Dollars and Sense: How much should you have in your savings account?
Sunday, 21 June 2026
Senior business reporter Rob Stock answers your money questions. Got a question for Sunday magazine? Email it to sundaymagazine@stuff.co.nz
QUESTION: How much should you have in your savings account at any given time?
ANSWER: There are so many ways to answer this question, but essentially, it all depends on what you are trying to achieve in life, and what your income is.
I will start, however, with something that to me is pretty straightforward. Your wealth is about more than what is in your savings account.
Wealth, which is a word with ancient origins, encapsulates more than money, or material wealth. It also includes your education, skills, health and wellbeing. To me, you are not wealthy, if you are unhealthy, miserable, and are not well-loved and respected by your family.
But, setting that aside, I would begin by offering this: Your wealth should at least be equal to the amount that you have inherited from your ancestors.
I very much believe that money inherited is money that you should pass on, after having enjoyed benefits from it during your life. I cringe when people spend windfalls.
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You will find many “rules of thumb” in life are suggested to you. All scan well, and I have lived by some of them.
One is that you should have emergency, instant-access savings equal to three months of expenses.
That’s a lovely idea, and was pretty easy for a well-paid household like my own to live by, but it’s up for debate, especially after you pass the magic moment in your life where (at a pinch) you can live on a single income, yours or your spouses.
Until that moment, ready access to savings is like having insurance.
I have had several non-journalist friends get made redundant and pass a nervous year until they got a new paying gig. So, should we have ready access to savings worth 12 months of your expenses? That’s a lot, especially for people who have a mortgage.
I do think you need to have a decent chunk of ready-access savings, but I think each of us should be playing a long-game with money.
Start with your ambitions. Most people’s first ambitions are to build employable/marketable skills, and to get together a deposit for a home.
Then their minds turn to the next sets of aims: getting equity in their home (including rapidly paying down their home loans), and also building a retirement nest-egg, which usually now means through KiwiSaver.
Once you have plans, you can gauge where you should be with your wealth at any point in time.
This is a time when people have to make savings trade-offs. How much do you direct to killing the mortgage? How much goes into KiwiSaver? How much do you keep in ready access savings? How often do you replace the car? How often do you eat out? Do you buy new furniture, or scour second hand traders for pieces you can restore?
I have been fortunate. I have had a household income for most of my life that enabled my family to do the things we felt were important. I married young, and have never been divorced. My important things included rapidly paying down the mortgage, having adequate instant-access savings, and maximising KiwiSaver (and before that workplace super).
I haven’t taken the kids on overseas holidays each year, and have never driven a new car, but I have been able to provide a stable home life for my girls, who have wanted for nothing of any real importance. That’s happiness for me.
A wise fund manager once told me the secret to a comfortable life without money worries was to get yourself skilled up, and then save 10% of your gross income into a superannuation scheme. I believe he is right.
That was a long answer to a short question, but it boils down to this: Work out what you want to do you want to achieve in life, and make plans that give you the best chance of getting there.