19fe8d2794f074061c2db72bb6686b26 - What is the Ideal Amount of Money to Keep in Savings?
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You have some money put aside in savings, but you’re not sure if it’s enough. As a financially responsible person, you want to make sure you have enough cash to fund both unplanned expenses and future financial goals. A good rule of thumb for a savings target is to store enough to where three to six months’ worth of expenses are covered. Whether it’s your regular savings account or an emergency savings account, it’s important to set achievable financial goals.

How Much Money Should Be in Your Savings Account?

A common question people might find themselves wondering is: How much should I have in savings? Generally speaking, experts recommend saving 20% of your income. Known as the 50/30/20 rule, this can serve as a guide to help streamline your budget. This guide works by putting 50% toward necessities and the remaining 30% toward discretionary items. For example, if you earn $1,000 per month, you would allocate $500 for necessities, $300 for discretionary items and $200 for savings.

However, certified financial planner Shon Anderson of Anderson Financial Strategies told CNBC Select that this “gold standard” won’t apply to every unique situation. Instead, he advises trying an 80/20 ratio that involves saving 20% of your income and allocating 80% for needs and discretionary spending. “The point with both these methods is that saving 20% is still a priority,” Anderson said. 

Different Savings Goals Require Different Amounts

As you move through life, it’s natural for your financial goals to change. While you might be focused on covering short-term emergencies at one point, it’s likely you’ll graduate to consider long-term savings goals too. Below is a look at some of the different savings goals, which each require a different approach to savings amounts.

Building an Emergency Fund

As noted above, experts recommend putting aside at least three to six months’ worth of savings to cover expenses that arise as a result of an emergency. This would be money separate from a standard checking account or savings account and is known as an emergency fund.

You can determine your own emergency fund goal. Start by determining how much money you spend each month. Then multiply your expenses by the number of months you want an emergency fund to keep you afloat. For example, if you spend $1,000 per month, then your emergency fund goal might fall between $3,000 and $6,000.

Saving for Retirement

Investment accounts and retirement plans are as unique as your individual finances. The amount you should have saved depends on the age you plan to retire, your savings rate and your desired lifestyle.

Saving for retirement typically takes decades. But getting an early start on saving for this big goal in a 401(k) or an individual retirement account can make the process easier.

5 Tips To Grow Your Savings

You’ve found the answer to the question “How much should I have in savings?” If your ideal amount doesn’t match the balance currently in your account, it’s time to make some changes to your spending habits. Here are a few tips to help boost your savings in no time:

  1. Automate savings contributions
  2. Create a budget
  3. Make a debt repayment strategy
  4. Take on a side gig
  5. Cancel unused subscriptions

1. Automate Savings Contributions

Saying you’re going to put a certain amount of money from each paycheck into your savings account is easy, but actually doing it can be hard. Reduce the temptation to spend the money elsewhere by having it automatically deducted from your account.

2. Create a Budget

Finding extra room in your paycheck to commit to savings can be hard, especially if you don’t know where your money is going. Take a close look at your spending habits, then make a budget to help reduce expenses.

3. Make a Debt Repayment Strategy

If you’re in debt — such as carrying balances on several credit cards — this is impeding your ability to save. There’s never been a better time to make a plan to pay off your debt once and for all.

This might involve consolidating your monthly payments into one to lower your interest rate or simply putting extra money toward the balance with the highest interest rate. Find the strategy that best meets your needs and stick to it.

4. Take On a Side Gig

Earn extra money to bulk up your savings by picking up another job. This could be anything from serving as a rideshare driver on the weekends to picking up a part-time virtual assistant job. Put your earnings from this gig directly into savings.

5. Cancel Unused Subscriptions

Chances are, you’re paying for at least a few streaming platforms, apps and services you don’t use. Be honest with yourself about the level of both use and enjoyment you’re getting from them, and cancel those you don’t need. Send the money you were paying for these subscriptions directly to your savings account.

Fixed Expenses vs. Variable Expenses

When creating a budget and analyzing your expenses, it is good to understand the difference between fixed and variable expenses. When you understand where you are spending money, it makes it easier to account for where you can save money.

Fixed Expenses 

You can categorize your fixed expenses as regular bills that typically don’t vary monthly. Here are some common examples of fixed expenses:

  • Student loans
  • Rent 
  • Mortgage payments
  • Insurance
  • Child support or alimony 
  • Utilities 
  • Cellphone

Variable Expenses

Essential or nonessential items can be considered variable expenses, as they will fluctuate in cost throughout the month. Here are some common variable expenses:

  • Living expenses
  • High-interest debts
  • Credit card bills
  • Groceries
  • Eating out and entertainment
  • Gas
  • Car maintenance
  • Clothing

Final Take To GO 

Most financial experts recommend building up enough savings to cover three to six months’ worth of expenses. However, there’s no need to panic if you don’t have anywhere near this amount. Just remember, working to increase your savings account takes time. Instead of feeling discouraged about how long it will take to reach your goal, be proud of yourself for all your hard work and celebrate your increased account balance every time you make a deposit.


Here are the answers to some of the most frequently asked questions regarding how much to have in savings.
  • Is $20,000 a good amount of savings?
    • $20,000 can be a healthy amount of savings, but this largely depends on several factors, including your financial goals, age, income, lifestyle or choice of retirement account.
  • Is $5,000 in savings a lot?
    • $5,000 can be considered a lot of savings. But it depends on what you plan to use those savings for, your financial situation and your overall financial goals.
  • How much should I have in savings for emergencies?
    • In general, experts agree that you should have between three to six months’ worth of expenses saved. For example, if you spend $2,000 per month, then a good amount of emergency savings might range from $6,000 to $12,000. But you might decide to save more or less based on your financial situation.
  • Can I have too much money in a savings account?
    • Tucking money into a savings account is an important part of building a bright financial future. But in general, it’s a good idea to invest some of your funds to build wealth for the future. If you keep too much of your net worth in a savings account, you could miss out on growth opportunities.

Explore More on Savings Accounts

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  • Types of Savings Accounts: Where Is the Best Place To Put Your Savings?
  • How To Open a Savings Account in 4 Steps
  • Checking vs. Savings Accounts: What’s the Difference?
  • 7 Strategies To Grow Your Savings Account to $1 Million
  • Best Savings Accounts

Sarah Sharkey and Jennifer Taylor contributed to the reporting for this article.

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