Survey Reveals The Exact Amount You Need In A Savings Account To Feel Significantly Less Stressed
You don't need to save millions to improve your financial well-being.
shurkin_son | Shutterstock Money is stress-inducing for many Americans, and it's easy to see why. The cost of living is outrageously high, and well-paying jobs seem few and far between. Add inflation, tariffs, and debt into the mix, and financial stress seems inevitable.
Yet, according to a recent survey, you don't need millions in your bank account to feel better. New research from investment firm Vanguard revealed that saving just a couple grand can lower your stress levels greatly.
The survey found that you need $2000 in a savings account to feel significantly less stressed.
In July 2024, Vanguard researchers surveyed 12,443 investors and measured their financial well-being, financial stress, changes in financial stress year over year, and level of emergency savings.
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"People with emergency savings tend to have a higher level of financial well-being, spend less time thinking about and dealing with their finances, are less distracted at work, and are less likely to experience increased financial stress over time," they reported. "Our findings also suggest that small steps may make a big difference in a household’s finances. They indicate that the strongest predictor of financial well-being and lower financial stress is having at least $2,000 in emergency savings."
This amount is associated with a 21% higher level of financial well-being. Though, of course, the more savings the better, and having at least three to six months of expenses saved on top of the initial $2,000 is associated with an additional 13% boost to financial well-being.
As for stress, "only 15% of clients with at least $2,000 in emergency savings reported an increase in financial stress year over year, compared with 51% of clients without emergency savings," the researchers noted. "This underscores the importance of emergency savings in managing financial setbacks and financial stress."
An emergency fund is incredibly valuable.
Nerd Wallet defines an emergency fund as "a bank account with money set aside to pay for large, unexpected expenses." That could be unforeseen medical bills, home and car repairs, or unplanned unemployment. Aside from lowering stress and boosting financial well-being, an emergency fund creates a financial buffer to keep you afloat during times of need.
This is especially important in a time when nearly half of Americans are living paycheck to paycheck, meaning an unexpected expense or loss of income could be disastrous. Yet, according to a U.S. News survey, 42% of Americans don't have an emergency fund at all.
Save what you can, even if it's not $2000.
While $2000 is the ideal minimum amount to have saved, many people don't have two grand to leave untouched in an emergency account. That doesn't mean you shouldn't save what you can, though.
Speaking with CBS News, Paulo Costa, a behavioral economist, certified financial planner, and co-author of the Vanguard research, suggested starting small by saving as little as $10 a week. "Saving something is better than saving nothing," he stressed.
In a recent article, YourTango staff writer Megan Quinn shared a few more tips to save money. She advised automating your savings, so a portion of your paycheck is automatically transferred into a savings account. Quinn also recommended cancelling unused subscriptions, using cashback rewards programs, and creating (and sticking to) a budget.
While these suggestions may seem small, over time, the money will add up to a stress-reducing amount.
Audrey Jaber is a writer and associate editor with a bachelor's degree in journalism.
