How much do you all think is a REASONABLE amount to have saved? I’m not talking retirement, I mean $ that you have set aside for emergencies, etc. I know that the experts say that we should have 3 months worth. I find that the majority of people I work with want to have $500 or $1000. I’m always trying to get them to raise that number, but realistically, how much do you shoot to keep in savings??
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I have heard 3 months and I have heard 6 months. For me personally, I would prefer more as it would give me more time to recover from a setback.
I would say to have 6 months at least of the major expenses (rent/mortgage, car, etc.)
As long as I had enough to cover the most important things, that would give me the ability to figure the rest out as I go.
With a place to live, transportation and food for 6 months if I didn’t have a job, I am sure I would be able to figure out a way to cover any other expenses that may arise.
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Yes, 6 months is ideal. But realistically, I don’t see many people (very VERY few) doing that. I know that the people I work with are low income (Section 8), and trying to encourage savings is tough. I don’t even bring up the 6 months idea because it’s so far outside of what most people think is possible that they don’t even shoot for it. I’d be thrilled to see everyone I work with have a $3000 cushion, but so many just try for $500 and that’s tough. Some are starting from a place where there is not an extra cent, but most could put aside 5$ or 10$ a paycheck. Much of the time, tax returns go to car repair which of course is necessary to keep a job here- limited public transportation.
I’m just trying to find out what people realistically want/what an attainable shorter term goal is/ saved, without asking for the actual number. I wouldn’t ask this in a public forum, but I am very curious what people have saved, and is it as little as the experts are saying it is.
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I had heard about 6 months worth of salary and tried hard to save for over 15 years without much success. As soon as I would start building a few thousand, it seemed something would happen (major home repair, need a running car, etc.) and instead of incurring yet another debt, I’d use what we’d managed to save. A few years ago I decided to create a list of the absolute minimum we could survive on a month - basically an absolute bare bones budget and we decided to target saving 3 times that amount.
We opened and online account and budgeted $50 a week to go into this account. This was separate to our regular savings - since that trying to use that had never worked out for us. In addition, if we received an unexpected bonus like birthday money or those two months a year when you have an extra payday (if you get paid weekly or biweekly) then we’d put anything from a 1/4 to 1/2 from that into the online account.
Last year we finally made our goal of 3 months and it wasn’t a strain at all. Now we’re shooting for 6 months. Having that separate online account really helped. About a year and a half ago, I opened and moved that money into a high yield savings account.
To get some extra money into my budget back then, I did two things. 1) I negotiated my internet/TV/telephone plan down $50 for two years. Warning - this was pretty painful and I was on the verge of leaving before they agreed to change my plan. 2) I shopped around and managed to save a little over another $50 a month on our insurance rates.
Hope this helps.
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Thank you @thesugarfreelife! Very helpful. I love to real life examples when talking with people. I know it makes me personally feel more like things are possible rather than reading about someone who doesn’t even seem real to me.
It all depends, 3 months is not bad but I would wish to save more. I currently set a 5 thousand mark for myself by the end of the year, I’ve worked harder to achieve it before even half of the year, but now I have to find another job because my contract ended, and I’m feeding off paycheck to paycheck trying so hard not to dip into my savings/emergency fund just yet. but if I ever have to, that should be able to take me over 5 or 6 months while getting myself back together with my money spending habits and bills
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Have any of you seen some research that JPMorgan Chase recently did on the topic, How Much Cash Buffer Do You Need? Surprisingly, they didn’t opt for the usual touted 3-6 month amount, but for amounts based on where you are in life. There’s a data visualization exercise that you can complete that gives you some idea of what they say your absolute minimum savings could be. Here’s the link: https://institute.jpmorganchas…ome-volatility-chart
Jean Chatsky from Her Money talked about this same thing in this weekend’s podcast. I think what they are pointing out is that saving money is extremely difficult for low-income or the over-burdened. When you say something to them like you need 3-6 months of expenses saved, that’s a far reach.
Example from data I selected in the Chase chart:
“Families with incomes less than $29,000 and a primary account holder aged 35 to 44 should have a minimum liquid cash buffer of 7.4 weeks to weather a simultaneous income dip and spending spike, which equates to $2,5661.” <not me, I’m a senior citizen?>
I’m semi-retired now, but when I worked full-time as a contractor I didn’t feel covered unless I had 6 months of bills set aside. But, I don’t really need that much now.
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I think the general recommendation is 3-6 months. Realistically I only have like a month right now. It’s not easy.
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Exactly, @lismox, it’s definitely not easy to reach the goal of 3-6 months in savings. But one month is a start and if you could use some of your stimulus as a boost, that would help. That’s what I’ll be doing. Take care.
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We have a 2 year emergency fund. Mary Hunt many years ago, (late 90s) said a family of 4 should have $10,000 in their freedom fund. We follow Dave Ramsey, he says 3-6 months of expenses, and $1000 for beginning emergency fund. Save what you can while you can. Save as much as you can, even 5-10 dollars a week. My motto is, save something.
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I had been in prep mode for most of 2019 for a recession as we were long overdue. Then reports of a viral infection that was deadly added to my discomfort of being financially unprepared. I started the year with about 2.5 months of liquid savings and now I’m sitting on about 5 months.
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@myron.h.jackson posted:
I had been in prep mode for most of 2019 for a recession as we were long overdue. Then reports of a viral infection that was deadly added to my discomfort of being financially unprepared. I started the year with about 2.5 months of liquid savings and now I’m sitting on about 5 months.
That was really smart Myron! I now have about 2 months saved but I’d feel a lot better with 6. Something this coronavirus has shown me was to be prepared!
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