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it is not higher incomes that let someone cut back . it is discretionary spending in the budget . i know plenty of high income people that created lifestyles where everything they put in place is a need and not a want .
on the other we know more normal incomed folks and they have built in higher discretionary spending
True enough. My point was just that one is much more likely to HAVE discretionary spending earning 200k vs 20k.
One other thing to consider: The amount of one's total portfolio represented by the emergency fund. For us, it's less than 8% of our total net worth (not including our house, but just stocks, bonds, 401K balances etc.). While I agree that having excess cash instead of investing the money can be a missed opportunity, the percent it represents also matters.
some marketing trick . half the country says they could never come up with even 2k in 30 days if they needed it .
OK so "trick" isn't the right word but it was late.
Half the country plans poorly... Doesn't shock me one bit. I think that has to do with the level of income. I wonder how those numbers change as incomes go up.
An emergency fund is one OPTION in a financial plan, not a requirement. (source me: BS Finance, MBA. in financial services for 10+ years, more licenses than 99% of your "planners" out there)
This is how my income gets split up every paycheck. 40% towards monthly bills, 25% into savings(in addition to my 401k savings), the rest goes towards recreational/miscellaneous spending.
I'm unemployed starting September 1. I've always maintained a really large emergency fund. At the moment, it is 1 year of gross pay. I think I can go 3 years on that if necessary without any lifestyle changes other than dialing back my monthly credit card bill. It takes away most of the anxiety of finding my next job. I doubt I'll have to dip into that emergency fund at all but it's comforting to know it's there.
OK so "trick" isn't the right word but it was late.
Half the country plans poorly... Doesn't shock me one bit. I think that has to do with the level of income. I wonder how those numbers change as incomes go up.
An emergency fund is one OPTION in a financial plan, not a requirement. (source me: BS Finance, MBA. in financial services for 10+ years, more licenses than 99% of your "planners" out there)
How many comprehensive financial plans have you put together that include zero cash? I'm sure with all your licensing you'd know that really should come out to zero. I don't think it's an option at all, maybe the amount would be optional
We used to keep a lot more in reserve but realized recently that it was overkill, so we scaled back to three months in cash in a financial management account and increased the percentage we invest accordingly.
How many comprehensive financial plans have you put together that include zero cash? I'm sure with all your licensing you'd know that really should come out to zero. I don't think it's an option at all, maybe the amount would be optional
I am sure the answer is not zero unless you consider CD's not to be cash and maybe the same for very short term bond funds. I think you need a cash fund for several reasons but if you put all your cash in CD's that had a penalty if you cash them in I would still count that as cash.
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