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

3 min read Feb 21, 2024

Apply for Savings Account!

Rule of 50-30-20

The 50-30-20 budgeting principle is widely accepted and assists in effectively managing your income. It encourages prioritising savings and debt reduction while allowing discretionary spending on wants. Your income is divided into three categories:

1. 50% towards your needs

Allocate half of your income to fulfil essential needs such as rent, utilities, groceries, and transportation. This ensures that you maintain a stable and comfortable lifestyle.

2. 30% towards your wants

Building an emergency fund

Financial stability is truly achieved when you have built an emergency fund. This dedicated money that you save can be your safety net during unexpected circ*mstances like medical emergencies, job loss, or even an appliance failure. Calculating 6 to 12 months’ worth of living expenses is recommended as an appropriate amount for such a fund.

You can start small, even with ₹500 per month, and gradually increase it. For instance, you can start by opening an Axis Bank AMAZE Savings Account, a zero-balance account where you can sign up for just ₹200 per month. The discipline of setting aside money to keep in a Savings Account monthly can shield you from all future financial emergencies.

How much cash should I keep on hand?

It is important to have cash readily available to balance convenience and security. You need to allocate a modest sum to cover daily expenses, emergencies, or situations where online or card transactions are not a feasible option.

Firstly, analyse your typical cash-based needs and maintain the amount on hand that aligns with your lifestyle. Carrying excessive cash can invite security risks, so it’s important to strive for balance. So, how much cash should you keep in your Savings Account or hand? It's a decision that depends on your individual situation and lifestyle.

Keep inflation in mind

Factoring in inflation is crucial when deciding how much money to keep in your Savings Account. In India, the annual inflation rate is typically higher than the interest rates offered by Savings Accounts. Thus, it also makes sense to diversify your savings into other products like fixed deposits, which relatively offer higher returns. When you consider the potential impact of inflation on your financial goals, you can begin adjusting your savings strategy to meet your current spending needs and maintain the value of your funds.

Assess your financial situation

Assessing your financial situation is a pivotal step in knowing how much can you keep in your Savings Account, for emergency funds, or spending. There’s no one-size-fits-all number, as every individual’s financial situation is unique. You need to regularly assess your income, expenses, risk tolerance, and goals to tailor your savings strategy. There are always going to be life changes, job changes, and unexpected events that impact your financial landscape. So keep evaluating and adapting to make informed decisions about optimising your savings for short-term stability and long-term financial goals.

Also Read: Guide to the cash deposit limit in a Savings Account

Conclusion

It is important to understand that saving is a continuous journey, and determining the right Savings Account balance requires a strategic approach. Start small, keep tracking your progress, and make changes as life unfolds. You can build a secure financial future by making one smart saving decision at a time!

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.

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.

Learn More Now ›

How much money should you keep in your savings account? ›

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.

Show Me More ›

What is a good amount of money to have in your account? ›

The general rule of thumb is to try to have one or two months' of living expenses in it at all times. Some experts recommend adding 30 percent to this number as an extra cushion.

Is 5000 enough to have in 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.

Get More Info ›

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.

Show Me More ›

How much savings should I have by age? ›

Key takeaways. Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. Factors that will impact your personal savings goal include the age you plan to retire and the lifestyle you hope to have in retirement.

Read The Full Story ›

How much money does a normal person have in their bank account? ›

While the median bank account balance is $8,000, according to the latest SCF data, the average — or mean — balance is actually much higher, at $62,410.

Read The Full Story ›

How much does an average American have in savings? ›

In terms of savings accounts specifically, you'll likely find different estimates from different sources. The average American has $65,100 in savings — excluding retirement assets — according to Northwestern Mutual's 2023 Planning & Progress Study. That's a 5% increase over the $62,000 reported in 2022.

Discover More ›

How much does the average person keep in their bank account? ›

One commonly cited data point comes from the Federal Reserve Survey of Consumer Finances, which finds that Americans hold an average balance of $42,000 in transaction accounts. This average is skewed by people holding high balances, so it might be better to look at the survey's median balance figure, which is $5,300.

Discover More ›

How much cash should I keep at home? ›

It's a good idea to keep enough cash at home to cover two months' worth of basic necessities, some experts recommend. A locked, waterproof and fireproof safe can help protect your cash and other valuables from fire, flood or theft.

Discover More Details ›

How many Americans have no savings? ›

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.

How much should I be saving a month? ›

At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.

Tell Me More ›

How many people have $20,000 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.

Find Out More ›

Is 100k in savings a lot? ›

Having over $100k in savings is generally considered a good financial position in the United States.

Get More Info ›

Is saving $1000 a month good? ›

Saving $1,000 per month can be a good sign, as it means you're setting aside money for emergencies and long-term goals. However, if you're ignoring high-interest debt to meet your savings goals, you might want to switch gears and focus on paying off debt first.