Question about saving $$

[simplemama32]

Assuming you have a steady income and no major debt, medical issues, etc...what amount of $$ in savings would make you feel the most comfortable?  Not wishful thinking like a million bucks or something , but a realistic number.

I've heard the rule about having 6 months expenses, but I was just curious. 

[laohaire]

I think expenses covering a period of time that you could foresee losing your income.

It could be 12 months. Since the economic collapse, the people I know who lost their jobs took about 11 months to find new employment. I think the 6 months figure was in better economic times, when you could reasonably assume new employment in that time frame if you were laid off and had decent skills.

Illness is another thought, but I think the ideal is to have a disability insurance policy. Maybe not one with all the bells and whistles but one that would cover a disability of a certain length of time. So your savings pool could cover, say, 6 months of expenses, and then the policy could kick in. But policies usually cover, say, 80% of your income (fancy ones pay 100% but you, you know, PAY for that in premiums). So you'd want some additional cushion in savings to stretch that out.

So, I think 12 months expenses. Note that expenses is different from 12 months income. (Just mentioning because sometimes people forget that). 12 months would be the IDEAL for me, but I think 6 months would be excellent.

[sewaneecook]

We have 12 months living expenses in savings right now, but about half of that is going toward a new-to-us van, some repairs on our current cars, and some work for the house that we're wanting to get done.  I figure that by the time we actually buy a van (probably in the next year) we'll have 8-10 months living expenses as a cushion.  I feel very comfortable with these numbers. 

Some other things that add to my security are disability insurance (as the PP mentioned) and having good life insurance policies on both my husband and me. 

[RollerCoasterMama]

I've currently got about 2 months worth of expenses...very frugal expenses!!  I've got about $9000 extra coming over the next few months...I'm going to try to double my savings account and put the rest onto student loans.  I figure every single monthly payment I eliminate makes that little savings account.  I've got two small student loans that I can knock out with this windfall if I pay attention to what I'm doing! 

So that would give me a very frugal 4 months of expenses, but I'd much rather double that savings again at least!  However, I think at that point, I'll be pushing as much as possible against my car loan (modest) and my ginormo student loan (law school + deferred forever during financially unstable marriage).  Those are the last debts!  I'm not comfortable with just the baby emergency fund (a la Dave Ramsey).  My ginormo loan is just too big to slam quickly.  It will take several years of focus to eliminate or I'll still be paying on it when I retire!  ;)  I'm hoping to do it in five years.  It's going to take WORK!  But with the medium size emergency fund at my back, I think I can relax enough to throw every bit on the debt.

I think everyone has a different comfort level!  I'm much much rather have a year's worth of gross income sitting in the bank, but that's pretty unlikely and unrealistic until I dump that student loan!!!

[SunRise]

I am working towards 6 months living expenses, then another 6mths. This is beyond long term savings. Right now I have 3 mths covered (I juste dumped a month and a half worth's on debt). I want 6-12 mths so if / when** I lose my job, I want to be able to take some time off/embrace the transition rather then be in a stressful situation and rush into applying for new jobs.

Now, if I were to take 6 months off, my monthly expenses would be cut in half by dropping private health insurance and daycare expenses and minimizing other savings accounts.

**I work on yearly contracts, so it could happen to me, although they have been renewed for the past 4 years.

Edited by SunRise - 4/1/11 at 10:58am

[its_betty]

In my family, both dh and I work. We have almost a full 4 months of expenses saved in what I think of as our regular emergency fund in case someone can't work for a while. It could be stretched to 6 or 7 months by cutting back on everything. But it's likely that only one of us would be out of work at a time, so we could last 9-12 months with just one person working. (Budget would be tight!) We rent, so there are no huge housing expenses (like needing a new roof) that could surprise us.

I also like to know that we have enough fairly accessible savings in case we have a medical emergency that makes us pay up to the full deductible and co-insurance for the year, plus some more for things that insurance won't cover. (We have a fairly high deductible plan, so we don't have all of that set aside yet. We would have to raid the regular emergency fund.)

Now that we are set on the emergency fund, we are working on regular savings. That will be more targeted: I'd like to set a certain amount aside to buy our next car with cash, savings for vacations, furniture and other big but not-monthly expenses.

Retirement and college fund are a whole different set of savings. And the house down payment fund. Sigh. Too bad I don't play the lottery very often...

[mar123]

My dh has been out of work since August, and my defintion of "enough in savings" has drastically changed! I agree with a year's worth of expenses. He was also out of work in 2009 due to a start company he joined going out of business. He was "only" out of work for 3 months then, but took a 15K pay cut when he did find a new job. . He was there for 10 months, until the oil spill/drilling moratorium. That not only effectively killed his employment but prevented him from getting anything else in the industry he had been in for 14 years. There is NOTHING going on in that industry and none for the foreseeable future. Consequently, he is trying to change industries, which is not easy. We have gone through all our savings- of course, we had not built up that much from the previous unemployment experience with the pay cut he had to take. We have cut back, but we make too much to qualify for any type of real help. (The government plan to help those unemployed with a house note is a joke; we don't make enough b/c he is unemployed and they won't count his unemployment money) Our kids are in Catholic school, which is non-negotiable. Our public schools are beyond awful. I make a decent salary- his basically paid our house note and the kids tuition. I have tenure in my job, so it is very secure. Once he is employed again, I will make sure we have a years worth of mortgage payments and school tuition saved up.

[cappuccinosmom]

Dh isn't happy when we dip below 10K.  At one point we had close to 20K, but then he was off work for 2 years, doing school, so a lot of it got eaten up.  I know once he's back to work, we'll be back up to 10 and beyond shortly.  Because we have no house costs (no mortgage or rent), we can save 300-400 every month, even on the relatively low income that we have (Never broke 40K/year)

[MidwifeErika]

I would be pretty thrilled to even get 2 months of bills put away. To be totally honest, we don't even have 1 month of bills put away in a fund for an emergency. Hopefully we will be making a change this next year as my work becomes a bit more steady.

[TiredX2]

We have over 4 months of *current* expenses in our emergency savings.  I just don't want more money just "sitting" there.  Realistically, if DP was laid off, we would cut back AND he would have unemployment so it would last quite a bit longer than 4-5 months.

[texmati]

I'd also say 12 mos-- not including retirement and college savings-- and also excluding any savings for med/auto/ emergencies

[EmsMom]

I am shooting for a year of expenses before I save for other things such as a house downpayment.  I am a single mama that I really need that secure base.  Right now I have 3 months saved.  When my divorce is finalized, I will have a year's expenses in savings and no debt.  I will also have a nice start to a retirement fund.  As we are living very close to the edge right now, I am looking forward to that day....  

[celerydunk]

I had a years worth of expenses saved and I can't tell you how much of a relief it was to have it when I got laid off. Im currently living off of it.

[sunnysandiegan]

We have about a year's worth of essential living expenses saved in what we call our mid-term savings. If DH were to lose his job and received unemployment compensation, it would last longer than one year. We have this savings for many reasons, though, so that one year is just a lose guideline that encouraged us to keep putting money away into those accounts.

We also have retirement accounts, which are our long-term savings.

We also have short-term savings, which have specific purposes and are intended to be used within the calendar year.

[redvlagrl]

Right now, I would feel great to have a year's expenses saved but that isn't going to happen. Though things are different for us because DH is a TT prof. Between now and when he is up for tenure we intend to pay off student loans and our car to minimize our monthly outgoings should something bad happen with his tenure case. After tenure, I would feel ok with a smaller amount of savings - 3-6 months? We live on DH's income and use mine for our debt snowball and other extras (I don't earn or work much). I think we wouldl focus on paying off the house after tenure as the job would then be very secure.