Should You Have $100K in Savings?
Written by
Melanie Grafil, AI Editor
Edited by
Melanie Grafil
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Wonder if having $100,000 in savings is a big deal? You’re not alone. That’s hitting a major milestone in the game of saving money. But, is it the right goal for everyone? Well, it depends on a few things, like what you’re saving for, your age, how you like to live and the responsibilities you have. Here’s more on why hitting that $100,000 mark could be a good thing, but also why it might not be the end-all-be-all for everyone.
See Also: 6 Genius Things All Wealthy People Do With Their Money
Key Takeaways
- Hitting $100K in savings shows you’re serious about managing your money.
- It’s a hefty safety net for emergencies or unexpected expenses.
- But, is just keeping it in a savings account the best move?
- Think about short-term investments to grow your savings.
First off, saving up $100,000 shows you’ve got your money management down. You’re making smart choices and staying disciplined about saving versus splurging.
Having $100,000 tucked away can also bring a lot of comfort. It means you’ve got a hefty safety net for life’s unpredictable moments, like sudden job loss or unexpected medical bills. This peace of mind is something everyone aims for. But here’s the thing: just having this money sitting in a bank account might not be the smartest move if you’re looking to grow your wealth.
Is $100K in Cash Savings Good?
Sure, it’s great for peace of mind. But if you’re saving for big future plans like retirement or buying a home, you’ll want your money to do more than letting the money sit.
When you just put your money in a savings account, you might be missing out on opportunities to grow your money in other investments. There’s also inflation to think about. So, if your money isn’t growing, it’s actually losing its power to buy things as years go by. Imagine saving up for a bike that costs $100 today, but in a few years, the same bike costs $120. If your money simply sits without growing, you won’t be able to afford the bike later on, even though you thought you had enough saved.
Then, there’s the chance to make your money grow faster, which you lose if you don’t consider investing. Keeping your cash in a savings account is safe and it’s not likely you’ll lose that cash, but the interest you earn could grow a slower rate–of course, there are high-yield savings account options as well. But, if you’re looking at a wider variety of investments–real estate, for example, you could find ways to make your money increase more quickly. This doesn’t mean you should throw all your cash into the stock market without thinking. By exploring different options, you could find other ways to get more from your money, helping you reach your financial goals sooner.
What About Growing Your Money?
That’s where short-term investments come in. These can be a smarter place for some of your cash, so it’s not just gathering dust in a savings account.
Looking into short-term investments:
- High-yield savings accounts: Better interest rates than regular accounts.
- Certificates of deposit: Locked in rates for a set period, usually higher than savings accounts.
- Money market funds: A bit more interest without much risk.
- Short-term bond funds: A step up in potential earnings, with a bit more risk.
Finding the right balance involves keeping enough cash accessible for emergencies and immediate needs while also investing a portion of your funds for long-term growth, in a way that aligns with your comfort level and financial goals. This dual approach ensures you’re prepared for unexpected expenses and are also positioning your finances to expand over time.
Final Take
Having $100,000 saved up is a fantastic place to be. It means you’re on top of your finances and ready for whatever comes your way. But remember, it’s not just about having a big number in your account. It’s about making that money work for you, so you can hit those life goals, whether it’s a dream vacation, a new home or a comfortable retirement.
Remember, there’s no one-size-fits-all in money matters. Think about what you’re looking to achieve, and don’t be afraid to chat with a financial advisor to get your plan just right.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
