Last year, emergency savings startup SecureSave reported that 63% of Americans didn’t have the funds to cover an unexpected $500 expense. So if you have a $10,000 balance in your savings account, you’re clearly in a much better position than people in this category.

But is $10,000 enough to keep in your savings account? Or should you aim higher? The answer depends on you, and you alone.

The Problem of Putting Too Much Money in Your Savings Account

Believe it or not, you don’t want to go overboard with topping up your savings account. And the reason is that you’re likely to get a much higher return on your money in a brokerage account than in a savings account.

Over the past 50 years, the average annual return of the S&P 500 has been 10%. Compare that to the 4% that savings accounts currently pay (which is higher than the norm), and the difference is obvious.

Our picks for the best high-yield savings accounts of 2024

American Express® High Yield Savings APY 4.00% Pricing information Annual percentage yield of 4.00% as of November 22, 2024 Member of the FDIC.	APY 4.00% Pricing information Annual percentage yield of 4.00% as of November 22, 2024	Min. earn $0
Capital One 360 ​​Performance Savings APY 3.90% Pricing information Check the Capital One website for the most up-to-date pricing. The advertised annual percentage yield (APY) is variable and accurate as of November 21, 2024. Rates are subject to change at any time before or after account opening. Member of the FDIC.	APY 3.90% Pricing information Check the Capital One website for the most up-to-date pricing. The Advertised Annual Percentage Yield (APY) is variable and accurate as of November 21, 2024. Rates are subject to change at any time before or after account opening.	Min. earn $0
Western Alliance Bank High Yield Savings Premier APY 4.46% Pricing information Annual Percentage Yield (APY) is accurate as of November 7, 2024 and is subject to change at the Bank’s discretion. Refer to the product website for the latest APY rate. The minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. earn $500 to open, $0.01 for maximum APY Member of the FDIC.	APY 4.46% Pricing information Annual Percentage Yield (APY) is accurate as of November 7, 2024 and is subject to change at the Bank’s discretion. Refer to the product website for the latest APY rate. The minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	Min. earn $500 to open, $0.01 for maximum APY

But while there is danger in keeping too much money in a savings account, it is also quite problematic in not having enough money in a savings account. If you don’t have a fully loaded emergency fund, you could be forced to rack up costly credit card debt when unexpected bills arise. It is therefore important to find a balance.

Determine your emergency fund needs

If you’re not sure if $10,000 is enough for your savings account, you’ll need to see the total of your essential monthly bills. These include rent, car payment, utilities and food. Then, multiply that number by three to six, which is what experts recommend for emergency fund purposes.

If your essential bills are $2,000 per month, your emergency fund should have a minimum of $6,000. And if you have $10,000 in your savings account, you’re in great shape. This means you can cover five months of expenses, giving you fantastic protection in the event of redundancy.

But if your monthly essential expenses are $5,000, a savings account balance of $10,000 unfortunately isn’t enough. While this provides some protection, it’s not enough to cover three full months of essential bills. This leaves you vulnerable to credit card debt if you lose your job. So in this case, you would want to work on increasing your savings balance by at least $5,000.

Make sure you get a good deal on your savings

Ideally, your savings account should be able to cover at least three months of bills, regardless of the amount. But you also don’t want to sell yourself short on interest while you park your money.

If you’re unhappy with the interest rate on your savings account, look for a new one. You can Start with this list of our favorite savings accounts with APYs of 4.00% and above today.

You should especially consider switching savings accounts if you keep your money in an account at a physical bank. Online banks have fewer overheads, so they are usually able to offer more competitive rates on savings accounts for this reason.

And remember, once you’re past the threshold of a three-month emergency fund, you shouldn’t feel obligated to keep your extra money in your savings. In this situation, you may decide to invest your extra money to get a more generous return.

But aim for at least three months’ worth of bills in your savings so you’re not left hanging when unemployment hits or an unexpected expense comes your way.