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Boost your savings account by following these tips

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You know you should be saving, but bills, expenses, student loans, health insurance, and even Netflix and DoorDash often get in the way. Much like working out, putting money into savings is often easier said than done. 

And if you’re struggling to save, you’re not alone. A recent Varo survey conducted by Propeller Insights showed that about one in five Americans is living paycheck to paycheck1. More than two-thirds don’t have a three-month emergency fund, and almost half don’t have any savings set aside for unexpected expenses. 

Whether you’ve recently had to dip into your savings due to circumstances out of your control or you’re just getting started with saving more for the future, here’s what you need to know about how much you really should have in your savings account—and tips for getting there. 

How much you should have in savings

When we talk about savings, we’re usually talking about saving for emergencies, short-term goals, and then retirement. Let’s start with these.

Emergency fund

An emergency fund is the money you’ve set aside for life’s unexpected events, such as a medical crisis, a job loss, and home or car repairs. A general rule of thumb is to keep enough money to cover three to six months’ worth of living expenses in an emergency fund. Essential expenses include your rent or mortgage payment, car payments, utility bills, health care, and food. 

Instead of saving money, many people count on credit cards for emergencies. But, most credit cards charge double-digit interest rates, and a second or third emergency may send your finances out of control.

If you’re just getting started with an emergency fund, set a goal of building a small fund of around $500 to $1,000—just enough to cover a few essentials, and then build it as you can to eventually ensure you’re not living paycheck to paycheck, especially if an emergency arises. 

Short-term goals

Short-term savings goals can include things like starting to save in March for holiday shopping next December, saving to buy a car, or making a down payment on a house. This money is different from your emergency fund because you are definitely planning to spend it once you meet your goal, whereas your emergency fund sits on the side for "just in case" scenarios.


The amount you should save for retirement depends on a variety of factors, including your age, your income, when you started saving, your planned retirement age, and your dreams for retirement. 

A good rule of thumb is to save at least 15% of your before-tax income every month for retirement. Your employer match, if you have one, definitely counts. And thanks to compound interest, the sooner you start saving, the better. 

But what about debt? 

If you have debt hanging over your head, it can be daunting to think about saving at the same time. It’s not easy to put $100 in your emergency fund each month when you have a 25.00% interest rate on your credit card.

But, if you only focus on paying your debt, then you’ll have nothing but your credit cards to fall back on if you have a financial emergency. At the same time, if you reduce the balance you owe on credit cards with high-interest rates, the less money you’ll be paying towards interest, which can give you some extra dollars to put toward savings. 

Ultimately, try to find a balance between the amount you spend on debt and savings each month. You might pay more interest than you should, but having savings to cover sudden, unexpected expenses will keep you out of an ongoing debt cycle, as well as give you a little peace of mind. 

So, if you feel discouraged every time you check the balance of your savings account, here are some tips for reaching your savings goals. 

Tips for how to reach your savings goals

1. Open a high-yield savings account

Savings accounts are the most common type of bank account to set aside money for an emergency fund. Keeping your money in a savings account, as opposed to a checking account, keeps it out of sight, which means you are much less likely to spend it. If you keep in a high-yield Varo Savings Account, you can save money even faster. 

High-yield savings accounts offer annual percentage yields (APYs) that are significantly higher than the national average. So, for example, if you have $5,000 in a savings account that earns the average interest rate, you won’t make much  each year. But if you keep that money in a savings account with 3.00% APY like Varo’s, you would earn $150 annually2

2. Pay yourself first

If you want to boost your savings account, consider adopting the investor mentality of paying yourself first. This means that rather than trying to save the money that’s left at the end of the month, you set aside a portion of your income for your emergency fund or another savings account first. 

Routing a specified savings contribution from each paycheck into your savings account helps remove the temptation to spend the funds on expenses other than savings. Varo’s Save Your Pay is a tool that automatically deposits a percentage of what you earn into your Varo Savings Account. The percentage you want to save is up to you

3. Set it and forget it

To make paying yourself first even easier, set a monthly savings goal, and automatically transfer funds to your savings account each time you get paid.

If your employer offers a 401(k) plan, you can automate your retirement savings, too. And if your employer offers a 401(k) with a match on your contributions, try to invest at least up to the match. After all, that’s free money! Consider increasing your savings rate by 1% every year until you reach at least 15% of your pay.

4. Get better benefits

If you’re on the hunt for a new job, give preference to employers who offer good benefits, such as health insurance, matching retirement savings plans, transportation reimbursement, or childcare perks. The less you have to pay for these, the more money you have to save.

5. Start a side hustle

Have some downtime? Start a side hustle. There are lots of ways to make extra money in your spare time, from becoming a dog walker or sitter to renting out your parking space or car. The more money you earn, the more you’ll have available to sock away.

Maximizing your savings doesn’t happen overnight. But if you focus on the fundamentals, pay off your high-interest debt, automate your savings and investments, and raise your income, you can build your wealth over time and set yourself up for a brighter financial future. 

1 2018 survey for Varo conducted by Propeller Insights of more than 1,000 U.S. adults age 18+

2 Start earning 3.00% Savings APY, then qualify to earn 5.00% APY on your balance up to $5,000.00 for next month by meeting these two requirements this month by receiving direct deposit(s) totaling $1,000 or more each month; and ending the month with a positive balance in both your Varo Bank Account and Savings Account. APY is accurate as of Feb 1, 2023. Rates may change without prior notice, before or after the account is opened. Interest is paid in whole cents only. See our calculations here. The requirements must be met within the Qualifying Period begins on the first calendar day of the month and ends at close of business (4:25 pm MST/ 3:25 pm MDT) on the last business day of the month. Meet the requirements in the current month to qualify to earn 5.00% APY for the following month. Qualifying direct deposits are electronic deposits of your paycheck, pension or government benefits (such as Social Security or unemployment) from your employer or government agency. Tax refunds and government stimulus payments, Person-to-Person payments (such as Venmo), and funds deposited using a Varo routing number are not considered a direct deposit. See the Varo Savings Account Agreement for full terms and conditions.

Unless otherwise noted above, opinions, advice, services, or other information or content expressed or contributed by customers or non-Varo contributors do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s) other than Varo.


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