I've Got $25,000 in My HYSA. Is That Enough?

My wife and I currently keep about $25,000 parked in a high-yield savings account.

It's not earmarked for anything specific. Just a catch-all fund for emergencies, surprise expenses, or peace of mind.

We dip into it here and there, but we always refill it quickly. Thankfully we've never had an emergency big enough to use the whole fund.

Still… the other day, a friend told me they keep a full year's worth of expenses in cash just in case of job loss. For them, that's close to $100,000!

That got me thinking: Is our $25,000 in savings enough? Or should we be aiming higher?

Why we chose a high-yield savings account

First off, I'm a huge fan of keeping our cash in a high-yield savings account (HYSA).

We have an HYSA that earns a 4.00% APY currently, which means our $25,000 is quietly making over $1,000 per year in interest.

That beats the pants off our checking account which earns 0.01%.

We can transfer funds instantly, there are no monthly fees, and we're not locking anything up like we would in a CD or a retirement account. For emergency money and short-term savings, an HYSA is the sweet spot.

How far will our $25,000 stretch?

Right now, my household spends about $6,000 to $7,000 per month. So if something major happened, like if I was to lose my job (let's be honest AI will probably replace me any day now), our HYSA would cover three to four months of normal living expenses.

That's decent, and most financial pros recommend saving three to six months' worth of essential expenses. So we're in the ballpark -- at the lower end.

But here's where it gets interesting…

A lower-spending lifestyle gives us more runway

If a true emergency did actually happen, my wife and I would probably cut back our spending. Hard.

If we cut out travel and impulse buys, and also cut out the higher-end groceries we've been splurging on, we could survive on much less I think.

Just survival-mode spending would be about $4,500 per month.

With this smaller budget, our $25,000 could last more than five months. I already feel a lot safer knowing we have this flexibility.

Should we keep more in our HYSA?

Thinking about my friend's ~$100,000 cash cushion, that might fit her better because of her situation and lifestyle. Emergency savings aren't a one-size-fits-all thing.

Having an even bigger emergency fund really depends on things like:

• How stable is your income? Freelancers or single earners might want six to 12 months saved.
• How fast could you cut expenses? If you've got wiggle room, you may not need as much.
• What are you protecting against? Job loss? Medical stuff? You might have different risks (or safety nets) than other people.
• Do you have backup plans? Like a spouse's income, side hustle, or investment cushion?

For us, I feel like $25,000 is a solid middle ground. It gives us breathing room without keeping too much in cash.

If we ever dip into it, we know how to rebuild. But in the meantime, it's growing quietly -- thanks to that sweet APY.

The bottom line

There's no universal "right" number to keep in an HYSA. But it's worth checking in once in a while to make sure you feel good about what it can cover in an emergency.

And no matter what your savings balance is, I believe it should definitely be earning you something, not just sitting there.

If your HYSA isn't pulling its weight, or if you're not sure how much to stash, now's a great time to reassess. Earn up to 4.40% APY with one of these top savings accounts, and make your emergency fund work harder.