How much money should I put in a high-yield savings account?

High yield savings accounts There are great places to store your money. They are safer than investing in the stock market, you can easily withdraw your money when needed and you will earn higher interest than a regular savings account. While traditional savings account interest rates currently hover around 0.33%, high-yield savings account rates can range from 3.5% to 4.5% or higher. This means your money grows faster the longer it stays in your account.

But while it’s always smart to save as much as you can, there is no such thing as “too much” when it comes to your savings account balance. So, how much should you keep in your high-yield savings account? We’ll break it down for you below.

Now see how much more you can earn with a high yield account. Or use the table below to get started.

How much money should I put in a high-yield savings account?

There’s no hard and fast rule about how much money you should keep in your high-yield savings account. Your target amount depends on your financial goals and budget. That said, there are two big things to keep in mind when calculating how much you should aim for.

Consider your needs and goals.

High-yield savings accounts are especially great for two things: building an emergency fund and saving for short-term goals, like a vacation or a new car. How much you set aside for both depends on your situation.

For an emergency fund, experts recommend saving at least three to six months of living expenses. This includes essentials such as housing, utilities, food, health care and transportation. For example, if your average monthly expenses are $3,000, you’ll want to save at least $9,000 to $18,000.

If you can rely on a partner’s income in case you lose your job, you may be able to get away with the lower end of this range. But it doesn’t hurt to play it safe and aim high. Putting more aside will give you extra breathing room for rising unemployment and any unexpected big expenses, like medical bills.

For short-term goals, how much you set aside depends on how much you’ve budgeted for the goal. Only you know how much you can afford to spend on something like a new car while meeting your other financial goals, such as saving for retirement and paying down debt.

For other purposes, a different type of account may serve you better. For example, if you want to make regular deposits and withdrawals to cover day-to-day expenses, you may want to Account checking Because savings accounts often limit the number of monthly withdrawals you can make. For long-term goals like retirement, a 401(k) or IRA serves you better because you will earn more interest in the long run.

Also, diversifying your money in several different types of accounts can help you maximize your interest and minimize your risk. A high-yield savings account is a great financial tool, but it shouldn’t be the only one in your tool belt. If you’re in the market for a high-yield savings account, Explore your rates and options here. Or by using the table below.

Avoid FDIC deposit limits

The Federal Deposit Insurance Corporation insures deposits up to $250,000 per bank. If you collect more than that, it won’t happen. Protected if the bank fails.. You can achieve this limit by holding multiple accounts at different FDIC-insured institutions. This way, all your deposits will be safe in case of bank failure.

That said, if you have more than $250,000 to put down, you may want to put some of it into a product that earns a higher interest rate. Your high-yield savings account should have enough to cover a job loss or other unexpected expenses, but anything above that can add up quickly. Certificate of Deposit (CD), Money Market Account or the stock market. Weigh your short-term needs against your long-term needs to make sure your money is working as hard for you as possible.

The bottom line

Saving is a fundamental part of any financial plan. Part of smart saving is knowing where to put your money. Being too low in your account means you may be unable to weather financial storms. Too much means your money isn’t making as much as it could. Carefully considering your needs and goals can help you strike the right balance. Choosing a high-yield savings account And deciding how much to put into it.

Start looking for a high-yield savings account now. Or use the table below to view your options.