How many months of salary is your emergency fund? I keep seeing 12 as the norm. But feel it’s a lot not to invest in the market.

like
Posting as :
works at
You are currently posting as works at
Highlighted IconHIGHLIGHTED

3-6 months is considered the norm. COVID has definitely shifted thinking to 6+ months of expenses as it could take that long to find a new job sometimes. But 12 months seems extreme, and you don’t want to hinder your retirement savings too much.

like

Despite receiving the standard education on the subject(3 month expense for dual earning family and 6 month for single earner)...I’ve averaged less than three month’s expenses for basically my entire FIRE journey...currently I have 0.7% of my net worth in cash(maybe 86% in stocks, 8% home equity, 8% bonds...with the amount above 100% in low cost borrowings)...you do need to consider your personal situation and calculate what sort of likely drag that cash will present. I currently am willing to borrow at 3.5% from my zero balance HELOC or my brokerage account...each could provide more than 100 months of expenses...so you can see that if I have an emergency once a year for a few months and borrow at that rate...that is equivalent mathematically to offsetting a 1-2% opportunity cost or “cash drag”. I also have six figures in highly rated muni bonds that yield north of 4% and can be borrowed against...once again, providing a very low cost funding source. But definitely not the right approach for everyone.

Recent IconRecent

I see 6 as the more common rec, 12 is fine but conservative. It should also be months Of expenses, not salary

like

Yeah, I’d shoot for 12 right now but take into account unemployment income too. The $ you need might not be that big

Your emergency fund doesn't need to be 100% cash. Just needs to be liquid.

like

What about keeping part of your savings in muni bonds or short term bonds?

My emergency fund is in CDs and HYSA. I think it is too risky to put that in the market; I need my principal to be guaranteed.

I have about 1 year of my net pay in CDs and HYSA. That will be changing in the coming months when some of my CDs mature and the interest rate is so bad it makes more sense to make lump sum payments on the mortgage. Its so depressing seeing renewal options for a CD I opened 1 year ago at 2.8% with a renewal rate at .85% 😟

Also, I am married and living the DINK life. We could easily live off 1 persons salary but our savings goals would suffor if we did.

likesmart

@manager risk advisory my strategy is to just still go the CD and HYSA route for my emergency fund. It needs to be liquid and the principle needs to be protected so I feel it is my only option. And yes, it stings looking at interest rates today versus what the CD I opened this time last year is. Since the fed promised to keep interest rates low for a few years this is how it will be short term.

Keep ~2 years expenses (ex-healthcare/COBRA) in cash, money market specifically. Keep rest of net worth in equities.

likefunny

Tell me about it. Hope you find someone to dress up as $$$ to cover the phantom gain.

Also don’t forget to consider COBRA (or healthcare market) as potential/probable emergency expenses when you’re calculating.

like

Good point @director1. COBRA is so expensive! I looked into it when I left an old job and had about 20 days before my new job's insurance was valid. $490 for a single person in their 20's! I just laid low for 20 days and if something happened my plan was to follow @accenture2 's advice

like

Job market looks tough. I have 18 months expenses

likehelpful

Well actually with the government mandate on mortgage forbearance... no one is paying!

Partner and I are holding a lot of cash ~120k. Should last us 25-30 months if we need. We could also sell stocks if needed, but would prefer not to.

like

@B1, it is our way to diversify. 90% of our other net worth in equities and real estate.

Norm is 6 months expenses, not salary.

I've got about 4 months in cash. I would sell stocks for anything longer.

Thanks. I'm pretty confident that the severe understaffing and strong market in my field will keep my job.

Thanks all. Apart from very low yield CDs and HYSA, any other options to safely save the emergency fund?

CDs are terrible right now with next to zero federal interest rates going into 2023. I am taking my chances on index funds and then high yield savings accts.

like

Related Posts

Has anyone gone through process to buy in Hawaii and use for vacation home / Airbnb? How was the experience? Does it make financial sense? Any lessens learned?

like

Hi Fishes,
I have received an offer from Tech Mahindra
I would like to understand in hand salary that I will get according to the below salary structure .

Post Photo
like

Hey all I have an opportunity to buy a vacation home as a private sale from my parents (they are buying a new house in that area and need to sell the old one), it is waterfront property in NH 10 minutes from Mt Sunappee. I am concerned that making this purchase may make me a little cash poor in the short term, but still manageable. Would it make more sense to rent out the property through a rental company that included insurance and cleaning or to put it on airbnb?

like

Question for Pune,UBS - if i resign in the month of December, will i be getting bonus ?

like
like

Is it true that comp changes at some top consulting firms depending on how well your bschool is ranked?

like

Friday the CEO sends out an email proudly proclaiming that the company made $22 billion last year.
Two hours later I am told on our team meeting that the bonus/raise pool is down from last year.
I just have no words.

likefunnyupliftingsmarthelpful

Hi fishes,

Could you please let me know what is the starting Salary of AWS SAA profile.

like

I’ve been doing real estate and software for about 3 years (without a degree in CS). I’ve been thinking about switching to tech sales. Would you recommend making the switch and is my experience any relevant in the field? I make a decent salary at the moment, just don’t like having to deal with a 9-5. What would you recommend looking for when checking out these positions?

like

My friends (especially the ones on H1b visa.. since our immigration process is tricky),how are you planning to report taxes on the coins you are HODLing or have in exchanges outside US (say binance)?

like

What is the VP compensation for AlixPartners after MBA? I just got an offer from their Restructuring and Turnaround business.

What’s the average salary for EY GPS Experienced Staff?

What is the salary range for technical architecht in Nagarro with 15 yrs of total exp.

like

Just got an offer from PwC for Management Consulting in DDV practice (Their name for M&A Advisory) in Chicago (I am not from there) and wanted to know what a normal salary range looks like (Compared to other Big 4 and MBB) as well as whether or not I can negotiate the salary and signing bonus - all information and advice appreciated!

like

How are people making AP/P in 5-7 years at ClearView? Is that the norm? Is salary tenure or title based?

like

Advice time. So I’m making 100k roughly and I still live with my parents. Moved back due to COVID as did a lot of people I think? Anyways I want to save $ to buy a house. Should I still be living at home? I was planning on leaving when COVID finally becomes a thing in the past so assuming the summer of 2022 so roughly 8 months from now. I know I am extremely blessed and thankful to god that my parents are kind and allow me this but just want advice please.

like

Hi Fishes,
What will be the in hand salary for the below breakup from Wipro?
Considering the tax deduction and pf and home loan exemption.

Post Photo

What blogs/books/resources should I seek out if I want to make the transition from passive trading (index funds/buy and hold blue chips) to more active trading (options, speculation, spending a few hours a week researching, etc)? I’m looking to turn my investing into more of a side hustle

like

For 15.5 YOE, on Cloud platforms, what band and salary should be offered by tech mahindra..CCTC is 17 lacs.Offfer I already have for 34 lacs.

What’s the total comp range at big banks (Canada) post Canadian mba? Does the pay scale jump significantly between senior consultant/senior manager>director>senior director?

like

More Posts

My joining date is 20th June, Bangalore location now WFH.

when to expect laptop and any communication mail or buddy ??

Can sick days get denied?

like

New Biz ....I always seem to get to the final round , always come close but never quite win . Always pipped to the post . I'm 11 years in the game and only had one win. I'm feeling cursed ....any tips ?

like

Work crushes: avoid? What are your stories 👀

like

Thinking of moving from media agency to holding group level, been in this group just over 2 years. Thoughts?

like

Why recently thoughtsworks are hiring women mostly for graduate developer role ??

like

Hi
Need referral in WIPRO
Req ID: 2709147

like

Hi fishes,

Any views on the work that CGI does in the insurance domain, GuideWire application?

like

What do we think of mekanism ny?

like

Anyone have recommendations for an adoption consultant?

like

Hi everyone! Curious if anyone here works for Slack and can shed a little light on the culture and perhaps offer a referral for an associate brand manager position I just saw on LinkedIn. With the Salesforce acquisition are SF employees allowed to refer for Slack roles? Currently a senior analyst with 4 YOE looking to break into a branding role! Thanks in advance.

likefunny

Any recommended courses or books on customer care/cust success analytics or marketing analytics in general?

like

Good job raptors.

like

Any tips for getting into internal audit analytics (automation/CAATs/ACL) and risk modeling? Working as IA consultant right now but have passion for analytics.

like

Fusion92 in Chicago?

like

Tips for AUD? Transaction Cycles have me in Hell

like

Are daycares tax deductible?

like

Yay or nay for the dress?

Post Photo
like

Senior manager at large fortune 20 company (but pay is less) or manager at startup in growth stage and not yet at IPO?

like
like

Additional Posts in FIRE Financial Independence Retire Early

Serious question - is there a reverse FIRE strategy? I like the idea of saving and retiring early, but the one hiccup I see (and sorry if this is grim) is if you die earlier than expected. I’d be worried that I would minimize lifestyle and fun for retirement at 50 but I’d die at 49. How about a way to work 9 months out of the year and retire/travel/relax for 3 months? This way you guaranteed your dreams/etc. are fulfilled

likesmart

Advice time. So I’m making 100k roughly and I still live with my parents. Moved back due to COVID as did a lot of people I think? Anyways I want to save $ to buy a house. Should I still be living at home? I was planning on leaving when COVID finally becomes a thing in the past so assuming the summer of 2022 so roughly 8 months from now. I know I am extremely blessed and thankful to god that my parents are kind and allow me this but just want advice please.

like

How much is your emergency fund? My husband and I are DINKS with 5K monthly expenses but (because we are very privileged) live near family who could help us if something happened. We only keep 5K in our emergency fund because I want to invest as much as I can in index funds.

like

I’m thinking about increasing my wealth but wanted to see what options I have. I don’t know much about stocks. I know real estate is a good way but not sure I have enough money for a second home right now. What other ways do you make extra income? My background is in audit, anything I can do with that in the side?

like

If you had an extra 50K laying around and wanted to take advantage of the recent correction in growth stocks, what you invest in? ETFs or individual stocks welcome. Won’t need the funds for at least 6-12 months

like

Do people tend to age out of wanting to FIRE?

In your 20s-30s, you don’t know much, you’re told what to do, you have few financial resources so you are tied to your job. Under these circumstances it makes perfect sense why you would want to FIRE asap.

But eventually you advance up the ladder, you are now the boss and your people do all the grunt work. You also have built up expertise which makes the job easier. And you are making the best money of your life. FIRE is no longer so pressing.

likesmart

How much should I have saved solely for real estate investments?

I think I want to step my toes in the water by renting an apartment complex and renting it out on AIR BNB.

Has anyone here done this? How much would you advice I have saved before I do this? I know there are fees as well as costs of furnishing, etc. but looking for further advice :)

New to investing. I want to open a Roth IRA and put 3000$ in to buy VTSAX. My plan after that is to contribute 200- 300$ at the end of each month. Is that how you guys do it? Do you watch the market and buy on a specific day when the market is low or do you just pick a day of the month- lets say every 30th day of the month to add to your acct? Thanks

like

What are the easiest / least time consuming 2nd careers? Ideally something where you can make your own hours or don’t demand more than 10-20 hours a week

like
likeupliftinghelpfulfunny

Any market considerations before refinancing my student loan with current rates? They’re giving me a .75-1% drop.

It’s worth it to refinance at this rate to save paying $1000 of interest albeit credit gets hurt. My only concern is missing out on inevitable lower rates forthcoming.

like

Are there any banks that that have the net-worth visualization capabilities of Personal Capital? Want it specifically from a bank as opposed to PC because I don’t want to give my data to them

like

Anyone here retire in late 30s or know someone that has?

Best HYSA for competitive rate and good customer service? I have seen a lot about ally and Marcus but recently seen more negative news about ally customer service and who knows if Goldman will keep Marcus around since they lose a ton of money for the firm. Which one is better?

like

For the KPMG folks, if we are rolling over funds from 401k to IRA (traditional and/or Roth) is there a way to request separate checks for the taxable vs. non-taxable amounts? I don’t want to have any previously taxed amounts in my traditional IRA. I want to roll that portion over to the Roth.

like

How do you feel about eviction moratoriums? Do you think they help or hurt access to affordable housing? Asking here because I suspect many of you own investment real estate.

like

I’m curious how much other people with similar incomes save/invest a year; I’m a 24M, making 70K a year in a HCOL city. I saved about $12K in my first year of working out of college, and I feel like that’s pretty good but I could’ve done better. My rent isn’t too pricey, but I went on 3 vacations, go out to the bars frequently, and spend pretty freely on food. Anyone care to share their income and corresponding savings for FIRE?

like

Started/maxed out my 2020 IRA on Friday at the market high without knowing and now my whole portfolio is down 2-5% already 😔

likefunny

I have 60k in the bank and have no idea what to do with it. Ik it’s a sin to have that much in an account and not making it work for me. I’m not saving for any big purchases either. I’m not too savvy when it comes to investing and really want to strengthen my financial/investing understandings. I plan on sitting down with an advisor. Any advice?

like

Currently looking to refinance my first home (4.125) and considering a few options. What do you recommend?

Background: 36, single and hoping to meet someone, would move from townhome at that point. Would like to save on interest & reduce costs in the time being. No other expenses but car is 10 years old and would prob need a new one within 5 years.

Loan amt: $220k
Current Principle + Interest 4.125% : $1104

Refinance options:
7/6 arm 2.25%: $848
30 yr 2.87%: $920

like

New to Fishbowl?

Download the Fishbowl app to
unlock all discussions on Fishbowl.
That was just a preview…
Sign Up to see all discussions
  • Discover what it’s like to work at companies from real professionals
  • Get candid advice from people in your field in a safe space
  • Chat and network with other professionals in your field
Sign up in seconds to unlock all discussions on Fishbowl.

Already a user?
Login here

Share

Embed this post

Copy and paste embed code on your site

Preview

Download the
Fishbowl app

See what’s happening in your industry
from the palm of your hand.

A phone with Fishbowl app

Send download link to your phone

OR

Scan your QR code to download
Fishbowl app on your mobile

By continuing you agree to Terms of Use and Privacy Policy.

Messaging rates may apply

Download app

Sign up for free to view this conversation on Fishbowl

By continuing you agree to Terms of Use and Privacy Policy

Already have an account? Log in

Sign up for free to continue using Fishbowl

By continuing you agree to Terms of Use(New) and Privacy Policy(New)
Messaging rates may apply

Already have an account? Log in

For account settings, visit Fishbowl on Desktop Browser or

General

Legal