Photo: David McBee

How much is too much cash in savings?

In the long run, your cash loses its value and purchasing power. Another red flag that you have too much cash in your savings account is if you exceed the $250,000 limit set by the Federal Deposit Insurance Corporation (FDIC) — obviously not a concern for the average saver.

cnbc.com - Can You Have Too Much Money in Your Savings Account? - CNBC

What kind of person is lucky?

Lucky People Are Extroverts For one, people who experience a lot of luck are extroverts, with large social groups and no fear of social...

Last updated Aug 14, 2018

Which money does not attract?

Money number 6 in numerology Considered to be the money attracting number, people falling under this will have the most luck when it comes to...

Last updated Jan 17, 2022

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

As the economic crisis continues to ripple throughout the nation, more and more Americans are taking the time to learn how to best manage their finances. High on that list is building an emergency fund. In fact, a recent MassMutual survey found that more than 1 in 5 Americans (22%) saved at least $1,000 during the pandemic this summer. While having a stable savings to fall back on is crucial for a healthy financial future, dedicated savers should be aware that there is such a thing as having too much money saved.

Why you shouldn't keep piling cash into your savings

Hoarding your cash and letting your savings balance get too high can actually cause you to lose out on money. When you keep your cash in a savings account — even a high-yield account like the Ally Online Savings Account or Marcus by Goldman Sachs High Yield Online Savings — over time you'll miss out on earning a better return on your money and really growing it like you would if you invested. If a high-yield savings account nets a 1% return and inflation averages close to 3%, you're not keeping up with the cost of living. In the long run, your cash loses its value and purchasing power. Another red flag that you have too much cash in your savings account is if you exceed the $250,000 limit set by the Federal Deposit Insurance Corporation (FDIC) — obviously not a concern for the average saver. Most savings accounts will insure your money up to $250,000 per an account holder for every account, but anything beyond that amount is not guaranteed to be reimbursed in the event something happened, like the bank collapsed.

How much is too much?

The general rule is to have three to six months' worth of living expenses (rent, utilities, food, car payments, etc.) saved up for emergencies, such as unexpected medical bills or immediate home or car repairs. The guidelines fluctuate depending on each individual's circumstance. Given the current economic uncertainty, you may want to save up to a year of your basic living expenses (not including any discretionary spending) if you're worried your job is less stable. The idea is that you have enough cash accessible that you can tap into whenever you need it without having to rely on credit cards or a personal loan. A savings account is also helpful for covering any immediate financial goals you want to achieve over the next two years. You can access your money whenever you want, and in the meantime it sits in a stable FDIC-insured account. After you have enough saved up for an emergency fund, you can shift your focus and put your extra cash somewhere else, whether that's working toward hitting a short-term goal or investing your extra cash in the stock market.

Where to put that cash instead

What country has the most millionaires?

United States. Topping the list of the world's most millionaires is the United States, which currently has 24.5 million millionaires—or 39% of the...

Last updated Sep 27, 2020

Can affirmations be harmful?

Studies conducted by Joanne Wood, a professor of psychology at the University of Waterloo show that the use of affirmations, or positive self-...

Last updated Oct 10, 2021

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

Once you have the safety net of savings in place, you should take the time to really think about your bigger goals and how you can use money to achieve them. Investing your money in the market can help you reach your longer-term goals more quickly. Though it carries more risk than keeping cash in a high-yield savings account, investing has the potential to offer much greater reward. You can start by setting up a brokerage account through firms like E*TRADE, Fidelity, Charles Schwab or Vanguard. If you want to have less of a hand in managing your investment accounts, let a robo-advisor, like Betterment, Wealthfront and Ellevest, do the investing work for you. Wherever you are on your financial journey, remember that the process takes time. Making a plan is the first step, and it's important to give yourself credit for even the small wins. Goldman Sachs Bank USA is a Member FDIC. Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

cnbc.com - Can You Have Too Much Money in Your Savings Account? - CNBC

What birth month lives the longest?

They Live the Longest While October babies have the highest risk of disease among all birth months, they don't let that stop them from living very...

Last updated Oct 11, 2018

What are the two values of money?

The report argued that a single point agenda would resolve the conflict between managing the two values of money: domestic value measured by...

Last updated Jul 4, 2019

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

How can I boost my confidence?

Tips for building self-confidence Look at what you've already achieved. It's easy to lose confidence if you believe you haven't achieved anything....

Last updated Aug 28, 2021

Awaken your dormant DNA ability to attract wealth effortlessly

The simple yet scientifically proven Wealth DNA method laid out in the report allows you to effortlessly start attracting the wealth and abundance you deserve.

Learn More »

Promotion

Will bedbugs follow you?

Bed bugs will not go away if you sleep in another room. Instead, they will follow you and create new colonies wherever you move. Remember: Always...

Last updated Apr 13, 2020