s/o budget cushion

[Deleted]

In the budget post the OP has over $500/month after expenses and a few commented on that not being enough of a cushion.

I was a little shocked at this, but I've been living in a very tight budget for years so a cushion of $500 would be a godsend. December will be my first month with so much rollover from the previous month. (I'm very excited about this.)

So...what's your ideal cushion after expenses? Not how much you leave in your account. Your cushion between income and expenses.

[countthestars]

Since you rent, I think $500 a month is fine. The other poster was buying a home, which was what gave me pause. I am more comfortable with a ~$1k cushion because we don't budget tightly and seem to always have unexpected expenses.

[Deleted]

You are not a homeowner. Plumbing, roof, water heater etc could take out that $500 in a second when you're not saving for maintenance otherwise.

Our cushion is small, but we have good savings. Ideally, $1000 would be a good cushion for us.

[chessie]

I own a house + animals, so for me I want a lot in cushion. I auto deposit 30% of our checks into savings a month. A lot can go down with a house though, 500 would not be enough in the scheme of things. Last 3 hurricane/major storms, we were without power for awhile, went through 500 just in diesel to keep the generator going.

[Deleted]

way more than $500, but SO has a high income and we have no set expenses outside of $1,640 for rent and phones (obviously we have to pay for food each month too, but that could be pared down tremendously). if we only had $500 after all of our expenses I think we'd be doing something wrong.

if I were on my own it would be entirely different.

[Deleted]

No one answered my question. LOL.

I know that her having a house, children means a bigger cushion is important; but with $17,000 in savings (assuming it's not for the DP) I overlooked those factors for the basis of this question. I'm not asking for me either. Just asking a general MM related question.

[gt7301b]

Well I think the OP was missing a bunch of categories.

The main reason we have a large cousion is that owning a home is expensive. We have spend between $3,000-$5,000 a year on maintenace items. (tree removal, electric work, plumbers, exterior painting, all things we can't handle on our own)

We budget for these, so we actually count a lot of them as expenses. On average I would say we have $1,000 extra a month, but then poof it is gone.

[countthestars]

I did and dbsk did. $1k.

[Deleted]

I think it depends on too many things.

Like, if you have $500,000 in non-retirement investments/savings with no real goal for it, no cushion may be just fine in many months because there's already plenty of cushion there. Very different if you have no savings.

Similarly, you have to look at what can happen to you that would be bad. We rent, and have a car that we only use for leisure purposes. So it isn't like we need to worry about emergency roof repair (or at least, we wouldn't pay for it), and if the car gets totaled by getting hit by a tree (which is precisely what happened to us last month), it isn't like we need to repair or replace it.

But on the other hand, I'd also think that cost of living factors in. If money stops coming in, rents are very high where we live and groceries and such are very expensive relative to lots of other places, so we need a bigger cushion than most for that.

Point being -- it is definitely case-by-case.

[Deleted]

Nov 27, 2012 15:27:30 GMT -5 countthestars said:

I did and dbsk did. $1k.

I didn't see either of your responses until I reopened the thread. Weird.

But thank you.

[pamela]

How much of a cushion in a budget to me depends a lot on what things you have budgeted for and how much you have saved. If you already budget to set aside for car repairs, house repairs, gifts, large seasonal utility bills, random Target runs for things like storage boxes, etc then you can deal with a smaller cushion. Especially if you are reasonable about how much you budget so you aren't going over on categories so you know that really is extra money.

[Deleted]

Maybe like 2K per month. But I don't budget closely so there are always expenses that come up..$500 car repair, $1K trip, a few hundred for wedding gifts or donations, etc.

[Deleted]

Nov 27, 2012 15:27:48 GMT -5 v said:

I think it depends on too many things.

Like, if you have $500,000 in non-retirement investments/savings with no real goal for it, no cushion may be just fine in many months because there's already plenty of cushion there. Very different if you have no savings.

Similarly, you have to look at what can happen to you that would be bad. We rent, and have a car that we only use for leisure purposes. So it isn't like we need to worry about emergency roof repair (or at least, we wouldn't pay for it), and if the car gets totaled by getting hit by a tree (which is precisely what happened to us last month), it isn't like we need to repair or replace it.

But on the other hand, I'd also think that cost of living factors in. If money stops coming in, rents are very high where we live and groceries and such are very expensive relative to lots of other places, so we need a bigger cushion than most for that.

Point being -- it is definitely case-by-case.

Which is why I'm asking "what do YOU have as a cushion?" Not what a general answer, but you (posters/lurkers) specifically.

I agree that it has several factors, I'm asking a general question. I'm not asking for me personally, I'm asking what YOU feel comfortable with as a cushion.

[pamela]

Nov 27, 2012 15:31:23 GMT -5 blissanity said:

Which is why I'm asking "what do YOU have as a cushion?" Not what a general answer, but you (posters/lurkers) specifically.

I agree that it has several factors, I'm asking a general question. I'm not asking for me personally, I'm asking what YOU feel comfortable with as a cushion.

What I feel comfortable with is not at all what I have. I'd feel comfortable with as little as a couple hundred (which is what it would be if one of us were to lose our job).

[SJ]

On paper, our budget has zero cushion- I budget all income/expenses.

However, we don't stick to it very well.

[Deleted]

Nov 27, 2012 15:31:23 GMT -5 blissanity said:

Which is why I'm asking "what do YOU have as a cushion?" Not what a general answer, but you (posters/lurkers) specifically.

I agree that it has several factors, I'm asking a general question. I'm not asking for me personally, I'm asking what YOU feel comfortable with as a cushion.

Because of the amount we have in investments/savings, I am comfortable with no cushion as long as it isn't every month. And honestly, we don't budget and don't feel the need to budget, so I don't know what we typically put aside per month.

[daydreamer]

It really depends on what is included in the budget and what will the cushion be used for.

As a single renter with a car that wasn't used for commuting, the absolute lowest amount of take home pay after rent/utilities that I was comfortable with was $1500/month. (I've never been a strict budgeter). After food, entertainment, misc, and whatever big expense was slotted for that month (airline ticket to visit parents, car repair, car insurance, Christmas presents, etc), I'd have around $750 to save. On months without a big expense, I'd save the extra for the leaner months (or maybe buy some clothes or another treat.) This was in a VHCOL area with a non-profit job.

So I guess for a single renter - $750/month for a cushion and that's assuming you have enough saved for a month that would have both a car repair and an emergency move (an expense that homeowners don't have.) $750 should be enough to fund and IRA and build long term savings.

[arch01]

$0. everything is budgeted for. it all goes to line items on paper. we don't have a huge e-fund either (*gasp*).

since DH semi-regularly works OT, we take those earnings and put it where it's most needed. if we know we have an expense coming up in our home improvement line, it'll go there.

[kadams767]

About $2,500/month right now. I'd be comfortable with less, but there are definitely times I am glad I have it. There are always months when everything seems to go wrong. One emergency vet visit and one appliance replacement will wipe out most of that.

[kadams767]

Nov 27, 2012 16:20:35 GMT -5 nuggetbrain said:

I'm kind of loling at the idea that a $500 a month for saving cushion is "tight". It might not be ideal, but I really, really don't think it's "tight". Especially with $17k in savings already and only $200 in credit card debt. And yes, that's even owning a house.

I think that it is not realistic that most people, that poster included, will save all of their "cushion" though. It takes someone really, really dedicated to being MM to never go over budget and dip into the extra cushion each month. I think it would be one thing if there was excess being added to various line items, but they all seem realistic, plus a few were missing.

[bronxgirl]

Nov 27, 2012 15:14:36 GMT -5 dbsk8dance said:

You are not a homeowner. Plumbing, roof, water heater etc could take out that $500 in a second when you're not saving for maintenance otherwise.

Our cushion is small, but we have good savings. Ideally, $1000 would be a good cushion for us.

this is making me feel much better about not being a homeowner.

[M]

We don't have a budget but we try to not spend more than half of our income. So I guess our cushion is 50% of our average monthly income. Only $500 in cushion would completely freak me out.

[mrshabious]

On paper, our budget has zero cushion- I budget all income/expenses. But, we also have savings, so if an unexpected bill comes up we can cover it (like the $1500 tax bill from 2009 taxes that we got in the mail two months ago!). If our home repair line is $500 month (don't know the number off the top of my head) and we don't use it, it just rolls over to the next month. It is in a "working savings" until it is needed. That savings account is seperate from our eFund.

[Deleted]

For savings, fun, and misc spending (so not including any actual bills, groceries, or gas) we have about $1300 a month leftover. All of that is allocated ($400 to savings, $500 to misc household, $200 to each of us for personal needs/fun) but can be adjusted if we have an emergency, need to buy Christmas gifts, we overspend in a category, etc. so I guess I could consider all of it a "cushion" as it's the amount leftover after necessities/commitments.

The poster only had $250 budgeted for that kind of thing with around $500 leftover as a cushion. Personally I don't think I could live comfortably on that. Certainly I could live on that if needed, but if I was making a decision about how much I want to spend on a monthly basis for mortgage/utilities/etc I'd want to have a larger amount available. Otherwise I'd end up feeling house poor.

[AAM2012]

Nov 27, 2012 15:11:54 GMT -5 blissanity said:

So...what's your ideal cushion after expenses? Not how much you leave in your account. Your cushion between income and expenses.

$1800 but that doesn't include post tax savings and investments taken out. $500-750 at minimum if include them. But it does fluctuate because we usually get a large bonus in the spring.

[kershnic]

Right now we're saving a little more than local newborn daycare costs per month. Our budget for post-baby if baby ever wants to be conceived will have 0 "cushion" until daycare costs go down when baby gets older. If emergencies come up during that time period then it will either come from savings or we will beg from family.

[SusanBAnthony]

About a thousand, but that includes savings too (other than retirement which is taken out automatically). So some months that means we increase the efund, sometimes it pays for repairs, some months it goes to once a year expenses that aren't budgeted for, some months a bunch of little things go over to eat it up.

We aren't very strict budgeter's, though.

[sillygoosegirl]

I've been asking myself this a lot recently because we are getting ready to be first time home buyers, and getting ready to lose my income semi-permanently. We're looking at only $400/month leftover, and I'm pretty comfortable with that. However, we are also have $600/month in the budget for "misc" (irregular bills, car repairs, clothes, fun, etc), $300/month for Christmas gifts and big ticket items for ourselves (this one is pretty frivolous), saving $250/month for home maintenance (I've been told to expect to spend an average 1% of the home's value on maintenance annually), and $500/month for travel (not as frivolous as it may sound; traveling to see my ILs once per year costs about $100/month all by itself, we would like to see them more than 1/year, and it'll be more expensive when we have kids to buy tickets for). The $400/month extra is honest-to-god extra that could go toward diapers, college fund, furniture, gardener, rising gas prices, replenishing the e-fund when there is an emergency over $600, etc without putting us into the red on an annual basis or giving up other items we normally spend money on. I know this based on 6 years of spending records, so it doesn't worry me much.

Now if I had $500/month extra after all the monthly bills and expenses that I could think of off the top of my head when I was making my first budget... well, then, no it wouldn't be enough. I know from experience that even without being home owners, we spend more than $500/month on average on irregular things, some of which are needs, and most of which I'd be very sorry to give up if we bought too expensive of a house. The first year DH and I were married, we didn't budget very carefully and saved $10K less than we expected to (fortunately, we were expecting to save a lot). We still don't budget very carefully, but we do at least now know how much we are spending, so we can avoid taking on unrealistic commitments. The problem with a lot of the budget posts is that people typically have no idea how much money they are actually spending in total on a monthly basis. I didn't see if that poster came back and indicated where she was getting her numbers from or not. I think $500/month left over is cause for alarm if the budget isn't based primarily on accurate past spending records.

The general rule that I like is that you need to set aside 10% of your income for retirement, 10% of your income for long term goals (house, college, larger emergencies, "future-proofing" your budget for when prices rise faster than raises, etc), 10% for short term goals (repairs, travel, smaller emergencies, etc), and 10% for fun (just what it sounds like), so your regular expenses should fit in the other 60% of your income (or ~70% of you have your retirement money taken out before taxes). You can't really enumerate what the needs will be ahead of time in those savings, savings, and fun categories, or the exact percentages that each family needs in each area, but if you want to be happy and not go broke, I think you have to realize they are going to eat a large chunk of your money in total even if you don't know exactly what they are going to be yet.