Is 3-6 months savings for emergencies realistic?
- Thread starter ZZman
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Sounds like a worst case. I like to keep a months worth of money available in case I lost my job. In the past I never had any trouble finding a new job.
I just looked at the savings accounts and that, along with the cash I have in various special places, I have the equivalent of about 3-4 months income. My wife is a student I have an okay salary... not wealthy by any stretch (but no kids, which helps). So yeah, it's doable but you have to know where to sacrifice. Everyone's situation is different though.
Originally Posted By: ZZman
Experts will tell you to have 3-6 months savings to help cover unforseen emergencies. Many if not most people live paycheck to paycheck. Is it realistic?
In our case we just never seemed to be able to save before something like a car repair or medical bill or something hit us.
I would say we lived an average lifestyle. Around 75-80,000 combined income, 100,000 house, used cars, no expensive vacations, no expensive nights out or restaurants, no expensive toys or clothes etc. The money just never seemed to be there.... 
It can be tough to save; if someone is paycheck to paycheck they might need to make a lifestyle change to make it happen.
One thing that bothers me, I know some people that complain they don't have any money, yet they smoke two packs of cigarettes a day which is about $300 a month - for each of them.
I suppose it is a matter of priorities - One has to decide that it is more important to save than to buy something else. I am as guilty as the next person, it took me a long time to get out of paycheck to paycheck living.
the advice is still good, but the point of the advice isnt for the people who are currently still in paychecktopaycheck at the moment.
The advice is for if or when they crawl out of the dire straights either by effort or by a windfall they dont fall back down. say a relative dies and they get 10,000 in inheritence what do they do.
if all your life you are used to paycheck to paycheck, and suddenly 2months ahead you may think you made it and start reaping the fruits of that money then.
the crude advice here is not to go splurging through that emergency fund.
There are a lot of people who are financially illiterate . i remember a huge part of the suze orman show is callers calling in asking basically for permission to buy or spend money on something.
it went both ways. Many clearly shouldnt afford it and deserved the lecture. while others had lots of savings and could treat themselves and just needed the go-ahead .
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It's realistic if you're on track for retirement savings.
If you don't have it, and you're living paycheck to paycheck, dial back your spending so that you can put away 3 - 6 months of savings. You need that cushion for unexpected events. It's part of a complete financial plan.
What's with your sudden obsession over income, savings, and retirement?
You're starting a lot of threads asking basic questions. You should seriously consider getting a financial advisor. This is precisely the kind of thing for them to guide you through.
If you're just discovering that you should have 3-6 months of savings, and that you should be putting away 15% of your salary for retirement, and all the other basic elements of financial planning, then instead of polling a site focused on oil, get real, professional advice.
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Originally Posted By: Astro14
It's realistic if you're on track for retirement savings.
If you don't have it, and you're living paycheck to paycheck, dial back your spending so that you can put away 3 - 6 months of savings. You need that cushion for unexpected events. It's part of a complete financial plan.
What's with your sudden obsession over income, savings, and retirement?
You're starting a lot of threads asking basic questions. You should seriously consider getting a financial advisor. This is precisely the kind of thing for them to guide you through.
If you're just discovering that you should have 3-6 months of savings, and that you should be putting away 15% of your salary for retirement, and all the other basic elements of financial planning, then instead of polling a site focused on oil, get real, professional advice.
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There are probably better forums out there for this. I'm not on them, but places like bogleheads.org gets mentioned a lot as a good one.
What I do probably has no bearing on your situation. I never bothered to have 3-6 months in savings. If I ever needed it, I could always liquidate some of my mutual funds for whatever cash I needed. I always have a few thousand in my checking account and move it over to purchase more funds whenever it gets too high. Usually you can get funds from a sale of a fund within a week. Worse case is that I could always throw it on a credit card for the short term until the funds came in.
Basically on those other forums, you basically post your budget and what happens is that people end up ripping through it. Usually they find that people are spending too much on their phone/cable/car/eating out etc.
When I started out, I made automatic monthly investments in various mutual funds. And that was after maxing out 401 and IRA. When I got a raise, I increased my savings, now I'm well over my target for retirement, I suppose I should retire earlier.
I keep all my money invested but have a HELOC on my house with a $0 balance but with a large limit. I will use that if I need to. Failing that I can cash in investments if I needed to but I would rather not when they are earning great rates of return and the interest rate on the HELOC is stupidly low. I think right now it's at 3% with only the interest being due each month.
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6 months was what i had on hand when i was off work for 9 months 
75-80K family income in MI with an inexpensive house and cars on which you should owe nothing should be ample.
Take a closer look at where your money is going each month and you'll then know where you can find the extra dollars to set some aside.
It isn't so much a matter of what's realistic as it is what's nice to have or even vital when your income goes south as it almost inevitably will at some point.
There is the potential to save money for everyone, but the habit of thrift is sometimes hard to learn.
Yes-cut back until you get it!
Originally Posted By: Wolf359
There are probably better forums out there for this. I'm not on them, but places like bogleheads.org gets mentioned a lot as a good one.
What I do probably has no bearing on your situation. I never bothered to have 3-6 months in savings. If I ever needed it, I could always liquidate some of my mutual funds for whatever cash I needed. I always have a few thousand in my checking account and move it over to purchase more funds whenever it gets too high. Usually you can get funds from a sale of a fund within a week. Worse case is that I could always throw it on a credit card for the short term until the funds came in.
Basically on those other forums, you basically post your budget and what happens is that people end up ripping through it. Usually they find that people are spending too much on their phone/cable/car/eating out etc.
When I started out, I made automatic monthly investments in various mutual funds. And that was after maxing out 401 and IRA. When I got a raise, I increased my savings, now I'm well over my target for retirement, I suppose I should retire earlier.
This post really hits a home. I handle the finances in my marriage, the first rule I implemented was that 20% of each check from both of us goes into two savings accounts. One is strictly an emergency fund that doesn't get touched, the other we use for big ticket items/car payment.
We had about 4 months worth of expenses at the beginning of the summer. Due to an unexpected series of medical tests and a separate set of greater than anticipated expenditures, we literally spent every penny (and then some) over the course of about 3 months.
Luckily we have access to quite a bit of credit so we were able to tap into that for additional assistance, but let me tell you, this is the first time I've ever had to pay interest on a credit card and I absolutely hate it.
Moral of the story, SAVE. Even if it's $50 a month that you put aside and don't touch unless absolutely necessary.
JHZR2
Staff member
Yes absolutely. For most everyone on here it's $100k or less in semi-liquid/liquid savings. You only need enough for after taxes/retirement savings... though if you lose a job or are sick, a higher cost of health benefits needs to be considered.
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