Savings: What counts as 'living expenses'? How did you build yours?

[summer_time]

I am curious as to what people count as 'living expenses' when referring to a savings fund (in case of layoff, etc.). We are on a tight budget, no debt, and I am kind of floored that people can have 6-9 months of living expenses saved. That would take us years and years if I include rent, utilities, food, gas money, and health insurance. I SAH and my DH is a teacher, so the fact that folks can do this blows me away! We currently have 2 months in the bank if I include what I listed above, but we have to use it to pay for medical costs (high deductible), car repair ($1700 in the past 3 months), etc.

I would love to hear how you built your savings, especially if you are lower income!

[BetsyS]

We are in the midst of building a 6 month emergency fund. It's slow going.

What I did to find a target number was calculate our very, very basic (job loss situation) monthly needs. I even included where I thought we'd qualify for government assistance. Like, if we had a job loss, we would get WIC and food stamps. So, while we'd need a little bit of grocery money, we wouldn't need the full amount. If we had a job loss, my kids would get Medicaid, if I was pregnant, I would get Medicaid, and my dh and I might have to be uninsured for a while. So, I didn't include health insurance premiums. We do have student loan debt, but if needed, that would be deferred. So, basically, just mortgage, basic utilities (no cable or cell phones), gas for the car, car insurance.

Now, granted this is a VERY bare bones 6 month number. VERY. But, it got me a target that we're working towards.

As for how? We have a budget that includes "cash money" for each of us. We don't always use all the money (in fact, rarely do), so the extra from that envelope goes into savings each month. I take out some money from the top (not much though) as savings. And, because it's our priority right now, things like tax refund, random checks, etc, get thrown into the savings account.

[velochic]

Living expenses is what is required to keep your household going, no luxuries:

- rent/mortgage
- food/ household
- utilities
- health care/ insurance
- car insurance
- car payment (if you have it)
- minimal clothing
- fuel

There are a lot of things just about anybody could drop if they had to... extras like cell phone, satellite, clothing, coffee, even thrift shopping, etc. It's definitely doable. It's a matter of discipline and yes, it can take years and years. It's a good goal to have, though.

Good luck.

[cappuccinosmom]

For us living expenses would be what we regularly need to keep afloat every month, plus a little more. We could do it on $1500/mo, but I'd be more comfortable with $2000/mo.

Right now we have plenty in savings. I'd say the primary move that helped us save larger amounts was paying off our mortgage. But that of course we were only able to do with an inheritance. The way things have worked out, we tend to deal with larger chunks of money over larger periods of time, rather than a little bit every month. So, every year our tax refund goes into savings after we've paid property taxes. Gift money goes into savings. Bonuses go into savings. There's a nice amount of elbow room in the budget, but we don't generally look for ways to spend windfall money like that, which seems to be something a lot of people do.

[phathui5]

When it's done, our emergency fund will be about $18,000.

That will cover 6 months worth of:

- rent
- electricity
- water service
- phone
- car insurance
- gas
- food
- misc expenses

(There are 6 of us, so it's hard to cut down on housing and food costs if we need to.)

[Denvergirlie]

Like everyone else my fund will cover 6 months of expenses.

Rent
electric
groceries
car insurance
phone & internet
gas for truck
propane for house heat

I had it to this number and above, but recently moved in February so used a good portion of savings to get us set up.

If I lost my job, we have 6 months of expenses plus in savings already; things we actually pay for.
However, my partner pays for rent with his labor on this property we live on, so if he were to break a leg or what not, we would thus only have 3+ months of expenses. The goal is to get that back up to cover 6 months of all worse case possible expenses.

As for building this fund, I save over 50% of my actual take home, we've slashed our monthly outgoing to be a low as possible. I would consider us to be solidly middle class, but do make well below the average for this area we live in. We have no other debt and rent to keep expenses low. It was a process to get to this point, but it has paid off.

[zebra15]

Rent/Mortgage
ALL utilities (electric, gas, water, internet, phone - phones are extremely important if you are looking for a job)
car payments
car insurance
life insurance
health insurance (dental/eye glasses)
home/renters insurance
Groceries
gas for the car and all car maintenance
LIBRARY FEES
Any debt payments
Any kids programs payments (daycare - you will need daycare to interview, job hunt, make phone calls ect)

I didnt figure in govt assistance. Around here there can be 6-8 weeks before you get bene's and there is no guarentee you will be approved. Our state is basically bankrupt and they are cutting services and funding right and left. I can not afford to be with out insurance. DS and my meds alone are 1k/month so I would need to figure COBRA payments. Going with out renters insurance is just too risky.

Ive faced many job losses over the past several years, they arent fun. The up-heval of not having an income is stress enough. That is not the time for me to be cutting utilities, worrying about not having internet, phone ... A solid savings accout made the transition much smoother.

One thing I do budget FOR is manicure/hair when interviewing. I need to look professional and that is one 'expense' that pays off in the short term. Looking the part is huge in getting a job, more so for women I think. I also make sure I have good professional shoes and a business outfit ready to go.

[chezlyryan]

I am trying to figure that out right now. I am doing a planned leave of absence for four months next year and I needed to figure out what I have to save in order to live. I looked at my expenses for the last six months and scratched out trips, automatic savings, RRSP contributions, and half of the fun stuff. I figure the rest I need to live.

For a real emergency fund, how easy is it to find a new job? Are you super specialized? Will you have to move to get a new job? Factor that in.