Hi! I am 32 years old.
For background,
I have no debt and about 40k in a HYSA account. I actually don’t know what’s in my retirement account at the moment but I’ve always contributed the max for company match (so like 3% or so).
How high should I get my HYSA to? I’m not a homeowner and I thought it made sense to keep stuffing in savings until I can buy a home but with the market that doesn’t seem possible anytime soon.
I feel like at some point I need to stop putting money in savings and just invest any leftover funds at the end of the month into an investment
At what point do you stop putting money into savings? Specifically a HYSA?
byu/MickeysRose inpersonalfinance
Posted by MickeysRose
22 Comments
Sounds like you are asking about a framework for what to do with money.
Start with reviewing the Prime Directive in the PF Wiki. It will answer your question and many other questions you didn’t realize you should be asking.
* https://www.reddit.com//r/personalfinance/wiki/commontopics
Check out the “How to handle $$$” flowchart in the wiki for this sub.
Track your expenses so you know how much life costs you. Put six months worth of those expenses into the HYSA as your emergency fund. Then you can either save the rest up for a big planned purchase (Like that house downpayment) or invest it for the long term.
But you also need to save more in your 401k. A good rule of thumb is to save at least 15% of your gross income for retirement over the course of your career.
My advice would be to figure out how much is in your 401k. Getting company match is important but if you have the funds why not max out contribution to 401k?
How do you not know what’s in your retirement account? Do you just let it disappear into a void and forget about it? Is it actually being invested, or is it just sitting there as cash? I mean, knowing all of this is more important than asking “How much should I have in a HYSA?” Especially when you can just google a typical answer for that question.
Normal advice is 3-6 months worth of cash in savings. You should try to contribute 15% to retirement, including any matching funds.
If you’re only putting 3% to get a 3% match into your 401k there’s a problem and you need to shift focus, immediately.
You should stop when you reach a full emergency fund (3-6 month) and have saved up for any short term large expenses (Vacation, Home Repairs, New car, Holiday gifts, etc.).
After that follow the Flow chart in the Wiki for investments.
I’d say ten grand then switch to putting extra savings in the market
What do your monthly expenses look like? Most experts suggest having (at least) 3-6 months of living expenses in your HYSA. With the world and economy looking as sketchy as they do, I’d suggest more like 6-12 months instead, but that is up to personal preference.
If you have a minimum of 6 months of your expenses saved and you don’t feel a need to be cautious like I do, yes. Invest the extra.
Sounds like you could use some time spent looking over the Wiki:
[https://www.reddit.com/r/personalfinance/wiki/commontopics/](https://www.reddit.com/r/personalfinance/wiki/commontopics/)
Graphical version: [https://imgur.com/personal-income-spending-flowchart-united-states-lSoUQr2](https://imgur.com/personal-income-spending-flowchart-united-states-lSoUQr2)
Separately, start checking your account balances already. If, for no other reason, to make sure the money you believe is being deposited actually IS being deposited. As a rule of thumb, it’s on the account holder to make sure things are correct and to bring attention to any mistakes. That means you should get into a routine of at least once a month, checking your balances and reconciling across ALL your accounts.
My wife manages our regular bills and I manage our “long term” finances. We both check the accounts we’re responsible for every week and update our respective tracking methods. For her, it’s an old version of Quicken before they started the subscription nonsense. For me, it’s an Excel workbook because I’m a programmer and love workbooks. But every week, we verify amounts deposited, amounts spent, interest earned, etc. We also download statements when they’re available. All of this to make sure that our money is right where we think it should be. And when it’s not, I can find out why. For example, a couple years ago, I had an expense reimbursement from work that was late. Knew right away so was able to contact HR the following Monday and get it sorted quickly.
You should max your retirement account. I’m not talking your employer’s 3% match.
Employees under 50 can contribute $24.5k into a 401k this year. My employer lets me contribute up to 50% of my paycheck to my 401k.
Or put another way, those are rookie numbers, gotta get those numbers up.
if you want to buy a house or a car anytime soon, that $ is better served in savings rather than investments b/c of market volatility.
For myself at least I have one HYSA with 6 months of expenses should I lose my income. When I need to make a large purchase like an appliance, home renovation project, or a car I take any excess out of that HYSA and move it to another one and start deposits as budgets allow. When I’m not saving for a high budget item any excess funds go to brokerage.
You should be saving at least 15% of your income for your retirement if you can swing it. You also should 100% know what’s in your retirement account.
There’s a flowchart in the PF wiki that shows how you should be routing your money, I highly recommend following it.
(Short answer, 3-6months of expenses should be in your HYSA as an emergency fund, everything else should be invested)
But if you have plans to buy a house you will have to keep saving in a HYSA. Or if you don’t care either way, then yea just invest anything more than your emergency fund and when you are ready to buy if your investments didn’t tank you can sell and use it for buying house.
Is your job stable and unlikely to lay you off? Is it currently easy to find a new position in your field? If so, then you can probably figure out what it would cost you for 3 months of your basic expenses and keep that in your HYSA. Plus if you are saving up for something specific within the next couple of years.
Beyond that, it sounds like you need to get a lot more money flowing into your retirement funds and ensure they are invested in a good growth fund.
I would flip the priorities upside down. Pay yourself 1st by making the level of retirement contributions that will get you where you need to be. Actually figure out that is instead of arbitrary “max your 401k.” Any money left at the end of the month, probably invest it as long as you are living a good life in the now.
Never. Sinking funds… sink. But you really should know what’s in your retirement accounts and if you are on track for retirement, which you probably are not bc 3%+3% isn’t enough. I wouldn’t worry about sinking funds until you are contributing 15-20% to retirement and have a 3-6m emergency fund.
A sinking fund is just for known expenses like yearly lump sum insurance payment or car maintenance or gifts or vacations etc.
My advisor has always said, 6 months expense liquid and the rest can be working for you. As i’ve built up funds and looking at the current economic climate: i’m leaning more towards a years expenses just to cover for volatility
Honestly, I think you’re already asking the right questions, which puts you ahead of a lot of people.
If you already have 6+ months of expenses covered and no debt, I personally would start shifting more focus toward investing and retirement contributions instead of continuing to heavily build the HYSA forever. Cash is great for safety and short-term goals, but over long periods inflation slowly eats away at it.
One thing I would definitely do though is log into your retirement account and see what’s actually in there and how it’s invested. A lot of people contribute but accidentally leave the money sitting in cash.
Also, don’t feel bad about not knowing all of this already. Most people are never really taught personal finance properly and just learn over time by asking questions exactly like this.
In 2025 the S&P 500, inclusive of dividends returned 17.9%. If you had moved $20,000 of the $40,000 into a brokerage account and put it into the S&P 500, you would have amost $3,400 of share price appreciation and about $200 of dividends. Compare that to $20,000 in a HYSA where at 3% to 3.5% interest you got $600 to $700 of interest that is taxed like orginary income.
Saving in a HYSA will never get you ahead when you get 3% interest pay 1% to the IRS and lose more than 2% to inflation. If you earn under 170k (single), and have not done a ROTH or if you have kids and have not done a 529 these are two vehicles that provide tax free interest, dividends and share price appreciation.
How much you need to have in savings, varies on your job stability, and your monthly expenses. You want a cushion sufficient to handle an unanticipated expense like a new air conditioner or loss of a job.
Your 3% into retirement needs to be increased immediately. Or you should be putting more into a Roth IRA if that’s all they are going to match. Stop putting into savings, increase retirement significantly.