General Savings Question - Need Advice

[blue38]

How much money is in your savings account and how old are you? Do you also have funds in non-liquid savings (401K, IRA, etc...). Personal question, I know, but I recently had to reallocate my funds and I'm just trying to gauge if I'm on track for my age (in my twenties). Thanks!

[Deleted]

Hi! Since I am in my mid-30s my exact numbers won't be as helfpul, but I have always focused on having:

- At least 4-6 months bare bone expenses in a cash savings for true emergencies (bare bone stuff Id have to pay if laid off...rent, utilities, basic groceries, insurance)

- A modest save-to-spend cash account (would save up for vacas, shoes, splurges in there)

- I also wanted at least 1x my salary in my 401k by 30, which was something I worked hard towards in my early 20s.

Hope that helps! Your numbers may of course vary (some people like a 9 mo emegrcy fund....that's what I am closer to now. Others are OK with 2-3 mos....that stresses me out!)

Since you mentioned re-allocate, I wasn't sure if you were also interested in equity / mutual fund advice....FWIW I love good, broad low-expense mutual funds and am Vanguard all the way!

[steamboat185]

We have roughly 5 months at our current expenses in cash and are in our mid 30's. We could probably stretch that to 7-8 months with budget tweaks. We also save money in our 401k's, Roth's, NQDC, and brokerage accounts.

In our 20's we kept less in cash- 3ish months and had lower expenses. We also tried to contribute as much as we could to our retirement and investments.

[ssmjlm]

I'm in my mid 30s, DH is in his early 40s. We keep 6 months of income in our general savings. Anything beyond that was in a Vanguard fund. (We liquidated the Vanguard fund since we just built a new house as part of our DP.)

We also have a car fund for $$ car repairs and to save for our next car's DP.

I contribute 18% to my TSP and DH contributes 20% to his 401k (he is behind).

Our goal now is to add back to the Vanguard Funds.

[genet313]

I am 35.   Ugh, now checking the 35-44 age group box.    DH is 34.  One DD, 15 months, and one on the way.

We have 1 year of expenses in savings currently.  Mortgage, insurance, utilities and fairly comfortable general living expenses, but we do not pay for childcare at the moment so if that changed we'd be down to bare bones expenses.   This is higher than what is generally recommended, but I'm strongly considering SAH after baby#2 and DH is in a volatile industry (finance), so this is what makes us personally comfortable if he is laid off. 

We have additional cash savings on top of that just for general savings/future DP.

We also have an investment account for general investing, but we've largely been cashing out of investments b/c DH is a bit wary of the market of late. 

We have separate 401K and IRA accounts as well.  We max out 401Ks every year to federal limit and we have about 1 year of retirement savings.  We're a bit behind per the traditional calculators but I'm OK with that given our other savings.

And we have a 529 plan for DD1 and will open for DD2 when she comes. 

[dcn]

We are 35. We have 6 months expenses in a savings account. A house dp savings at Vanguard. We also have some savings for each kid, and a car replacement fund, just in regular savings for now.

For retirement, We each have a ROTH, I have an IRA, DH has a tsp and an inherited IRA.

[sarapocalypse]

We're working on building our savings up. We are currently at 2 months of bare bones expenses. We'd like to get closer to 6 months in our general savings. We aim to put a minimum of $500 a month into our savings to help build it up.

I'm 28 and DH is 27.

We both have 401ks. I currently contribute 6% to that. I also have a required 6% state employees pension fund contribution. DH switched jobs recently so he hasn't been contributing to his 401k the last few months, but he's gonna get that squared away in the next couple of weeks.

[explorer2001]

Amounts-wise the short answer is not enough, but getting better all the time. Everyone here is a great support and inspiration. I hope you get as much from hanging out here as I have.

Emergency funds can take a while to save. Mine is pretty low (about 1 months expenses) but I focused on paying off higher interest debts and investing in retirement with a higher return since my exH wiped me out financially several years ago.

Now I have more than 1.5x my salary in retirement and a lot less debt. Once the last of the debt is gone the focus will shift to a larger efund and save to spend funds.For reference, I'm 33.

[Deleted]

We are mid 30s with 2 kids.
We have:
-over a year expenses in liquid savings. This is a lot but it's because we are slowly investing in the market and may pick up a rental property later this year.
~money in a brokerage acct
~1.5 times our income in retirement accounts, max retirement contributions
~529 accounts for our kids, contribute $250 per month

In my 20s, I tried to have 3-6 months expenses in an e-fund, saved for a house, and slowly upped my retirement contributions so that I could learn to live on less.

[bostonmichelle]

I'm 28 and DH is 29. We have 25k which is roughly 5 months of current expenses. We could definitely cut a lot out of one of us got laid off and could stretch that a lot further. We save a lot for retirement right now, DH almost maxes out his 401k (15% plus match), I save 6% into a state pension, 10% into a traditional 401k, and another 5% into a Roth IRA. We also save most of my paycheck, well the last month and next two months we are cash flowing some house stuff, moving, new roof, fence, and floors. I'd like to start taking my paycheck and investing half of it and using half to build a maternity leave fund.

[megstoo]

I'm in my mid 30's and DH is the same age. We only have a month or so for current expenses but that's because we just built a new deck (a 20k project) and paid cash for it. We're working to rebuild those funds. We both have 401's and contribute each paycheck to it and with a small IRA.

[Deleted]

I am 26. I have 1.5 years of income in my 401K and nearly 3 years vested in a pension. My 401K is unrealistic. At my current rate of contribution, I would normally have just over half a year's income. I was in a situation for two years that allowed me a high paying job with $500 or less in expenses per month since room and board was paid. I believe the rule of thumb is 1 year salary at 30? We get annual increases and merit raises. I just put that % towards my 401K and never miss it.

For liquid savings, I have 4 solid months of emergency fund should I lose my job/health issues/etc in a high yield savings account. I like to think I could stretch it to 6 months bare bones. I also have about 2K in the same account earmarked for other things such as a new car down payment, car registration for next year, and vacations coming up.

I have one month + of income in a low yield savings account that is connected directly to my checking.

So basically, I'm about 10K liquid. I also only budget for 24 paychecks a year.

[liveintheville]

41
3x in retirement
6 months efund
Car fund
Other investments
Ira

[SJ]

In our 20's we focused way more on retirement savings (Roth IRA's when eligible, 401k's, SEP IRA, HSA, etc) than on building up cash savings.

Then we bought an investment property which we still rent out.

Then we started college savings.

Then we finally started saving up cash for a down payment.

[compassrose]

I'm 34. I have 1.75x my salary in retirement (but my union agreement requires I contribute 14% + 9.5% match, so it's going up quickly).

We only have ~3 mo in savings (mostly e-fund). We are building up savings for cars, vacation, repairs, etc. It has been a major shift of almost 10 years of grad school + postdoc to a faculty position, so the house was a little bit of a stretch, but it's working out so far.

[tcu2003]

I'll be 35 this summer and DH just turned 40. We have 3.2 times our combined salaries in 401k accounts (we currently contribute 16% plus each get a 5.25% employer match).

Our liquid e-fund is high -it's just under 6 months of salary. We're having baby #2 later this year, so have extra cash on hand just in case, and will hopefully pay off our mortgage by EOY so we can transfer our mortgage payment to daycare for the second kid.

[tacom]

26/28 yo

we currently have 8 months full expenses in cash. this will drop to 6 months after our move and European vacation and hover around 5-6 before it's replenished in Dec with our next bonus.

I'm fine w/ that risk level because we have other assets (non-retirement investments) we could liquidate, and we have zero debt/no mortgage/no responsibility to pay for repairs when things break. the only event that would cause us to need $80k without notice would be my husband's job loss.... in that event, we'd just need enough to get the hell out of Manhattan ASAP.

we are on track for retirement (401ks, backdoor IRAs, HSA, other investments)

[larzhope]

32/30 yo

We currently have 9 months salary in cash. we could easily live off of this for well over a year if we needed to. we are very conservative in that regard. I believe we are on track for retirement (and are contributing the max we can for IRS allowable pre-tax for our income) so I'm not too concerned about investing outside of retirement just yet.

In addition to that cash savings, we are aggressively paying down our mortgage (unpopular opinion here) and have started a separate savings for a new car for me which we'll purchase likely summer/fall of 2017.

[daisyn]

41 single mom
4 months of expenses in liquid savings
About 70% of one year of salary (plus bonus) in retirement (not good)

[5thofjuly]

Mid 30s with very secure jobs. We have 2 months normal expenses (4 months bare-bones) in savings and 2.5 times in retirement. We started late because of being in school forever, but we don't have kids which helped us make up for lost time.

[blue38]

blue38,@shoegal,steamboat185,ssmjlm,genet313,dcn,sarapocalypse,explorer2001,@missy1,bostonmichelle,megstoo,@lemonlover,liveintheville,SJ,compassrose,tcu2003,tacom,larzhope,daisyn,5thofjuly,

Thank you all so much! Reading all of these responses has been great. It's totally given me direction, I'm 23 and trying to build savings as to not rely on my spouses savings, not that there's anything wrong with that, I'd just like to contribute. My spending habits aren't great and I'm contributing 5% to my first 401K. Student loans are bringing me down, and frivolous credit spending in college. Got my credit card debt down to about $400 but struggling to get my credit score back up after some medical bills went to collections. All in all, I'm happy to have a place such as this to use as a resource. Definitely going to try to get into a Vanguard or DFA fund once my 401K grows.

Any general tips regarding budgeting/building credit is greatly appreciated! As is the above posts. Thanks again, and Happy Friday!

[Deleted]

You are wise to start getting your financial habits together in your early 20s! Good habits can lead to security and wealth faster than you might expect.

I have some general suggestions:

- Set up an automatic transfer each month fr your checking into your emergency fund. If you need to start small, like $25-50/mo, that's cool...just do it and keep raising it. It is amazing how fast that $$ adds up.

- On the spending side, start tracking using Mint.com or Quicken, you will find areas where you are likely just frivolously spending money, we all have our weak spots.

A big one for me in my early 20s was simply not "going shopping." I would meet up with my girlfriends, and our activity would often be shopping and lunch....well duh I was spending on clothes and shoes like crazy. Anyway, I certainly go shopping still but only when I need something or have $$ set aside to spend.

So excited for you to get on a stronger $$ path.

[tcu2003]

May 7, 2016 5:18:39 GMT -5 @shoegal said:

A big one for me in my early 20s was simply not "going shopping." I would meet up with my girlfriends, and our activity would often be shopping and lunch....well duh I was spending on clothes and shoes like crazy. Anyway, I certainly go shopping still but only when I need something or have $$ set aside to spend.

Ditto this. And I didn't even realize it at the time because I was still managing to save some money. But sheesh, looking back, I wasted so much money window shopping with friends that turned into buying stuff I didn't need, or just stopping by the mall/WM/Target wherever because I happened to be driving by and had time. Once I realized I didn't want to continually have to deal with the consequences of more stuff (cleaning, storing, finding room for it, etc), it was so liberating. I still like to shop, but don't do it nearly as often, and try to make sure I absolutely love something or need it before I purchase it.

[bostonmichelle]

I agree your wise to start now. I started really tracking at about 23 as well.

Make a budget and stick to it. Use mint, ynab, or quicken to figure out your spending so you can create your budget and track it.

If you have issues sticking to the budget, go with the cash envelope system. DH and I did this for a few months for a few categories to really tighten down.

Also if you can snowball your debt payments. So find $25 or some other amount in your budget and start paying debt down by that extra amount each month. Once you pay off one debt apply the $25 + the 1st debt's payment to the next payment. DH and I did this for a couple years and basically cleared all of our debt except our mortgage.

If shopping is an issue you can always put stuff in your online cart and then wait 2-3 days and if your still thinking or needing that item buy it, if not don't buy it.

[atarianna]

We are savers by nature and have always worked to save one salary while living on the other.

We have about two years worth of salaries in various savings accounts. 6 months is liquid, with the other being in various mutual funds.

We also have Roths that are maxed each year and have about 1/2 year salary worth in each. We both have 401ks that are a little more than one year salary each.

We are 30.

[daisyn]

My biggest advice to any 23 yo is start saving for retirement now!!

2nd is live within your means and don't rack up CC debt

[steamboat185]

Definitely transfer a set amount into a savings account that is harder to access- I still do this today. Once it gets above a certain level consider transferring some of the money into a Roth IRA

I used to bring a set amount of cash with me when I went out with friends, which kept me from over spending. Also when online shopping leave purchases in your cart for at least 24 hours to make sure you still want them.

The medical bills will go away eventually just keep making payments on the credit card and keep it open when it is paid off to help extend your credit history.

Whenever you get an raise increase your 401k contributions. That way you don't see the money.

[liveintheville]

May 7, 2016 5:18:39 GMT -5 @shoegal said:

You are wise to start getting your financial habits together in your early 20s! Good habits can lead to security and wealth faster than you might expect.

I have some general suggestions:

- Set up an automatic transfer each month fr your checking into your emergency fund. If you need to start small, like $25-50/mo, that's cool...just do it and keep raising it. It is amazing how fast that $$ adds up.

- On the spending side, start tracking using Mint.com or Quicken, you will find areas where you are likely just frivolously spending money, we all have our weak spots.

A big one for me in my early 20s was simply not "going shopping." I would meet up with my girlfriends, and our activity would often be shopping and lunch....well duh I was spending on clothes and shoes like crazy. Anyway, I certainly go shopping still but only when I need something or have $$ set aside to spend.

So excited for you to get on a stronger $$ path.

This is the advice my dad gave me and it was a very smart move. No matter how little I made I paid myself fisrt from each paycheck.

[blue38]

Love the ideas of setting up an automatic transfer and snowballing debt payments! Will do that for my student loans after I get the medical bills paid off. I'm fortunate to not live check to check with my current salary but my spending habits are irresponsible as in I won't have security if something happens. Most of my $$ after bills goes to Mexican food, haha.

bostonmichelle, never heard of ynab, looks interesting! I'm on Mint but I'm terrible with sticking to my budget. Just did a quick Google search of the cash envelope system. I like the idea I've just always had a hard time sticking to it in Mint

[Roc A Bee]

Pay yourself first. Basically transfer money to savings, retirement or otherwise first, pay bills second, live off the rest.