How much money should you have saved in order to feel comfortable. (funds, pay)

[mudbone]

I am in the process of saving and growing up never had any money but now i managed to save some funds but still dont feel financially secure.So i was wondering how much do you think you need to have in the bank to be stable.

[CTGirlNoMore]

Are you talking stable right now, or for future retirement?

By that I mean, if I personally want to feel stable right now, I would want about a year's worth of living expenses in the bank. Just in case.

[Escort Rider]

Sometimes the financial "experts" talk about having six months' worth of living expenses in the bank, but obviously what makes us feel secure as individuals will vary. Good for you, Mudbone, for saving. I think people who don't do it are foolish.

[CTGirlNoMore]

I hear the experts say 6 months too, but I wonder if they would change their tune in this economy? I've heard Suze Orman say 8 months even, but I don't know how recent that was.

[mysticaltyger]

Originally Posted by mudbone

I am in the process of saving and growing up never had any money but now i managed to save some funds but still dont feel financially secure.So i was wondering how much do you think you need to have in the bank to be stable.

It depends on the context. Ideally, you want enough money so that you don't have to work for a living. That usually means about 25 times the amount you spend every year. EG. If your living expenses are $30,000 per year, you'll need a minimum of $750,000 to last the rest of your life so you don't have to work. Of course, it takes a long time to save that amount. If it takes you 30 years, then you have to take inflation into account. In 30 years at 3% inflation, you'll need $73,705 to maintain the same purcashing power. So $73,705 x 25 = $1,842,625. To get to that amount in 30 years, you'd need to save about $1010 per month for 30 years (assuming an 8% return in a fund that invests in a mix of stocks and bonds).

Of course, you'll need to regularly invest in stocks and bonds through a mutual fund to earn the kind of return needed to get yourself to that amount. A fund like T. Rowe Price Capital Appreciation would do the trick (PRWCX). www.troweprice.com. They'll let you invest for as little as $50 a month if you have it deducted automatically from your bank account. The fund I mentioned has returned 8.6% annualized over the last decade and over 10% annualized for the last 15 years, with less volatility than the stock market as a whole. It's tough to know if you can consisently get more than 8%, so it's better to assume 8% or less for your rate of return.

In the shorrt run, I'd say 6 months' worth of living expenses and enough cash for a decent used car (unless you have a nearly new car) would be a minimum. Ideally, you'd have more than that. But if most people had that much, they'd be sooo much better off.

I agree with what most financial expert say that once your debt is pretty low, and you have $1000 in the bank, it's time to start putting something away for retirement, even if it's a small amount.

[Pear Martini]

This thread is making me want to start saving more

[shaggy323]

We want to save 100k as an emergency fund. Much more for retirement.

[mathjak107]

there never is a comfortable number. there is always to much month at the end of the money. money is like water and will always seek its own level most of the time.

the more you have the more most folks spend so the relationship of expenses to income to savings always leave you feeling like you need more.

we are getting ready to pull the plug and retire and we dont feel anymore secure now with 7 figures in savings then we did with 6 figures in savings. only our expenses changed... we buy more,do more and give more but that feeling of will i have enough always haunts you.

[nicet4]

Originally Posted by mysticaltyger

A fund like T. Rowe Price Capital Appreciation would do the trick (PRWCX). www.troweprice.com. They'll let you invest for as little as $50 a month if you have it deducted automatically from your bank account. The fund I mentioned has returned 8.6% annualized over the last decade and over 10% annualized for the last 15 years, with less volatility than the stock market as a whole. It's tough to know if you can consisently get more than 8%, so it's better to assume 8% or less for your rate of return./

In the shorrt run, I'd say 6 months' worth of living expenses and enough cash for a decent used car (unless you have a nearly new car) would be a minimum. Ideally, you'd have more than that. But if most people had that much, they'd be sooo much better off.

I agree with what most financial expert say that once your debt is pretty low, and you have $1000 in the bank, it's time to start putting something away for retirement, even if it's a small amount.

It all depends on age and circumstances with the older you get the more you should have.

In my opinion everyone needs a very minimum of six months enough to cover all normal living expenses which for many will be nearly equal to six months income. Personally I would like to see one year in today's economic climate.

At age 60 you should have enough to pay all living expenses up to reaching full retirement age. If you are 60 today then you should have six years which isn't that much as long as your house is paid for and you have zero debt. At age 60 your house should be paid for and you should be out of debt. For most of us in Flyoverville you should be able for $150k which isn't high living by a long shot but it should represent a comfortable and secure living.

The thing about being 60 is if you do lose your job you may never work again. Your largest monthly budget item would easily be health insurance.

[hershey48]

I would say 12 months expenses for an emergency fund. JMO.