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I'm 35, turning 36 in August and unfortunately do not have that much savings. I have $1,600 in my savings account. I single, make $58,915 a year gross but will go to $64,701 this October and my current position will go to $68,875 by 2020 and will top out at $81,400 but that won't be for a long time (federal job) but hope to be promoted to a higher grade in a few years.
I pay $889 in apartment rent, $500 car payment until July 2021 (5 year loan) and after utilities and food I have about $450 left for savings and entertainment. I have $50,000 in my TSP, which is the government version of 401K, which $467.71 is taken out bi-weekly, plus I get 5% match. Other than my $500 car payment I have no debt. I want to own a house but I do not want to stay in the south long term, so not going to buy a house now.
My goal is to get to $10,000 to $12,000 in savings by 2019. My question is, do you consider your savings just savings or do you also consider it your emergency fund? I've heard of people who have a savings AND an emergency fund but just wondering if you have both a savings and emergency fund or just have one savings account and consider it your emergency fund?
Since I'm single I think $10,000 to $12,000 savings should be enough for a while an then I want to stop contributing to my savings for about 1 year and travel instead, which I have wanted to do for a long time. I feel like I'm a financial failure for having so little in savings.
Google savings and I bet you are in the top 50% if not higher. But as you realize you are short on an emergency fund.
You want a fund that will carry you until you can get a new job if you get laid off. Could be up to a year.
I would put your future pay increases into savings. That way your standard of living does not decrease.
Yes the emergency fund and savings are separate. But I can see an emergency fund and an investment fund and no saving account. But remember investments are for money you won't need in the next 5 years or so.
I don't think it's a hard set rule and there are areas I'm not sure about either... like the portion of our savings going into a travel fund... how should that be considered?
I think in your situation you want to save towards your emergency fund until it's fulfilled to whatever you want it to be. Once that goal is reached then it's on to other things.. down payment or retirement accounts. whatever your goal might be...
Alternatively many might recommend splitting your savings between long-term savings (i.e. retirement account), down payment (if interested) and your emergency fund.
BTW: We can get nitpicky, but your savings is everything you have saved and/or invested. When you tally up your net worth all of it becomes "assets".
You can 'ladder' your accounts according to what you think works for you.
Right now I only have a checking account and my emergency fund is in an MMA with a credit union.
(But it's not paying much so as soon as tax time is done, I'll likely move it to an online MMA.)
There've been times when I had a savings account -- AND and emergency fund, and CD's.
The savings account at its peak had about 2-3 months of living expenses, and was there for major car or home repairs.
The emergency fund has been in a money market account or money market fund -- and was 6-12 more months of living expenses. (or enough to pay cash for a new car). Basically, for me it's everything saved that I don't want in the market for whatever reason.
I also used laddered CD's at certain time -- in addition to the savings account and MMA/MMF.
Basically, everything else is in retirement accounts.
Psychologically I don't like tapping my EF. So in my head, having the savings account allows me to handle 'little' unexpected situations -- without having to tap the real emergency fund. I know that's silly. But what can I say, that's my thought process.
I'm 35, turning 36 in August and unfortunately do not have that much savings.
My goal is to get to $10,000 to $12,000 in savings by 2019.
...do you consider your savings just savings or do you also consider it your emergency fund?.
Savings is EVERYTHING; it starts when you get that first quarter from Grand Dad and continues until you die.
The rest is about accounting and behavior modification and has the specifics change some as we age and accumulate.
The bulk of that accumulation should be investments of some sort.
At 35/36 you should have a quite a bit of savings; including investments and other assets.
I treat my savings account as my emergency fund, yes. I try and keep a minimum of $10K there at all times and never dip below that line. When I have to dip below that mark I stop everything until I get it back to that level again. I have a credit union money market account for this purpose as it pays a bit more interest while remaining fully liquid.
I have an investment account with Schwab as well but treat that more as my "Life or Death Emergency Fund" and would not ever touch this unless it was a truly a catastrophic need for the money. I add to that as I can. If at the end of my 2 week pay cycle I have a fully stocked money market emergency fund and nothing on the horizon in terms of big bills/expenses, I take whatever is left in my checking account and xfer it to my investment account. If I'm short on my money market fund, I'll xfer to that account until I'm at $10K.
I have several savings accounts for different things. I track everything in Mint, so it's very easy to see my goals and how much I need to obtain them. I have an emergency fund where my goal is to have 6 months (net) wages. I also have savings accounts for home improvement, car, and home furnishings.
OP, some of the same people who say you should have quite a bit of money by the time you're 36 also think ALL -- ALL your housing and utilities should be no more than 25% of your NET income or there about.
We have no idea what your bills and budget are and it's not even relevant to your question.
OP, some of the same people who say you should have quite a bit of money by the time you're 36 also think ALL --
ALL your housing and utilities should be no more than 25% of your NET income or there about.
Close.
Some of those same people who say you should limit ALL of your housing costs
will also suggest that doing so is what allows you to have quite a bit of money by age 36.
It's really a very simple arithmetic.
Quote:
We have no idea what your bills and budget are and it's not even relevant to your question.
I missed the referred or linkage statement between these points ...
but I can assure you those billss and the budget limits they currently impose are entirely relevant.
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