That’s not a good metric. You can only vote once, but if you are interested in the topic, you might view the thread every time someone adds a new reply. In fact, if you are reading this message, you probably have contributed at least two views to the view count.
I now have two. I used to have 5 months saved but the cat ended up in the kitty hospital for two days and had some stuff done. He’s 17 and I was so distraught. He’s better now and I consider it money well spent. But I now only have 2 months saved, which might as well be paycheck to paycheck.
Also, is OP asking for net worth, subtracting any short-term debts or liabilities? I did a recent poll of net worth and Doper respondents were overwhelmingly wealthy, most having over $100,000 net worth but that included tangible assets such as home and vehicles.
We perpetually have about 1 month of our combined income in a cash account. Any more than that and we use it to get through our priority list, a list of things we need for the house interspersed with lump sums onto our mortgage.
I voted more than 12 months. I have always been a bit rabid about saving money and minimizing debt, and working overseas in some less than scenic locations has made it possible to acquire a considerable amount of liquid assets and no debt.
Depends. If you just count regualr savings, about 3 months (which is what I voted for). If you count all the money I have in CD’s and other funds that I am saving for retirement (not counting annunities or mutuals, just cash I could get my hands on today), about 18 months.
I like having about a 6-month reserve so I’m going to concentrate on building that 3-month number up, so I don’t have to touch the retirement funds. Being 62, retirement is more in my mind than others, I suspect.
The question doesn’t make much sense from a practical standpoint, other than to answer the question “How much money do you have available on a weekday, barring bank failures?”
When asking about months of funds available, what usually matters is liquid assets. That’s usually the main issue when the concern is job loss. 6 months is recommended by most financial planners.
Cash on hand is an issue in case of bank failures or economic meltdown. Most of us don’t have a plan for that. Best bet there is a hoard silver coins, and bills for shorter term failures.
I don’t know what type of emergency requires months of income on one weekday’s notice, so I don’t know the OP question’s practical relevance.
I normally have about 10; I now have about 6.
That’s including liquid assets
That can be a good match. Just be sure to set up automatic deductions for savings, both to sheltered (eg 401k) and unsheltered accounts, automatically invested. If you’re not investment savvy and under say 45, just use a no-load S&P500 index fund with low administrative fees, at a discount online brokerage.
Try to set aside a total of 20% or more. Suspend this for a few years if necessary to buy your first home.
I am not a certified financial planner.
I’d expect to see Dopers having more savings than typical people. But I’m still surprised at how much people are saying they have liquid.
What’s the point of having a years salary in cash? That seems very wasteful.
Let’s say you start out making 50K and save 20% a year. 10% goes into your 401K and the other 10% goes into a savings account. It would take you ten years just to save up the one year’s salary in cash. Then what do you do with it?
I’d say you’re much better off putting the whole 20% into your 401K.
Get credit cards with high limits so if you get laid off or have an emergency you can use them.
I thought the OP was clear. Something I’m often confused about, though, is when the media or politicians talk about “savings”. When people say the average American only has X months saved what does that mean? If I have three months salary in a savings account for emergencies but I’m a year away from retirement so I’m sitting on a 2 million dollar 401K and a one million dollar IRA and I own my house outright how much “savings” do I have?
I agree with you. Perhaps you can explain it to my wife in a way that doesn’t start an argument.
After 20 some years of poor/no financial planning I’ve started using You Need A Budget to get my spending under control. I started last March and used an income tax return to build up a one month buffer as suggested by the program. I’m up to having about 2 months worth of pay available and am currently on a 6 year plan to get rid of my credit card debt.
I interpreted the OP as talking about liquid assets which you have access to without penalty. I didn’t count my 401K/IRA since though I’m over 59.5 and don’t have the big penalty for taking money out, I would have to pay tax on it. My non-IRA investments I can get to almost as easily as going to the bank and can get money with no penalty.
I don’t think credit cards are a good idea since if you are laid off for a long period you’ll get socked by the interest. But cash or today’s money market funds are not so great either.
Yeah, a year in savings+checking is weird to me. I’m bothered by the waste when I have more than ~2 weeks. I don’t have to move anything around to pay rent, my credit card, or buy groceries. Why do I need more that’s instantly available? If something comes up I charge it, sell stock, and then pay off the card before its due.
In true cash assets in the bank, I have about half a year. Most of the rest of my net worth is in various investments. Most of those I could liquidate fairly quickly if I needed too, but not instantly.
Then again, I have a nice line of credit against my investments, and can write a check for a roughly year of salary against it…so I count that as “cash” for this discussion.
If you have that option. I max out my SEP-IRA and my Roth IRA, so I can’t put anymore in it than I’m legally allowed to. Now, the rest of the money doesn’t sit in checking or savings alone–most of it is in personal investments, but that I essentially treat as savings. My checking account is for paying bills and depositing checks. And I just don’t have a savings account because what’s the point? So I guess it depends if you mean to include non-retirement accounts with the retirement investments. I would, because that’s the money I use to pay big bills, like cars, downpayment on houses, paying off mortgages, etc.
A year’s salary varies greatly among people. But I suspect the cost of a new furnace, or a new roof varies somewhat less.
We keep $20K in very ready assets as our emergency fund. Just so if anything bad happens or any urgent need comes up, we can simply cut a check. We had a plumbing issue about 5 years back that cost $17k over and above insurance. Our kids were in college at the time, and it was a considerable hassle getting that cash together.
Or if we simply decided we wanted to take a trip. It gives us the degree of security and flexibility that makes us comfortable. Also eliminates the stress of potentially needing to sell when the market is down - although you obviously forego return for that liquidity.
But I would imagine/hope most people have money invested in ways other than specifically designated retirement accounts where there is a penalty for early withdrawal. Any stocks, bonds, mutual funds, gold bullion… are pretty easily converted to cash, tho with some transaction costs.
Any of the other paycheck to paycheck people feeling even worse about your life after reading this thread? :rolleyes:
Yea, well, you should of thought of that before you decided to be poor!
According to CNN, 76% of Americans live paycheck to paycheck, so you aren’t alone, except among Dopers.