I’ve always thought of a high-yield savings account (HYSA) like a really talented point guard — it scores major points for my money game, but it’s not the only player on the team.
HYSAs are clutch for racking up solid interest (mine currently pays 4.00% APY) and helping with short-term savings goals. But they’re not built for long-term investing or day-to-day spending.
That’s why I only keep specific types of money in mine.
What I keep in my HYSA
1. My emergency fund
This is priority number one for me. I keep about six months’ worth of living expenses in my HYSA as an emergency cash buffer. It’s around $25,000 at the moment.
Since I’m earning 4.00% APY, this account generates about $1,000 in interest each year. Woot woot!
And because it’s FDIC-insured up to $250,000, it’s super safe and I never have to worry about the risk of losing any money.
2. Short-term savings goals
If I’m saving for something big in the next year or two (like a vacation, home renos, or new car) that cash lives in my HYSA.
For example, I’m planning a family trip to Australia soon. Putting money aside into my HYSA means it’s out of my checking account (where I might accidentally spend it), and also earning a decent interest rate.
3. Money “in between” investments
Sometimes I sell an investment or get a big cash influx, but I’m not ready to reinvest right away. In fact, right now I’m about to sell my last physical rental property and haven’t quite decided where I’m going to reinvest the proceeds.
That’s when my HYSA acts as a holding pen. Even if it’s only for a short time, the interest really adds up. For example, keeping $50,000 in an HYSA earning 4.00% APY just for 45 days will earn ~$246 interest.
Money I never keep in my HYSA
1. Long-term investments
For money that I won’t touch for decades, I want it working way harder. Sure, earning 4.00% APY feels great for short-term savings, but it can’t compete with the long-term growth potential of the stock market.
Historically, the S&P 500 has returned ~10% annually. There’s definitely more risk with investing in stocks. But over 20 or 30 years, that difference in growth is massive.
Every now and then, I check in with my HYSA to make sure I’m not sitting on too much cash. And if I am, I pull some out and throw it into index funds where it can really go to work.
2. Everyday spending money
Transfers from my HYSA to my checking account usually take one to two business days. So it’s not practical for everyday banking activities.
My checking account is where I get my paychecks, have my credit cards auto-paid from, and keep about one month of expenses as a float balance.
HYSAs are great at some things, but fast access is not one of them. If you’re unsure whether an HYSA fits your needs, read up on the pros and cons of high-yield savings accounts before you open one.
Your HYSA will look different than mine
The beauty of an HYSA is that it’s flexible.
Maybe you only keep a small cushion in there and invest everything else. Or maybe you’re in a season of life where you want more cash on hand — like if you’re about to buy a house, switch jobs, or are close to retirement.
You get to decide what role your HYSA plays on your financial “team.”
The trick is being intentional. Decide what belongs in your HYSA and what doesn’t. That way, every dollar in there is earning more than it would in a big bank savings account, but still ready when you need it.
If you’re still on the fence, the best way to figure it out is to open one and start small. Move over an amount you’re comfortable with, watch the interest roll in, and see how it fits into your overall plan.
Check out our list of the best high-yield savings accounts right now. Compare rates, find the right fit, and put your HYSA to work in a way that makes sense for you.
