The Average American Needs $19,800 in Savings -- Most Don't Even Come Close

If you had to cover three months of bills without a paycheck, could you?

That's the real reason financial experts point to $19,800 as a smart savings target. It's based on one simple idea: The average U.S. household spends about $6,600 per month, according to recent data from the Bureau of Labor Statistics. Multiply that by three, and you've got a bare-minimum emergency fund.

And yet, most Americans don't even come close.

Most households aren't ready for a crisis

A recent Fortune survey found that just 41% of Americans could cover a $1,000 emergency using their savings. That's not even enough for a major car repair, let alone a job loss or unexpected medical bill.

It's not always a spending problem; it's often a strategy problem. Many people keep what little savings they do have in accounts earning basically nothing. Meanwhile, inflation keeps eating away at the value of their cash.

If you're serious about reaching that $19,800 target, where you keep your savings matters just as much as the amount you save.

Where to stash your emergency fund (Hint: not a checking account)

This is where high-yield savings accounts (HYSAs) come in.

Top online banks are currently offering over 4.25% APY, with no monthly fees or hoops to jump through. That's a huge upgrade over the national average savings rate, which is still stuck below 0.50%.

Let's do the math:

If you're holding $10,000 in a traditional bank account at 0.01% APY, you'd earn just $1 in a year.

But at 4.25% APY? You'd earn $425 -- with no extra effort.

These accounts are federally insured, totally liquid, and built for exactly this kind of savings. You're not locking your money away in a CD or taking on stock market risk. You're just earning more while staying flexible.

How to build up $19,800 -- even if you're starting small

If that number feels out of reach, don't panic. You don't have to save it all at once. The key is consistency.

Try this:

• Start by automating $50 to $100 a week into a high-yield account.
• Use windfalls like tax refunds or bonuses to boost your balance.
• Keep it separate from your everyday spending so you're not tempted to dip in.

Once you build momentum, saving gets easier. And watching your money grow faster in a high-yield account can actually be motivating. You'll feel the progress.

Savings isn't just a number -- it's peace of mind

Having $19,800 in the bank won't make you rich. But it might be the difference between staying afloat or going into debt when life throws you a curveball.

Most people don't have that cushion. But that also means most people aren't earning interest on their money, and that's something you can change today.

If you want a savings strategy that actually works, start with a better account. You'll hit your target faster, and you won't have to settle for earning pennies on your hard-earned cash.