Here’s How Much You Need in Savings

When you're saving your money, you want to make sure you're doing it strategically. Because if you're just saving your money to save it, well, now your savings are making you poorer because of inflation. A simple thing that you can follow is something like a savings goal, somewhere between three to 12 months worth of expenses, depending on your risk tolerance, depending on your financial lifestyle, depending on your financial responsibilities. If you have kids, you have a spouse, you have a lot of financial responsibilities, you don't have a high risk tolerance, then maybe you want to save 6, 9, 12 months worth of expenses in an emergency savings account. If you're 25 years old, you're not married, you don't really have any financial responsibilities. Maybe you don't need that big of a savings fund now. Maybe it's only three months. So depending on where you are in your life, that's going to help you decide how big of a savings fund, an emergency savings fund, that you need. That way, in case an emergency happens, this is the cash that you fall back on. And once you hit that savings goal now, you're no longer going to be saving your money, you're going to reallocate the savings money to your investments.