joint accounts and single accounts), per insured institution.

You could also look for small ways to reduce optional expenses and then put that extra cash into an FDIC- or NCUA-insured emergency fund. For example, consider free, community-sponsored activities for weekend entertainment. You don’t have to cut everything you enjoy — but sometimes small tweaks can help you save more cash.

» Want to explore more? Read about ways to earn extra money

Maximize your savings

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» LISTEN: NerdWallet's Smart Money podcast explores how to score a bank bonus

Once you have a plan to save regularly, make your money work hard for you by depositing it into a high-yield savings account. The best savings accounts have low or no monthly fees and earn strong rates.

Consider that the average rate for savings is only 0.46%, according to the FDIC. And some of the largest banks have savings accounts that earn only a 0.01% annual percentage yield. With that yield, if you deposited $3,000, you’d earn less than $15 in interest after a year.

On the other hand, if you put that same $3,000 in a high-yield savings account that earns a 4% APY, it would earn more than $120 after a year. That’s a nice chunk of money for simply picking a better account, one that earns much more than the FDIC average. And that interest also earns interest over time. This is called compound interest, and it helps your savings grow even more.

Use NerdWallet’s savings calculator to add up how much your savings balance could grow.

» Ready to start earning higher yields? Learn about the best places to save money and earn interest

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Save for nonemergencies

Building an emergency fund is important for your financial health, but you might have other savings goals, too.

Saving for a rainy day (or a fun one)

Once you’ve built up your emergency fund, consider saving for expenses that aren’t necessarily emergencies but also aren’t part of your regular budget (think replacing an older appliance or taking care of minor home maintenance needs). For those types of costs, consider creating a rainy day fund in a separate savings account.

You could also treat yourself by opening a savings account for something fun, such as a vacation.

Keep savings for different goals separate to avoid dipping into emergency funds for nonemergencies. Some banks and credit unions allow you to open several subaccounts for different savings goals, helping you stay organized.

Other types of savings accounts

If you’re fortunate enough to have money to spare, consider ways to earn even higher yields. Certificates of deposit, for example, often earn higher rates than savings accounts and are an option if you don’t need access to your cash for months or years. As with savings accounts, CDs are also federally insured up to $250,000 per depositor. Check out NerdWallet’s list of best CDs to learn about current rates.

Money markets are another type of savings account, but unlike regular savings options, some MMAs come with debit cards and the ability to write a few checks each month. However, some MMAs also have higher deposit minimums and monthly fees. The best MMAs have lower fees and competitive rates.

»MORE: Should I keep accounts open at multiple banks?

Investing and saving for retirement

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If your goal is to save larger amounts of money, you could also look into investing. This is a longer-term strategy to grow wealth. Returns can be higher than savings account yields, but they are not guaranteed. Read NerdWallet’s guide on how to invest money to learn more.

Saving for retirement is another consideration. There are special accounts, including individual retirement accounts and 401(k) plans, that give tax advantages for saving until you are close to or at retirement. Read NerdWallet’s primers on IRAs and 401(k) plans to learn about these accounts and how to determine your target retirement savings amount. The earlier you start saving for retirement, the more time your money will have to potentially grow. You can use this retirement calculator to try out different scenarios to see how much you could have in your retirement account at different ages.

The recommended amount of money to have in savings is different for each person. But as long as you make deposits regularly and make sure you earn an attractive interest rate, you can build a savings balance that is right for you.

Frequently asked questions

How much money should I keep in savings vs. checking?

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.

How do I estimate three to six months of living expenses?

Review recent bank and credit card statements and add up how much you typically spend on your most important bills. Consider only essential expenses, such as rent or mortgage payments, insurance premiums, debt repayments, and spending on groceries and transportation.

What are features of the best savings accounts?

The best savings accounts tend to have high annual percentage yields and low or no monthly fees. Many tend to be online savings accounts. Online banks are federally insured — just like big banks. They are able to save the cost of branches and bank tellers, and they can pass the savings on to customers in the form of low fees and strong rates.

How Much Should I Have in Savings? - NerdWallet (2024)

FAQs

How Much Should I Have in Savings? - NerdWallet? ›

Overall, there is no one answer for how much you should have in savings, but an ideal target for an emergency fund is enough to cover three to six months' worth of basic expenses. If you're able to save 20% of your take-home income each month, for example, you may be well on your way.

What is a reasonable amount of money to have in savings? ›

A rule of thumb is to set aside 50% of your income for necessities, 30% for discretionary expenses and 20% for savings.

Is $5,000 enough for savings? ›

Saving $5,000 in an emergency fund can be enough for some people, but it is unlikely sufficient for a family. The amount you need in your emergency fund depends on your unique financial situation.

Is $20,000 a good amount of savings? ›

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.

What is the 50 20 30 rule? ›

One of the most common types of percentage-based budgets is the 50/30/20 rule. The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings. Learn more about the 50/30/20 budget rule and if it's right for you.

Is $2000 enough in savings? ›

There is no one-size-fits-all answer to how much you should keep in an emergency fund, but Orman said that $1,000 to $2,000 is usually enough. “With an emergency savings account, if you have $1,000 in there, you have $2,000 in there, great,” she said.

Is $100 000 a good amount in savings? ›

When your savings reaches $100,000, that's a milestone worth marking. In a world where 57% of Americans can't cover an unexpected $1,000 expense, having a six-figure savings account is commendable.

Is $500 a month enough saving? ›

Investing $500 a month could make you a millionaire in 30 or 40 years. You don't need to be a financial expert, but understanding how to build a balanced portfolio will go a long way.

How much do most 21 year olds have saved? ›

According to a study by Merrill Lynch, the average 21-year-old has saved $5,887. That's certainly not bad, but it's also not a lot of money when you consider that number could be used for a down payment on a house or to cover a year's worth of living expenses.

How many people have $5,000 in savings? ›

About 29% of respondents have between $501 and $5,000 in their savings accounts, while the remaining 21% of Americans have $5,001 or more. Few hold much cash in their checking accounts as well. Of those surveyed, 60% report having $500 or less in their checking accounts, while only about 12% have $2,001 or more.

How many people have 20k saved? ›

Most Americans have $5,000 or less in savings
Savings account balancePercentage of respondents
$1,001 to $5,00022%
$5,001 to $10,0008%
$10,000 to $20,0007%
Over $20,00014%
3 more rows
Oct 18, 2023

Where should I be financially at 35? ›

One common benchmark is to have two times your annual salary in net worth by age 35. So, for example, say that you earn the U.S. median income of $74,500. This means that you will want to have $740,500 saved up by age 67. To reach this goal, at age 35 you may want to have about $149,000 in savings.

What percentage of people have $20000 in savings? ›

Other answers revealed that 15 percent had between $1,000 to $5,000, 10 percent with savings of $5,000 to $10,000, 13 percent boasted $10,000 to $20,000 of cash in their bank accounts while 20 percent had more than $20,000.

How much should a 30 year old have saved? ›

Fidelity suggests 1x your income

So the average 30-year-old should have $50,000 to $60,000 saved by Fidelity's standards. Assuming that your income stays at $50,000 over time, here are financial milestones by decade. These goals aren't set in stone. Other financial planners suggest slightly different targets.

Is $4000 a good savings? ›

Are you approaching 30? How much money do you have saved? According to CNN Money, someone between the ages of 25 and 30, who makes around $40,000 a year, should have at least $4,000 saved.

How much money should I have left over at the end of the month? ›

The 20% rule is a good general guide, but it isn't the right fit for everyone. Some people can save above that rate, while others merely struggle to make ends meet. “Some people pay their rent and they have nothing left.

Is $300 K in savings good? ›

The short answer to this question is "Yes". If you've managed to save $300k successfully, there's a good chance you'll be able to retire comfortably, though you will have to make some compromises and consider your plans carefully if you want to make that your final figure.

How much does the average 25-year-old have saved? ›

The Fed's most recent numbers show the average savings for the age group that includes 25-year-olds is $20,540. The median savings is $5,400. Having relatively modest savings in your 20s is nothing unusual if you are still in college or have recently graduated.

How much money should I have saved by 30? ›

If you're looking for a ballpark figure, Taylor Kovar, certified financial planner and CEO of Kovar Wealth Management says, “By age 30, a good rule of thumb is to aim to have saved the equivalent of your annual salary.

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