Should You Ever Keep More Than $50,000 in Savings?

What's the perfect amount of money to keep in the bank? Oh, if only life were that simple…

The truth is, there's no one right answer. It depends on your spending habits, your income, and your specific financial situation. Most people don't need $50,000 in savings, for example -- but there are a few scenarios where you might want that much and then some.

Here's how to know how much you should keep in the bank, and what to do with your money instead.

How big should your emergency fund be?

At a bare minimum, you should probably keep three to six months' worth of essential expenses in the bank -- money you can access at any time for any reason. That's your emergency fund, which you can lean on in the case of job loss, unexpected medical expenses, or anything else that might come up.

If your monthly costs run to, say, $4,000, you should probably keep $12,000 to $24,000 in savings. Freelancers and commission-based workers might lean toward the higher end, since their income swings more than most. On the other hand, a dual-income household with stable jobs can sit at the low end of that range.

According to Motley Fool Money research, only 55% of Americans can cover three months of expenses using savings. If you've already cleared that bar, you're in better shape than a lot of people. But don't be afraid to keep saving if you need to.

When $50,000 in savings is too much

Beyond that three- to six-month mark, keeping extra cash in your savings account is probably a missed opportunity. That's because historically speaking, you can earn a lot more by investing that money in the stock market with a top brokerage account. Even a top high-yield savings account barely outpaces inflation in the long run.

Keeping more than, say, $50,000 in savings probably makes sense if you're saving for something specific and short-term. If you don't have a clear goal, that much cash sitting in a bank account is probably working against you.

Want to start saving for your future today? Check out our list of the best brokerage accounts available now and start growing your money.

When $50,000 in savings isn't enough

On the other hand, there are a few situations where $50,000 in savings is perfectly reasonable -- or maybe even not enough.

If you're buying a home, running a business with unpredictable income, or retiring in the next few years, keeping more cash on hand might make sense. More cash means more security, and less scrambling if you need to cover unexpected expenses in a hurry.

On a $400,000 home, for example, a 10% down payment is $40,000 before you've paid a cent in closing costs. That makes for a pretty good time to stay liquid.

Also, business owners often need a bigger cushion than others, since revenue can dry up fast in some cases. A good rule of thumb is three to six months of business operating expenses on top of your personal emergency fund -- kept in a separate account so the two never get mixed up.

And if you're within a few years of retirement, it's smart to keep one to two years of expenses in cash. That way you're not forced to sell investments during a downturn just to cover your bills. The same logic applies if you're between jobs or expecting a big one-time expense, like a wedding or a major home repair, in the next year or so.

What to do with the money in your emergency fund

Where should you put the money you do want in an emergency fund? There's only one answer: a high-yield savings account (HYSA).

Right now, the best HYSAs offer around 4.00% APY -- about 11X the national average of 0.37%, per the FDIC. That means on a balance of, say, $10,000, you'd earn about $400 a year in interest. And on a $50,000 balance, you're looking at a whopping $2,000 a year in earnings.

Best of all, your money stays protected and totally accessible -- no risk required. That's the power of taking a few minutes to move your cash to the right place.

Interested? Check out our list of the best high-yield savings accounts and find the one for you today.