Here's What Happens When You Stop Putting Money Into Savings

A recent SecureSave survey found that 67% of Americans don't have enough emergency savings to cover an unplanned $400 expense. And people in that boat are no double vulnerable to credit card debt.

If you're on the path to building up your emergency fund, it's important to stay the course. If you stop funding your savings account too soon, you might end up short on money if an unplanned bill strikes or you wind up unemployed for an extended period of time.

When you stop adding to your savings before your emergency fund is complete

You might hear different guidance as far as what a "complete" emergency fund entails. Some experts will tell you that it's best to have enough money in savings to cover six months' worth of bills. Others will tell you that eight to 12 months' worth is more appropriate.

But the generally accepted convention is that your emergency fund should have enough money to cover a minimum of three months' worth of essential bills. If you stop putting money into your savings account before reaching that point, you might end up having to rack up debt if you find yourself out of a job. That's because it can easily take three months to get hired after becoming unemployed.

Also, if you stop funding your emergency savings too soon, you'll risk landing in debt when a large unplanned bill pops up. That bill could be a home repair, a vehicle repair, or a medical expense you weren't anticipating.

It's okay to stop putting money into savings once you have a full emergency fund

Although saving money clearly requires a lot of discipline, it's important to push yourself to keep doing it until your emergency fund is complete -- whatever that means to you, and as long as it means having at least enough cash to cover three full months of essential bills. But once you're happy with the state of your emergency fund, it's actually okay to stop pumping money into your savings account.

In fact, at that point, it can be a great idea to stop putting cash into savings and instead invest it in a brokerage account or IRA. Doing so could allow you to earn a much higher return on your money over time.

In fact, over the past 50 years, the stock market has delivered an average annual return of 10% (before inflation), as measured by the performance of the S&P 500. If you complete your emergency fund and wind up with an extra $500 on your hands, investing it at 10% could grow that sum into $5,400 over 25 years. If you were to keep that extra $500 in a savings account paying 2% interest, you'd only grow it into $820 during that same time period.

It's important to push yourself to complete your emergency fund before halting the practice of putting money into savings. But once you're all set in that regard, you might specifically want to stop funding your savings -- and invest your money instead.