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What’s the right amount to keep in your Savings Account?

The right amount of money in your bank account varies from person to person. Some of the factors are financial goals, responsibilities and expenses etc.

Many of us have a savings account. Some of us have more than two. While in one bank account, we keep thousands of rupees, we hardly keep a few rupees in the other bank account. Savings account also gives different interest rate which can range from 3.25% to 7%.

Savings account is important and it can help you in various ways. A savings bank account is the gateway to the financial world.   Through a savings account, you can open a recurring account, fixed deposits and take loans as well. That’s not all. Investing and taking insurance also becomes easy with a bank account.

In this article, we will try to find out what’s the ideal amount that you should keep in your bank account. Coming to an ideal amount to keep in an account is tricky as less amount may mean that you may have to run door to door during emergencies, while a higher amount may result in loss of better returns by investing in other financial products that give higher returns such as fixed deposits, recurring account, equity mutual funds etc. 

How to come to the right amount

Your expenses

It is one of the basic parameters to understand how much of money needs to be parked in a savings account. However, don’t confuse expenses with income. Experts typically advise on keeping at least three months of expenses for emergencies. For emergencies, a highly liquid instrument should be selected. Savings account is the most liquid financial product as you can easily withdraw the money through ATM or transfer the money online. The emergency fund is extremely useful during emergencies such as accidents and job loss.  

Read: Savings vs Liquid Fund: Which one is the best for you?

Short term financial goals  

Your short term financial goals such as vacations, buying gadgets also play a crucial factor in deciding how much you may keep in your bank account.  Just for an instance, let us assume that you are planning a gateway with your friends which is going to cost you Rs.20,000. You can keep the money in the saving account and use it to fund the travel. Similarly, if you are eyeing a gadget that you can easily buy by saving for a month or two, you can keep the required amount in a savings account.

Read: Eyeing the latest gadget? Open an RD


Liabilities is also one of the vital factors that decide how much you should have in your savings account. Credit card dues and loans are liabilities that you can’t afford to forget. Not paying your dues on time, can adversely impact your CIBIL score which may have long lasting impact. Typically, the EMI dates are on the first few days of the month. But if you have a EMI date on the second half part of the month, then you need to be careful and not touch the EMI amount.

Financial Responsibilities

Financial responsibilities differ from person to person, even if the person is of the same age. A person with higher financial responsibilities needs to have more money in his or her savings account, then a person with lower financial responsibilities. E.g., a 30-year married person with two kids will have more financial responsibilities than a 30-year old single. The different financial responsibilities of the married person maybe his children’s crèche service, vaccinations, medicines as well as buying anniversary gifts.

The amount of money that needs to be there in the savings account may differ from person to person. It depends on what stage of life they are in, their financial goals and responsibilities, how much they have to save for emergencies etc. Knowing the right amount that needs to be in your savings account can help you to get the best out of your bank account and at the same time, you can be sure that you are not losing on any high returns.  


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