I’m 29 and sitting on over one year’s worth of cash — is that too much?

24/7 Insights

• • • This Redditor is wondering if $23,000 is too much in savings. 
    • The question of how much you need in an emergency fund is a personal decision. 
    • Some believe six months of emergency savings is enough; others want one year. 
    • Also see: How one man went from “way behind” on retirement to ahead of schedule.

Let it be known that it’s never too early to start thinking about putting money into savings. Anyone with a small understanding of personal finance should know that putting money away into an emergency savings account is good. In fact, this is exactly what this Redditor in r/Bogleheads is doing at 29 years old. 

Of course, this post is about more than just smart financial sense; it’s about exactly how much money you should have set aside. When I stumbled on this post, it sparked an idea in my head as to whether the 3-6 month savings allotment still holds. The challenging part here is that everyone has different needs, but this Redditor wonders if his emergency savings amount should be lowered. 

This begs the question of how much is too much in a savings account. This poster asks whether you need to listen to the average amount you’ll read online or if you can do something different. 

The Scenario 

In this particular instance, you have a 29-year-old Redditor, single, with around $23,000 in a HYSA (high-yield savings account). Their specific question, which sparked my interest, is that they believe this number constitutes around 1-1.5 years of living expenses for them. Ultimately, they are wondering if this is too much money. 

First and foremost, I’d love to be in a scenario where $23K is even close to a year’s worth of living expenses, but not in my area. Unfortunately, the above info is pretty much all we have to go on. We don’t know what kind of debt they have or what could happen if they get into a relationship. 

Savings Benchmarks

It’s important to note that I am not a financial planner or advisor, and I didn’t stay in a Holiday Inn Express last night, so I’m not a money expert. I’ve researched what you need to have saved regarding emergency savings and what a good amount of money should be for someone around 30. 

Ideally, in my opinion, you should have around 1x of your current annual salary saved up by the time you are 30 years old. If you make $75,000 a year, your savings should have at least $75,000 available. The same goes for $100K, $150K, etc. At this rate, you would have one full year’s salary available should you lose your job and have to live off savings. 

However, when it comes to a dedicated emergency fund, I advise this Redditor to have at least six months’ worth of all living expenses tucked away. This means you could survive at least six months without working in any capacity and not have any financial concerns. This Redditor makes over $23,000 annually, so the $23K set aside for one year seems low. 

Key Takeaways

The bottom line is that there is no right or wrong answer. My financial advice—and again, I’m not a financial planner—is to put away what you can in an emergency account. Some people will say you need at least 12 months of money put away, given the current economic climate, inflation, etc. Others may tell you that only having six months is fine. Again, there has yet to be a definitive answer. 

The bottom line is that while I don’t believe $23K is too much cash to have on hand, especially if it’s in a HYSA where it’s making money. This person doesn’t mention the interest rate, but if they make 3-4% annually, this is another $1,000 over a year, which feels like a wise investment opportunity.