If you’re wondering how much you should have in savings, you may know that many financial experts feel three to six months’ worth of living expenses is vital. That said, you might also be curious if more cash in the bank may provide a greater sense of security and well-being.
Despite the saying that money can’t buy happiness, research indicates that having cash can indeed enhance one’s sense of well-being. A study conducted at the Wharton School of Management at the University of Pennsylvania found having more money does boost your positive feelings.
So with that in mind as well as your financial security, here’s a closer look at how much you should have in savings to get those good vibes going and give you a sense of security during uncertain times.
Key Points
• Financial experts generally recommend having at least three to six months’ worth of living expenses in savings.
• Savings recommendations vary by age, starting with $500 for young adults and increasing to six months of expenses for older adults, not including savings for long-term goals, such as retirement.
• Many Americans lack sufficient savings, according to a 2024 SoFi survey, with 45% having less than $500 in their emergency funds.
• Outside of savings accounts, you may consider putting your savings in retirement accounts and investment accounts — though higher risk, these options may help your money grow over time.
• Budgeting, tracking spending, and cutting unnecessary expenses may help you build savings more effectively.
Why Should I Have Savings?
You want to be financially savvy, right? Most people do. But a startling 12% of Americans have no savings, according to a recent YouGov survey. Another 13% say they have less than $100 and 14% indicate they have between $1,000 and $4,999.
A savings account helps you avoid going into more debt and prepare for unexpected emergencies. Imagine if your car had a major breakdown, or your cell phone was trampled on during a weekend outing. How would you afford the unpredictable repairs?
An emergency fund stocked with extra cash can help you avoid taking out personal loans or using a credit card to cover an unexpected expense. And while emergencies are never fun, it might help you feel a little bit better knowing that you’re prepared. In SoFi’s April 2024 Banking survey of 500 U.S. adults, 45% of respondents said they have less than $500 in an emergency fund.
How Much Money Should I Have in Savings?
If you don’t have much in savings, where exactly do you start? A general rule of thumb is to have three to six months of living expenses saved up, not including money you’re setting aside for long-term planning, such as retirement funds. But keep in mind that your living expenses may increase as you age, as you start growing your family, have mortgage payments, or are saving for retirement, so you might need more in a checking and savings account.
But that is still a good figure to aim for. Once you figure out your bare minimum monthly expenses and multiply it by three or six, you can calculate how much to aim for and get that sum saved.
It’s worth noting that some money experts say 10 times your monthly expenses may be a wiser amount of a cash cushion to stash away.
However, many Americans are not yet stashing away enough for emergencies, according to our survey data.
| Amount in emergency savings | People who have saved that amount |
|---|---|
| Less than $500 | 45% |
| $500 to $1,000 | 16% |
| $1,000 to $5,000 | 19% |
| $5,000 to $10,000 | 9% |
| More $10,000 | 10% |
Source: SoFi’s April 2024 Banking Survey of 500 U.S. adults
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How Much Money Should I Have in Savings by Age?
Now, here’s a look at how much to sock away in savings based on your age.
18-24: At Least $500 in Savings
Being a college student or recent grad is expensive. It’s hard to keep up with tuition and rent. However, as a college student, you can try starting with $500 in emergency savings and working your way up.
A $500 emergency fund is a great place to start for young people whose expenses are typically less than older Americans. Even just saving $10 per week can help you reach your goal in about a year.
20s: 3-6 Months of Expenses in Savings
After graduation, you’re figuring out the real world for the first time. Most post-graduates are determining how to pay back student loans, and maintain new living expenses. It may help to break down your larger goal of three to six months’ worth of living expenses into first saving $1,000 in your emergency fund.
This can help you feasibly achieve your savings goal while preparing for most emergencies with a sum of cash on hand. You might want to try automating your savings and having a small amount transferred from your checking account on payday to build up your reserves.
30s: 6+ Months of Expenses in Savings
By the time you reach your thirties, ideally you’d have at least six months of expenses saved. At this point, you may even be questioning if you should invest more or continue to save. An easy way to determine how much you need to save is to create a budget of your basic living expenses. Twenty-three percent of people in SoFi’s survey report using budgeting tools offered by their bank.
How much do you need to survive in the case of job loss or a medical emergency? A savings account of at least six months of your usual expenses can help you feel safe enough to cover rent, utilities, and food while you get back on your feet.
40s: 6+ Months of Expenses in Savings
How would you survive if faced with a job loss? According to the Center on Budget and Policy Priorities, unemployment benefits vary state-to-state, but many states give up to 26 weeks in benefits.
However, the amount you receive might not be on par with what you are earning, so consider alternative safety nets. As an example, in New York, which can have a high cost of living, unemployment benefits may range from $100 to $500 a week.
When you’re in your 40s and 50s, replacing your income may prove to be more difficult as you search for positions with more work experience. If the government covers roughly six months of unemployment, then you’ll likely want to have at least that much and then some in your own savings.
50s: 6+ Months of Expenses in Savings
If you are in your 50s and wondering how much to have in savings, the answer again is at least six months’ worth of living expenses and ideally significantly more. For many people, this is their period of peak earnings. They may have multiple expenses as well, such as a mortgage, children’s education, and eldercare. Yet only 10% of people in SoFi’s Banking survey have more than $10,000 in their emergency savings.
Given these pressing concerns, you want to make sure you have a cushion if you were to face an emergency like job loss. What’s more, you don’t want to tap your retirement savings, which can trigger steep early-withdrawal penalties.
Where Should I Put My Savings?
If you’re building up an emergency fund, then placing your savings in an account that can be easily accessed, like a savings account, is probably ideal. That said, there are different options for putting your savings, depending on your goals.
Retirement Accounts
Putting your near-term or emergency savings into a 401(k) or mutual fund might not be the best place for this purpose because these accounts are not very liquid. In other words, you can’t easily access the money when you need it.
Plus, withdrawing early from accounts specifically set up for retirement may come with penalties and hefty fees if you are under the age of 59.5. In addition, these funds may not be insured, depending on the type of account.
That said, a retirement account is an important tool for long-term savings, since they may help grow your funds over time to help provide you with the money you’ll need later in life.
Investments
Investments can offer a place to grow your savings at a healthy rate of return over time. However, this money will not be insured, and you could face losses if the market drops. That could leave you vulnerable if you needed to access money at that moment. You might look into short-term vs. long-term investments to see how you may want to balance different types of savings plans.
Savings Account
A savings account can provide a secure place to store your savings. There are different kinds of savings accounts to consider, and you may find varying rates of return depending on the annual percentage yield (APY) offered and how often compounding occurs. For instance, there are high-yield savings accounts that offer higher APYs, which 23% of the SoFi survey respondents said they have.
When comparing traditional vs. online banks, you may find that the latter, since they don’t have brick-and-mortar locations, may offer better rates and lower fees.
Recommended: Use SoFi’s savings account interest calculator to see how much your money can grow over time.
Checking Account
While a checking account is a secure, typically FDIC-insured place to store your savings, it’s really designed to be more of a place for paying bills and for everyday needs. You likely won’t earn much interest. In SoFi’s survey, 88% of the respondents with bank accounts have checking accounts, while 71% have savings accounts.
Cash
While cash is perhaps the most liquid of ways to store your money, it can’t promise security. You could be robbed or could lose your money. That’s not what you want to happen to your nest egg!
This chart helps you compare the different places to put your savings.
| Location of Savings | Rate of return | Insured |
|---|---|---|
| Retirement | Variable | Maybe |
| Investments | Variable | No |
| Savings | Low to moderate | Yes |
| Checking | No to low | Yes |
| Cash | None | No |
How Much Does the Average American Have in Savings
While you’ve now read the advice to have three to six months’ worth of living expenses stashed away, many Americans are not hitting that goal.
According to the Federal Reserve’s Board Survey of Consumer Finances, here are the average savings:
• Under 35: $11,200
• Age 35-44: $27,900
• Age 45-54: $48,200
• Age 55-64: $57,800.
Building Up Savings More Quickly
Convinced you need more savings, and a traditional savings account just won’t cut it? Here are a couple of ways to help build up your savings faster than a savings account alone.
Selling Your Stuff
Take inventory of things in your garage or closet that you can sell. There are several buy/sell apps out there that can make it easier to sell your unwanted items, and many places where you can sell your stuff and recoup some money.
Any money you make off of your items can be thrown into your savings account. This method is a win-win because you get rid of things you aren’t using, and you can build up your savings without changing your spending habits.
Cutting Out Unnecessary Spending
Want to make significant strides with your savings habit? It might be time to look at your expenses and cut out unnecessary spending.
There are several things you could change, even if it’s just temporary. Replace your $100 per month gym membership by exercising with free, full-length workout videos online. Cut out your cable expense and go all-in with a cheaper Netflix subscription.
How a Budget Can Help You Save
Yes, the dreaded budget. Actually seeing how much you spend each month in a written budget can help you save. When you track your monthly income and expenses, you can quickly identify what areas of life are costing the most so you can make adjustments.
An online budgeting tool like SoFi’s can help you track your spending, which can help you see where you might be able to trim some fat from your expenses.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
FAQ
How much should a 30 year old have in savings?
How much money you should have in savings at age 30 will vary, but an individual should have at least three to six months’ worth of basic living expenses saved. Some financial advisors suggest that you should have the equivalent of one year’s salary (gross) saved.
How much does the average person have in savings?
Savings vary person to person, and with age. Currently, the average American under age 35 has approximately $11,200 saved.
Is $20000 a good amount of savings?
Whether $20000 is a good amount to have saved will depend on a few factors. If you are a single recent college grad, it could be a very good starting point for an emergency fund. However, if you have several dependents and are taking retirement savings into account, then you may consider strategies for increasing your savings.
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SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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