It's common wisdom that folks should keep a rainy day fund that is liquid cash available in case of emergency. You see slightly different recommendations, but in general, it's about 3-6 months worth of expenses.
Having $10000 in savings is generally reasonable. It indicates sound financial management and provides a safety net for emergencies or unexpected expenses. While it's not an enormous sum, it's a comfortable financial cushion that can serve you well. Here are some ways to make the most of that $10000:
To calculate how much you should have in your emergency fund, take the amount of your monthly expenses and multiply it by three or six. This fund should be used ONLY in case of a large, unforeseen financial emergency such as job loss, medical illness, etc.
The recommendation is to have three months' worth of essential outgoings in your account to fall back on. This will give you a financial buffer if you need it. Use our calculator to find out how much you should save in your emergency fund.
How much do I need? Ideally, 6 months' essential expenses – for example, rent or mortgage, utility bills and groceries. If you're just starting out, you could set a smaller target – such as 3 months' essential expenses – to begin with. Any emergency fund is better than nothing, so don't be discouraged.
High-yield savings account (HYSA)
High-yield savings accounts are particularly beneficial because they're highly liquid — your money is just a quick transfer away. Plus, there's no possibility of losing any of your principal balance to investment losses. And HYSAs typically don't have minimum deposit requirements.
You'll want to max out at about half a year's worth of expenses. The long answer: The right amount for you depends on your financial circumstances, but a good rule of thumb is to have enough to cover three to six months' worth of living expenses.
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
Where should I keep my rainy-day money? Your emergency savings should be kept within touching distance. By that, we mean in a savings account you can quickly and easily withdraw from. Instant or easy access savings accounts are the best option for this.
Is $20,000 enough for an emergency fund? A savings account with $20,000 is a good starting point for creating a substantial emergency fund. This will help you financially should an unexpected situation arise. However, if you face an extreme situation, $20,000 may only cover limited expenses.
Is $10,000 too much to keep in savings accounts? Financial experts often recommend maintaining an emergency fund of three to six months' worth of expenses. If $10,000 fits this guideline based on your expenses, it's the right amount to keep in a savings account.
While the size of your emergency fund will vary depending on your lifestyle, monthly costs, income, and dependents, the rule of thumb is to put away at least three to six months' worth of expenses.
You can hold only one Rainy Day Saver account at any time. The maximum amount you can have in a Rainy Day Saver account is £10,000,000. Who can hold a Rainy Day Saver? To hold a Rainy Day Saver, you must be at least 18 years old and resident in the UK.
Most financial professionals recommend that you avoid investing your emergency fund in stocks because they are fairly volatile. So, if you need to sell your stocks to use the money for an emergency expense, you may be forced to sell at a loss.
While this figure can vary based on factors such as location, family size, and lifestyle preferences, a common range for a good monthly salary is between $6,000 and $8,333 for individuals.
Quick Take: The 75/15/10 Budgeting Rule
The 75/15/10 rule is a simple way to budget and allocate your paycheck. This is when you divert 75% of your income to needs such as everyday expenses, 15% to long-term investing and 10% for short-term savings. It's all about creating a balanced and practical plan for your money.
By age 30, you should have saved about $52,000, assuming you're earning a relatively average salary. This target number is based on the rule of thumb you should aim to have about one year's salary saved by the time you're entering your fourth decade.
Current Fund Balances
California ($76 billion) had the highest state rainy day fund balance in 2022; its balance alone contributed 46 percent of the nation's total. The next highest balances were in Texas ($11 billion), Massachusetts ($7 billion), and Georgia ($5 billion).
How much should I save for a rainy day? A rainy day fund is money that you put aside for emergencies or unexpected bills. This could include your car breaking down or losing your job. It's recommended to have three months' worth of essential outgoings saved in your account.
So if you spend $5,000 per month, your first emergency fund savings milestone should be $2,500 to cover spending shocks. For your longer-term goal of an emergency fund that will cover income shocks, aim to save $15,000 to $30,000 total.
So, how many savings accounts should you have? Eventually, you should have one savings account for each big savings goal, and financial experts recommend capping the total at around five savings accounts. Just remember to start slow and open one at a time as you build up your savings.