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Aug 30, 2021
Personal Finance

How Much Money Should I Keep in My Savings Account?

Saving money is a critical part of building financial wealth and independence. There are lots of different financial instruments to help you save more money, and each is designed to have different benefits, conveniences and costs. Don’t be overwhelmed by the options though! We’ve got your back. 

There are ultimately two forms of savings accounts available to all of us:  investment-linked savings accounts and bank-linked savings accounts. This article is focused on how much you should consider for a bank-linked savings account, but let’s first review the difference between investment and bank options.

Investment-Linked Savings Accounts

The first option is to save through an investment account. These types of accounts are typically offered by a securities brokerage firm or asset manager. There are lots of firms and lots of types of investment accounts that come with varying degrees of risk. 

Some, like 401Ks for your retirement or 529s for educational costs, are designed for specific purposes. Firms may charge fees based on the number of trades made, the amount of assets under management (AUM) or some combination of the two. There are usually restrictions associated with these types of accounts to ensure they are being used as intended. Make sure you know what those restrictions are so you aren’t forced to pay onerous financial penalties and you’ll have access to your money when you need it. 

The important thing to remember with any investment-linked account is that there is risk of loss. While you may be able to ride the wave of high returns when times are good, you are subject to losing money too if markets fall.

Bank-Linked Savings Accounts

The other way to save is through a more traditional savings account, typically offered by a bank. Bank-linked savings accounts have no risk of loss subject to FDIC-insurance and usually no restrictions on accessing your money. While they typically offer a much lower rate of return, it’s a promised return, rain or shine, and it’s always there when you need it. 

Bank-linked savings accounts are great options if you aren’t comfortable taking on a higher level of risk or if you want to set aside some of your money for emergencies or for that upcoming down-payment on a home you can’t risk losing. 

Many experts recommend growing your savings in different accounts that have different risk tolerances so you can protect against bad times while also growing your nest egg in a meaningful way. If all of your money is in a bank-linked savings account, you run the risk of losing purchasing power due to higher rates of inflation. We don’t want that! On the flip side, it's nice to know you have some money available for emergencies or if you’re planning for that big upcoming expense.

So, when it comes to bank-linked savings accounts, how much is too much, or not enough?

Identify What You’re Saving For

Knowing what you’re saving for is a critical first step. Whether you are saving for unplanned emergencies, a down payment on a home or car or your retirement, your savings goals will determine how much is the right amount and what financial vehicle you should use. It’s also very helpful to have multiple accounts for each of your savings goals. Most experts will tell you this tactic will get you to where you want to be, faster.   

If you’re looking to build a general savings account to guard against whatever life might throw at you, whether next week or next year, a bank-linked savings account is a great option because it’s there when you need it. 

Exactly How Much Should I Keep in a Savings Account?

Some financial experts say you should have the equivalent of at least three to six months worth of expenses put away for those no-risk emergency funds. This should include your rent or mortgage, food, utilities, extra spending money, food, gas, and anything else you deem a necessity to live your life comfortably. 

The end figure will vary from person to person and household to household, and we have some tips to help you calculate the right amount for you. 

Track Your Spending To Build Your Emergency Fund

To really get an idea of how much you spend, you should make a habit of tracking your expenses. Financial advisors and experts often suggest this because you may be surprised to learn how much you spend in a specific category, and it might help cut back on some unnecessary expenses so you can grow your savings even faster! 

For all the coffee drinkers out there, it’s astounding how much you can save if you cut out your daily coffee runs and substitute it with some homebrew. We speak from experience!

Your spending log should span at least three months. One month isn’t enough to give you a reliable picture. Keep a spreadsheet consisting of household expenses, credit card purchases, cash purchases, automatic deductions and extra spending to name a few. Every dollar should be accounted for.

You shouldn’t be extra frugal during this time either. You want to be able to live comfortably off your emergency fund if it ever comes to that, so build that into the plan!

If a multi-month budgeting analysis is just too much to take on (and we don’t blame you!), don’t sweat it. Download your bank and credit card statements for the last several months, remove any uncommon spend to find your monthly average. 

Save Between Three and Six months of Living Expenses

Once you have an average amount, multiply that number by six to give yourself a good safety net.

For example, if your monthly expenses are around $2,000, the total in your savings account should be around $12,000. Six months is a generous estimate, but life throws us curve balls and it’s important to be prepared for anything! It’s a good rule of thumb to have at least three months of expenses to put away.

This fund will be your support in the case of a job loss, a sudden medical cost, or another emergency. Remember, if you’re saving for a house, car or an upcoming vacation, you may want multiple accounts to ensure you only dip into each account when absolutely necessary. 

Use a High-Yield Savings Provider To Maximize Return and Convenience

To make the most of your money, store your savings in a high interest savings account that maximizes your return. A high-yield online savings account like Atmos is a great option that offers no minimums so you can get started with any amount, no fees and nationally leading rates on your FDIC-insured deposits. 

What If You Don’t Have a Savings Account?

If you don’t yet have a savings account, it’s never too late to start. It’s okay to start slow, and the number you deposit may fluctuate from month to month. Set small milestones and gradually work your way up to your ideal total. 

Scheduling recurring payments once or twice a month can help you grow your savings to meet your goals without needing to think about it on a daily basis.

Avoid Risk to Preserve your Nest Egg

FDIC-insured savings accounts offer account holders no risk so that your money is there when you need it. The downside of a bank-linked savings account is that banks tend to offer much lower interest than investment-linked accounts. No risk means low return. 


Your financial goals are paramount to how you allocate your money. It’s never too late to start saving, and a high-interest bank-linked savings account can provide maximum return and ultimate flexibility. Atmos offers nationally leading rates and uses all of your deposits to fund a climate-positive future, so that you can create a better tomorrow for all while ensuring financial stability for yourself. 

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