Here's How Much Money You Should Have in Your Bank Account During a Recession (2024)

FAQs

Here's How Much Money You Should Have in Your Bank Account During a Recession? ›

Single income: Save six months or more

Where to put money during a recession. Putting money in savings accounts, money market accounts, and CDs keeps your money safe in an FDIC-insured bank account (or NCUA-insured credit union account). Alternatively, invest in the stock market with a broker.

The government generally can't take money out of your bank account unless you have an unpaid tax bill (and before they go to that extreme, they will send you several notifications and offer you multiple opportunities to pay your outstanding taxes).

Treasury Bonds

Treasurys, says Collins, are similar to government and corporate bonds, as they are backed by the full faith and credit of the U.S. government. They are typically seen as safe investments during a recession.

Most experts suggest keeping one to two months' worth of expenses in your checking account at all times.

Banking regulation has changed over the last 100 years to provide more protection to consumers. You can keep money in a bank account during a recession and it will be safe through FDIC and NCUA deposit insurance.

While volatile financial times (inflation, recessions, and fluctuations in supply and demand) may cause some to feel as though the best place to store their money is under the mattress: it is not a recommended practice now, or at any other time.

Saving Accounts

Like checking accounts, they're federally insured and are generally the simplest and safest place to keep cash in good times and bad.

FDIC insurance coverage guarantees up to $250,000 per depositor, per insured bank, for each account ownership category. This means that if you have multiple accounts with the same bank, each account is insured separately up to $250,000.

You should only take your money out of the bank if you need the cash. In the bank, cash is less vulnerable to theft, loss and disaster. And depending on the bank account, you could be earning interest on your cash that you won't be earning if it stays under your mattress.

What food to buy before a recession? ›

Canned meats are a good selection. Rice and varieties of beans are nutritious and long-lasting. Ready-to-eat cereals, pasta mixes, rice mixes, dried fruits, etc.

Where Is the Safest Place To Keep Cash? Deposit accounts—like savings accounts, CDs, MMAs, and checking accounts—are a safe place to keep money because consumer deposits are insured for up to $250,000, either by the FDIC or NCUA.

How much is too much? The general rule is to have three to six months' worth of living expenses (rent, utilities, food, car payments, etc.)

It's a good idea to keep enough cash at home to cover two months' worth of basic necessities, some experts recommend. A locked, waterproof and fireproof safe can help protect your cash and other valuables from fire, flood or theft.

Key Statistics on Average Savings Account Balances

According to the Federal Reserve's 2022 Survey of Consumer Finances (SCF), Americans' average (mean) household savings account balance is $62,410. However, the median savings account balance of $8,000 might be a more accurate representation.

Recessions typically occur every 6.5 years, a sobering reminder of why keeping cash on hand is a crucial part of financial planning. But how much is the right amount? Experts recommend having three to six months of living expenses in a savings account, regardless of the economic climate.

U.S. government securities—such as Treasury notes, bills, and bonds—have historically been considered extremely safe because the U.S. government guarantees timely payment of interest and principal, backed by its full faith and credit.

Bank stocks typically underperform heading into a recession. They act as a proxy for the health of the economy. If the market is looking 18 months into the future, they expect a slowdown in activity from the banks. However, once we're in a recession, banks typically outperform.