We are fine but we're older and are lucky to have planned ahead. I worry about my daughter, she's single, one child and living pretty much paycheck to paycheck.

When you say “savings,” do mean that as distinct from retirement/investment accounts? I know plenty of folks who may not have six months of living expenses (at their current standard of living) sitting liquid in a safe or designated savings account. But those same people have more than that in investment accounts or vested retirement plans that they could access in the event of a job loss or catastrophic emergency.

After the experience of my first marriage, I got into the habit of making sure my spending never exceeded my income. Among other things, this has allowed a certain peace of mind, and the ability to defer paying taxes via timely investments. It turns out, investments grow, who knew?

My feeling is that having a significant amount of ready cash is most beneficial in that it gives one the freedom to make good choices when the inevitable problems arise. Being forced into choosing bad options due to lack of resources often leads to greater problems, and results in a cascade of consequences that would have been easily avoided had one been able to head them off at the pass.

quote:

Originally posted by Aquilon:
When you say “savings,” do mean that as distinct from retirement/investment accounts? I know plenty of folks who may not have six months of living expenses (at their current standard of living) sitting liquid in a safe or designated savings account. But those same people have more than that in investment accounts or vested retirement plans that they could access in the event of a job loss or catastrophic emergency.

As long as they can access it in the event of a financial emergency without major penalties and without derailing their retirement plans, then I'd say that probably qualifies. Although with investments, you're running the risk of it being wiped out if the market crashes or something similar...

But most recommendations seem to be to keep it liquid, and generally only recommend investing money available after you've accumulated the designated 6 month emergency fund.

The problem with relying on retirement investments as an emergency reserve is that there are usually penalties associated with early withdrawals, in addition to taxes owed. It's better than going into foreclosure, etc., but a true emergency fund should be in cash equivalent account like a savings account or money market.

I married up, I married a saver so other than having to forgo some toys I wanted from time to time along this path it has been easy.
We tithe to the church 10% and have been blessed we feel.
I am 52, cash in the bank, 401K maxed each year, stable jobs to this point, goal is to live below our means, no fancy cars, no fancy vacations, we do eat out too much I confesss, house paid off.

Kids college tuition paid early via Texas Tomorrow Fund Gen 1, money for room and board allocated for each beyond that sitting in the bank. 1st child started at A&M this week.

Thank you Lord!

if you don't count retirement funds, no. It is hand to mouth.

Some ridiculous number of Americans (hovering around 80% from a quick Google pull of 2019 data) are living paycheck to paycheck. Some 70% of Americans have less than $1000 saved.

I think I read last week (though I can't seem to find the article) that nearly half of Americans couldn't come up with $500 if they had to.

No but working on it. (Two months easily, three if pushed.) This is something I wish I'd done a long time ago.

Besides a savings account, I keep a cache of cash in my gun safe as a sort of "general fund" and for unexpected expenses. When, for example, my car needed an alternator without warning, the money was as close as my safe.

I'm around the corner from retirement, so yes, we have more than 6 months of post-tax cash for emergencies outside of our retirement and home equity (house paid off in full). No car payments either.

quote:

Originally posted by Aeteocles:
Some ridiculous number of Americans (hovering around 80% from a quick Google pull of 2019 data) are living paycheck to paycheck. Some 70% of Americans have less than $1000 saved.

I think I read last week (though I can't seem to find the article) that nearly half of Americans couldn't come up with $500 if they had to.

Yes, I read the same thing a couple of months ago. I read the majority of adults in the nation could not cough up $500 cash out of their savings.

Pre Covid and the associated financial and jobs crunch, I think the old idea of 3 to 6 months living expenses saved was good advice.

I believe that has changed.

Good for you if you have a great and secure job, most folks don't.

The future is murky.

Currently I now believe that you need a minimum of 12 months living expenses. Minimum.

Even better is several years worth.

It's not just job loss and general economic woes.

For example, I've seen people where the husband or wife became terribly ill. The other became the caretaker and couldn't work.

Think it doesn't happen? I have a friend who is, or was, a Dentist. He had a very successful practice and did manage to save a lot of money.

He came down with cancer at about age 50.

He barely survived, had to close his practice.

He was cured but never again had enough energy and stamina to go back to work as a Dentist.

Now, suddenly, he's not cured. The cancer is back. BTW cancer sucks!

He may lose his paid for house to pay expenses, he has pretty much burned through his investments.

Yeah, 2 years of expenses would not have been enough for him in his particular situation.

However, take away whatever you wish to learn and retain from that example.

I know others in the same type situation. Successful business owners who get very sick, badly injured in an accident, etc. They're wiped out.

Save what you can. You may be just fine, but someone will not.

Good luck to all y'all.
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Yes, separate from retirement plans we have 5-6 years of living expenses saved.

quote:

Originally posted by egregore:
Besides a savings account, I keep a cache of cash in my gun safe as a sort of "general fund" and for unexpected expenses.

That's an excellent point. I do the same thing. While most of it is in a dedicated savings account, part of my emergency fund is kept at home in cash.

Even besides it being a part of my emergency fund, it's helpful for something as simple as saving me a trip to the bank or ATM that day. I can just replenish the cash I pulled out a few days later when it's more convenient.

And it has added utility for things like natural disaster scenarios where ATMs/banks aren't currently available, or where you have to evacuate your home, etc.

About 10-12 yrs ago my wife "froze" our paychecks at the level to cover our bills at the time plus a bit. As time went by we paid off all the plastic (and didn't keep any except gasoline), sort of got cost of living increases, but maintained the same monthly income. The extra built up in the checking accounts then was moved over into a money market every 3-6 months. She retired in May, I will in Jan. We both are fortunate to have excellent annuities. The extra? 5-7 years worth.

^^^^^ Yes a couple grand at home is a useful thing.

Seriously. I have been able to run across incredible deals currently of people with no job yet, no income coming in, needing cash for whatever, and been able to pick up great deals on ammo or other things I value and will buy.

When you find a deal, you need to have immediate cash to get it done.

I can proudly say I'm on baby steps 456 after starting last year. I have $21,000 in a money market account for an emergency fund.

Yes, but just recently and I’m 57. Paid off the house in March for my birthday and just put that money in cash savings. That said, we always put away 20% or so for retirement investment. No student loans for kids or grandkids either. Also drove our cars til the wheels came off. I guess we tried to do everything at once and not agonize about an emergency savings account. Just got comfortable slowly.

We are savers so have pleanty of cash just in case. House paid for, Both the truck2018 and pilot 2019 paid for. Took alot of work but you have to keep trying if it is inportant to you.

Aside from the cash, cash equivalent, liquid investments, non-liquid assets, buffer income, passive income, and personal property, I also intentionally keep a very good credit score and plenty of available credit that can be deployed in an emergency.

Currently taking steps to reduce my expenses by about $600 every month. Some will go to pay other debts down faster, and the rest will go into savings.