How Much Money Should You Keep in a Bank Account? And Where Should the Rest Go?

Most people keep way too much money in their everyday savings account. And I get it. It feels responsible. Like eating kale. But unless you’re planning to buy something big tomorrow, your money could be doing more than sitting in a dusty bank vault next to everyone’s abandoned gym resolutions.

A simple way to think about it:

1. Emergency fund This is your break-glass-in-case-of-chaos stash. One to three months of essential expenses: rent, groceries, insurance, the daycare bill that hits harder than expected. Keep it boring, accessible, and drama-free.

2. Near-term purchases If you know you’re buying something within 6 to 12 months—a trip, new laptop, braces for the kid—park that money somewhere safe. Yes, even in the same savings account if you must. Just don’t invest money you’ll need in the short term. That’s like booking a long-haul flight with a baby and no snacks. Too risky.

3. Everything else This is your “build wealth” pile. It’s the money that doesn’t need to do anything dramatic soon. This is what should go into an ISK and work quietly in the background, like a well-fed sourdough starter. Low-fee index funds. Long-term mindset. Minimal panic.

Final thought

If you’re keeping all your money in your bank account because it feels safe, just remember: so does staying indoors forever. But eventually you need to leave the house. Or at least open an ISK.

You don’t need to take big risks. You just need to stop standing still. Your money deserves more than a nap.

Next up: Where EXACTLY should I put my money?