How Much Should I Have in Savings? Answered.

The unprecedented pandemic brought the importance of savings to light by hurting millions of Americans who did not (or were unable to) prioritize saving over spending. Those who had three to six months of expenses were more likely able to weather the storm. But how, exactly, can someone put away enough — and maximize their savings to be ready for the unexpected? Check out these savvy financial moves to help you along, wherever you may be in the savings journey.

Less than $1,000

If you’re just getting started, the most important move you can make is to establish an automatic savings plan. If you can save as little as $10 per week, you’ll have more in your savings account than 40% of the population, in less than a year. 

[ Read: The Best Savings Accounts

If you’re in debt from student loans, credit card debt, or you’re not making enough money at your current job, you can still set aside some money if you’re willing to make small sacrifices. Put together a budget to analyze and control your spending. And to make the plan work, set up automatic transfers from your paycheck or your checking account to your savings account. 

In addition, preserving the money you set aside for emergencies is essential. Set firm rules of what an emergency consists of. Kristine Seale, a Texas-based financial coach explains: “Your water heater blows, and you have to call the plumber and replace it. That’s an emergency. What’s not an emergency? Christmas gifts. We all know Christmas is coming, so ideally, saving a little each month is the best way, not raiding the emergency fund.”


The first $1,000 in savings is sometimes the hardest amount to reach. But once in the groove, you won’t miss the small amount you regularly contribute towards savings. At this point, you may want to be more ambitious with your savings plan. And adopt useful methods, like creating your own personal savings calculator and cut back on your expenses to pay off debt and increase savings. 

For many at this point, a side hustle may be the answer to fund a savings account faster. Consider picking up a gig as a delivery driver for Uber Eats or DoorDash. Or decluttering your home by selling things you no longer use on apps such as Decluttr, Ebay or Facebook Marketplace. The money you make can bump up your savings account to the next tier.


Todd Christensen, AFC, and author of Everyday Money for Everyday People says savings are for emergencies and short-term goals, not wealth-building accounts. “Don’t worry about interest rates. Worry about security and access,” he says. But once you get closer to the $10,000 mark, you may want to take a closer look at higher-yield savings to earn more on your money. 

[ Read: How to Lower Your Credit Card Interest Rate ]

Deciding to slow down your emergency fund savings rate to start saving for other wealth-building goals wouldn’t be a bad idea. For example, you reach a milestone of a $7,500 emergency fund by putting aside $500 per month. You decide to adjust your automatic transfers to $200 per month towards your emergency fund and start putting aside $300 per month towards a downpayment for a home.


It’s time to ask yourself, “Am I saving too much?” You can never have too much in savings, but you could have too much for a short-term emergency fund. At some point, it’s sensible to stop and focus on saving for other goals.

[ Read: The Best IRA Accounts ]

Once you reach this level of liquidity, you’re comfortable with controlling your spending and expenses and setting money aside for bigger investments like a house down payment. If you haven’t started saving for retirement, it’s time to take the skills you learned to set up an emergency fund and use them to open and grow an individual retirement account (IRA).

In this article

    Over $30,000

    There are special considerations for people who have saved over $30,000. Do you really need this much sitting in a bank account earning a minimal interest rate? You may need to revisit your expenses and overall financial picture to find ways to maximize growth. 

    It’s important that you have cash for an emergency, but once your basic needs are met and you’ve reached your target number, don’t stop putting money aside. Allocate the money towards more aggressive growth. Savings account rates are low. Consider a higher-yield investment, such as an index fund. 

    [ Read: How to Get Started Investing in Index Funds

    Index funds are low-cost mutual funds that track the performance of the stock market. The most popular is an S&P fund. It’s made up of the 500 largest, best-performing companies. Many are household names and are most likely to perform well for decades. 

    The five-year average return on your investment if you invested in Vanguard’s VTSAX S&P index fund is 10.95%. In comparison, investing your money in a certificate of deposit in the last five years would have only earned you less than 2%

    How to find your target number 

    Knowing how much to save is an age-old question. To determine the amount, you’ll need to have a good understanding of your income and expenses. Creating a budget is one of the best ways to manage your money. Tally up your bills, debts and expenses to find your monthly expense total. 

    Once you know how much you spend every month, a good rule of thumb is to save three to six months’ worth of expenses. Michele Lee Fine, RICP, Founder and CEO of Cornerstone Wealth Advisory, advises people to save closer to one year’s worth of expenses. “With everything going on in the world, it makes it more evident than ever that having that cash cushion is so important to get you through the unexpected hurdles that life can present at any time.”

    We welcome your feedback on this article. Contact us at with comments or questions.

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    Cynthia Paez Bowman

    Contributing Writer

    Cynthia Paez Bowman is a finance, real estate and international business journalist. Her work has been featured in Business Jet Traveler, MSN,, and

    She owns and operates a small digital marketing and public relations firm that works with select startups and women-owned businesses to provide growth and visibility. Cynthia splits her time between Los Angeles, California, and San Sebastian, Spain. She travels to Africa and the Middle East regularly to consult with women’s NGOs about small business development

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    • Andrea Perez
      Andrea Perez
      Personal Finance Editor

      Andrea Perez is an editor at The Simple Dollar who leads our news and opinion coverage. She specializes in financial policy, banking, and investing.