A viral video spurred discussion over how much money young people really keep in their savings accounts - but here's how much experts say you should actually have on hand
How much do you keep in your savings account? $30,000? A few grand? Less than a dollar?
Those were a few of the answers thrown out in the comments on a recent TikTok video that focused on how much money people actually keep in their cash reserves.
"Can we normalize telling each other what our savings accounts' [balances] are?" user Hannah Lasche said in the video, which had been viewed more than 4.7 million times by Monday afternoon. "I feel like I see people saying they have no savings, I feel like I see people having insane savings, and I just don't know what the normal is ... between the age of 20 to 35."
Lasche shared that she'd met a 26-year-old who lives with their parents and had stowed away about $60,000 in savings, an amount that shocked her.
"I know you can't compare because you have different lives, but I just want to know," she continued in the video.
The video, with nearly 326,000 likes and more than 50,000 comments, isn't the first post about personal finance that has taken off on TikTok. Topics like so-called loud budgeting or a typical checking-account balance have stirred broad conversations about finances among the app's younger user base.
In one survey, 76% of Gen Z-ers said they'd learned about personal finance from video platforms like TikTok and YouTube (GOOG).
The comment section of Lasche's video was filled with users sharing how much they had in savings. Some said they had as much as $400,000 saved for retirement and other expenses; others said their account, if they had one at all, was nearly empty.
"What's a savings account?" one user wrote. "I'm literally scraping by."
"I have leftover fries in the fridge," another wrote.
But is there a magic number you should aim to keep in savings? And is it a smart idea to share how much you have saved? MarketWatch talked to personal-finance experts to find out.
How much should you keep in your savings account?
The amount of cash you should keep in savings depends on what kinds of savings you're talking about, said Elizabeth Ayoola, a writer at the personal-finance site NerdWallet. You could be saving for retirement or for a short-term spending goal like a vacation or new car, or just stowing extra cash in case of an emergency.
Most personal-finance experts advise that at the very least, you should keep three to six months' worth of living expenses in a savings account for emergencies.
"Stuff happens. It's not a matter of if. It's only a matter of when. You'll need to have a reserve fund if your car breaks down, you have an unexpected medical bill or regrettably lose your job," Thomas Scanlon, a Connecticut-based certified financial planner, told MarketWatch in an email. "Don't beat yourself up if you are nowhere near that. Just start where you are and add something to it every month."
What's a 'normal' amount to keep in savings in your 20s?
The median bank-account balance for those under 35 years old is $5,400, according to Bankrate. The average amount is $20,540. For people in the 35-to-44 age group, the median amount is $7,500 and the average amount is $41,540.
The ideal amount of savings will look different for everyone, Ayoola said - and to figure out your own, you'll need to look at the amount you spend in a typical month.
For example, one young adult might live with their parents and spend about $800 a month. Another person might live alone and spend $3,500 a month.
The first individual should ideally keep at least $2,400 in savings, while the latter might want to keep a minimum of $10,500 on hand.
"If you look at that example, there's a huge difference," Ayoola said. "You have to get into the nitty-gritty of budgeting, which isn't always fun. But it's necessary, so you have a concrete number you can work towards."
Savings for a short-term goal like buying a car or paying for a vacation will depend on how much you're planning to spend on those goals. And retirement-savings levels can also vary, especially among young people, but NerdWallet does track the average amount for each age group. For people younger than 35, it's $49,130.
Gen Z is ahead of the game when it comes to saving for retirement, according to a few recent surveys. About seven in 10 Gen Z-ers say they're on track or even ahead when it comes to preparing for retirement, a Goldman Sachs report showed.
Is there such a thing as too much savings?
Your emergency fund could be up to 12 months' worth of living expenses, and experts recommend keeping that money in a typical bank account, such as a savings or high-yield account.
But for short-term and retirement savings, it might actually be wiser to stow that cash in other instruments that can offer higher rates of return, Ayoola said.
Retirement savings can be placed in target-date funds that invest your money depending on the year you're planning to retire, for example. For savings for short-term goals that are separate from your emergency fund, you might consider utilizing certificates of deposit or money-market funds that will pay more interest than a typical savings account, Ayoola said.
"For most savers in their 20s, the sweet spot is to save no more than six months' worth of expenses in cash and invest the rest," said Charles Pastor, a Colorado-based certified financial planner and contributing expert at the Motley Fool Ascent. "Even when [interest] rates are high, putting too much money in a savings account can mean missing out on market gains over the long term."
Should you talk about your savings with friends?
Personal-finance experts agree that talking more openly about your savings can be helpful.
"The only way to make money less taboo is to talk about it," Vivian Tu, the creator of Your Rich BFF, said in a video stitching the original TikTok video from Lasche. "Ultimately, the more we discuss our finances, the more knowledgeable and powerful we become."
However, it's important to keep in mind that everyone's financial circumstances and goals will be different, Ayoola said. Some folks may have lower expenses or higher incomes; others might have debts that impact their ability to save.
"It's a really slippery slope using your friend's [specific] savings-account balance as a benchmark for how much you should be saving," she said.
The financial conversations spurred by social-media apps like TikTok might be playing a role in helping younger generations manage their money, Ayoola said.
"I do think it's shifting people's conversations, and young people in particular, because young people are talking about it more ... and being a lot more transparent about it," she said. "There are still people who are very uncomfortable talking about money, and what can happen when you start discussing it openly is you can start learning from your peers."
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