Money Management: How much should you keep in your savings account?
A savings account is the first step of your financial journey. It is important to have a savings account to avail multiple services and accessibility of your funds when in need. Besides keeping your funds safe, your savings account helps you earn interest on your deposits. However, it is generally recommended not to park your entire funds in your savings account but invest them for maximising your income.
Finding the right balance between saving and spending is crucial for a secure financial future. One of the key aspects of managing your money is determining how much you should keep in your savings account. While the answer may vary based on individual circumstances, financial goals, and economic conditions, there are some essential considerations to guide your decision.
Adhil Shetty, CEO, Bankbazaar.com, says,“Keeping your money in a savings account is a reliable way to ensure its safety and easily access it when needed. It’s a great option for short-term goals, emergencies, and everyday expenses. However, savings accounts don’t typically offer high interest rates. If you want to accumulate wealth and achieve your financial goals, it’s important to diversify your investments and create a portfolio that aligns with your short-term, mid-term, and long-term financial needs.”
Also Read: Sweep-In FD Vs Liquid Fund: What’s your best option?
One of the primary purposes of a savings account is to establish an emergency fund. Financial experts recommend setting aside three to six months’ worth of living expenses in a readily-accessible account. This safety net provides a cushion in case of unexpected events, such as medical emergencies, job loss, or major repairs.
Saving for short-term goals, like a vacation, a down payment
Read more on financialexpress.com
