{ "media_type": "text", "post_content": "How much do y’all keep in emergency savings? What does that account for? I am currently at home with zero expenses but want to keep some cash. Does having to pay a big medical fall into this account?", "post_id": "616943f31feb37002ba7734b", "reply_count": 29, "vote_count": 2, "bowl_id": "5b3f7377ab53db00136f7b4c", "bowl_name": "FIRE Financial Independence Retire Early" }

How much do y’all keep in emergency savings? What does that account for? I am currently at home with zero expenses but want to keep some cash. Does having to pay a big medical fall into this account?

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In truly liquid cash I have 3-4 months living expenses in my checking account. I have a taxable brokerage account I view view as a “true” emergency fallback that could carry me for a while (similar to the post above). I factor in taxes on long term capital gains if I had to liquidate all of it. Personally I don’t like to sit on more cash while it’s not doing anything. Sure the market could crash, but danger is my middle name 😎 just kidding I am a trusts and estates lawyer and am a nerd 🥸

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If you live at home and your family doesn’t rely on your paycheck, you can be a bit more aggressive (less liquidity) than someone else who has a rent/mortgage payment and others to feed. Yes, medical bills fall under emergency fund.

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That’s great! Your situation is unique but sounds like you have a solid plan.

I live at home and keep $10k of my brokerage in a money market fund. Rest is in stocks or retirement accounts.

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Yes, with my parents. My joke is I never moved out after college 🥲

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Related question...where do you all keep this emergency fund? Straight cash? Short term CDs? Hate the idea of just parking cash but obv since it's an emergency fund need decent liquidity

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Lmcu.org 3% checking up to 15k. That is where my emergency cash sits

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It will, and should, vary from each individual/family. I keep: (a year's worth of core living expenses + funds for a year's of leisure travel + a year's of expected property taxes + a year's of home maintenance + a safety fund worth replacing an expensive appliance + dry powder to invest when markets dip) in hysa. It amounts to about $80k. Also helps that this amount is ~7% of our portfolio.

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38k which is 6 months of expenses. Two kids so we are a little more conservative with the emergency fund.

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It really depends on the safety net you’ll have. If you have a ton of assets with low fixed expenses, you can get away with having a lower emergency fund. If you have parents who will help out in a worse case scenario you can also have less. I personally don’t keep more than 2 month’s worth of expenses in my emergency fund and choose to be slightly riskier and keep the rest in highly liquid stocks (e.g. S&P 500).

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I agree generally that in your current circumstance you don’t seem to need much. But you may want to think about your emergency savings needs for the future. Are you young, living at home, but planning to move out in a year or two? If so you might want to slowly accumulate a fund with three to six months worth of expenses that you’ll likely have once you get to that point. It can be hard to just immediately save that much money up quickly for some people. So you could use your current opportunity to save up a bit for future needs with little impact on you now.

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I don’t think you should consider your investments as your emergency fund. I think most people consider their emergency fund to be a separate pot of money kept in a fairly liquid form (Savings account etc) for a rainy day with about three to six months of expenses socked away. The point is to have a reserve of funds to handle emergencies that keeps you from having to dip into your retirement funds (401k and Roth) when something unexpected happens like the loss of a job or medical bills. So I wouldn’t consider those part of your emergency fund. As for how much you need I would think about what your expenses will be likely be like once you move out in 8 months (rent, utilities, cell and internet, etc and plan to have about four months of that saved somewhere.

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Emergency fund for me is anything unexpected. So cat breaking down, medical bills, sudden layoff. Whatever you would need to cover those unexpected one offs and in the event of an emergency so you don’t have to dip into other investment accounts

Well… I meant that to read ‘car’… though there have been times I’ve gone to the vet for my cat and had some serious medical bills dip into my emergency savings fund! 😹

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I keep anywhere from $25-30k in savings for an emergency fund. This is the amount I could comfortably live on if I was out of work for a year. I’m probably going to decrease the amount to $20k or less since the job market is so good right now. In a more uncertain market I would build it back up as a safety net

We have $100k in our emergency funds but our families monthly expenses are in the $20k range. Wife also wants to be conservative as there has been some drama in the past. Net worth is in the $3m+ range so not too stressed about milking every dollar especially since we have this emergency fund, a layer of conservative investments (Bonds + VOO type), a layer of themed ETFs (cloud, sustainability, innovation etc based on mega trends) and then more speculative investments (TSLA, UPST, NVDA, SQ, ABNB - don’t understand the hype on crypto so let it do it’s thing and not worry. Do enjoy conversations about it as I’m open to learning but no one has given me a killer argument yet. Have the emergency funds in some of our state’s tax free bonds purchased through our broker.

$20k. My house and cars are both paid off. So unless its a big repair bill, nothing should be too expensive. I also have a healthy HSA so if I were to lose my job I think the biggest expense would be premiums so I could put it towards that. $20k is kept in CDs and HYSAs

@consultant1 If I lost my job and received unemployment or COBRA, yes

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I have 1 month worth of expenses in my savings account + 50% of my taxable brokerage is in cash (I’m a swing trader).

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