What’s your number?

November 10, 2009 · 15 comments

My savings account is with Bank of America. On the main page of the website BoA has a calculator that predicts how much you will have waiting for retirement (after answering a couple quick questions). I pretty much love financial calculators. They help me set up a game plan to reach a goal.

………Awkward Transition………

I wrote about my decision to beef up my savings account, even though I have more than six months of expenses in it? Why? Six months isn’t enough to make me feel all warm and fuzzy inside. I’ve been fortunate enough to never have to use my savings account for anything….ever. I’m not ignorant, however. I know one day my car will break down, or I’ll lose my job, or maybe get struck by lightning (that would be kind of sweet).

Something unexpected is going to happen to just about each one of. The larger the savings account, the less impact the unanticipated expense will have. There are a couple traditional recommendations for savings accounts.

1) If you have non-mortgage debt you only keep $1,000 in savings until you pay it all off. This is the Dave Ramsey plan. I totally understand the logic behind this, but it’s just not my style. A grand in the bank would make me break out in a cold sweat. I need more on hand to feel secure.

2) Three to six months in the bank. This was the method I subscribed to. I worked hard, spent little, and saved diligently. About four months ago, I accumulated enough to reach six months of expenses in the bank. It was quite an amazing feeling.


3) Do whatever the F you want plan. Maybe you’re allergic to saving money. If that’s the case, then you probably wont have any money in the bank, but you will surely have plenty of credit card debt. The “do-whatever-the-F-you-want” plan works both ways though. There are some people that are addicted to saving money. Every now and again, I’ll watch a little Suze Orman. Sometimes people call in and have like $250,000 in the bank. That’s a boatload of moolah.

So now, as always, I leave with a question to my wonderful bootylicious readers. What’s your number? How much green do you have to have in the bank to feel “secure.” I’ve put in my head that $30K would be a great number  (don’t ask me why, ’cause I have no logic). Let’s make it a two part question, what do you have in your savings and what would you ideally have it be at this point in your life. Don’t be a douche bag and say you want a bagillion dollars. Drop a line and let us all know what “your number” is :)

{ 15 comments }

1 Michelle

I still have non-mortgage debt, so this is my planned number once I've killed all the debts – 8 months full-up both-incomes expenses. Like unemployed type expenses – including COBRA'd health insurance at its most expensive. For our household, in which DH & I both bring home the bacon, that'd be $5900/month say $6K to be nice & round, so $64 M-F grand! (forgive the MF, but I watched Pulp Fiction & my internal Jules is talking). Seems like a lot to save, but we have $15K of it in our current E-fund and once I've killed all the non-mortgage debts, we'll have good leverage in free-d up cash flow.

2 eking out

My number is and always (read: for the last 3 years) has been $10,000. After about a year and a half of work full time, I accumulated this amount. BUT, then I moved and opened up a Roth IRA, both of which sucked me dry of about half that total. Then, feeling lost and alone and hungry, maybe, I don't know, I spent a good bit of the rest on myself. Never do that. So now I'm starting over, only I have a wedding to plan, so it's even harder!

3 myprettypennies

Are you talking about JUST emergency fund? Because I want to have an emergency fund of at least 6 month's salary… which is about $12,000. But I'd also like to have $1000 buffer in my checking account and maybe some other little liquid savings funds in the bank.

Right now my goal is to pay off my debt (DR style I suppose) but I'm also slowly contributing to my E-fund also. My first goal is $6000 then $12,000.

4 Mrs. DFx40

For now our goal is to have 3 months living expenses in our EF, which is around $5000. I know that sounds low, but we're currently living on about 50% of our income while DH is in school. Our ultimate goal will be to have 12 months of living expenses in our EF so we can take extended missions trips. We don't expect to reach that for another year and a half though. That's when we should have stupid Wells Fargo out of our lives for good.

5 SS4BC

Well, the Dave Ramsey plan of $1,000 assumes that you put 100% of your effort and extra money into paying off your debt as soon as possible. Like less than a year as soon as possible. It hedges of the wager that you won't have a bad emergency in that short period of time that requires more than $1,000. And I think that is a fair assumption for 98% of people. He also assumes you'll get that $1,000 in like the first month or so, because that's probably how fast you'll need to get it to get out of debt just as fast.

The problem is the speed. Most people aren't willing to give up their spendy lifestyle in that quick of a time frame (I know that I sure wasn't!)

My "magic number" currently is $10,000. But it isn't just based on salary if I lose my job. Because for me salary is a worthless number. I have a career that (if I'm healthy) I will be able make SOME amount of money every month – whether that be teaching, researching, tutoring, whatever. Somehow Chemistry Ph.D.s are always in need – even if I would just be adjuncting and making a pathetic $1800/month. I could still LIVE on that.

So my $10,000 is based on a few things:

1) A worst case scenario for my health (I have to pay up to a maximum of $2,400 per year in copays plus my deductible of $900) – which would come out to $3,300. Thus, any year I should have available $3,300 to spend simply on doctor and hospital visits.

2) If I'm injured for some reason and unable to work, I have disability insurance. This however does not kick in until I have been unable to work for more than 6 months. So I would need to have 6 months of bare living expenses: $1500 x 6 = $9,000 (I consider this very unlikely to have happen, because I could work as a professor if I had no arms and no legs – as long as I was still able to think).

3) End of life or emergency care for my pets. I do not have health insurance for my pets. Even if I did, health insurance plans work by reimbursement so I'd still need to have the money available. I figure the most that it may cost me at any given time would be $5,000.

4) Freak emergency. My car gets totalled and I have to get a new one fast. My sister gets kidnapped and the ransomer wants cash by tomorrow morning. Who knows. I know other types of emergencies happen. I can't foresee something that would cost me $5,000 BY TOMORROW that wasn't so completely freaky that I had to have counselling for 80 years afterwards.

Now, the likelihood of all of these things happening within one years time? Pretty low I'd say. And the idea of having $25,000 in a low interest savings account seems dumb to me on the off chance that I need all of it TOMORROW.

So my "plan" is to have $4,000 in a savings account, $6,000 in a CD ladder that matures $500 every month, and put the rest of my money towards savings for specific goals – a down payment, a car payment, ect, ect, ect. And if the freak does happen I'll have the cash available to me from those other savings accounts. But I also am not "squandering" the money in a savings account waiting for the worst to happen instead of savings for the goals I have in life.

(Currently my E-fund is at $1,125. I plan of increasing this by $100 every month until I pay off my debt. Then transferring all of my debt repayment money into the savings account until it reaches $10,000.)

6 SavingDiva

I have several types of savings accounts (around $11k in savings)–emergency fund, car fund, travel fund, etc. I think I need about $10k in my emergency fund to feel secure. Right now I have about $6500.

7 me in millions

$10,000. It's probably about 6+ months worth of expenses. I don't know where I came up with that number, but it just sounds good to me. Lots of zeros! :)

8 Investing Newbie

I have one savings account that doubles as my emergency account. (Does not include my retirement account) I rarely dip into my savings. I just keep have enough cash to spend. If I run out of that cash, then I'm SOL because my Savings is NOT linked to my checking and I have to write my bank a letter to withdraw.

I need that type of discipline. HAHA.

Currently I have $7,200 in this savings. I don't have an ideal number. But I really am going to start thinking of one. Currently the game plan is to invest $5,000/yr in the market and after that, save the rest.

The best thing would be to find a ratio of how much you should have saved relative to your income/debt (I have no mortgage related debt) and try to target that amount.

PS I heart Financial Calculators too. Go on CNBC and click on the Personal Finance tab. FILLED with Calculators. But don't blame me if you lose a whole 2 hours…

9 Jessie

To qualify my answer – I have no-mortgage at present.

I have *nearly* $1,000 in an emergency fund and am currently building a joint Efund with my partner, Jordan – in about a years time we'll have $1300 in that account in addition to my $1,000.

I would like to have $10,000 – but it's not realistic right now. I want to pay of my student loans, and save up to buy a house – so the $10,000 mark just isn't a priority right now.

10 graduatedlearning

I sort of subscribe to the "whatever the F you want" plan…in the "saving way too much" direction. I think my theory has been that I just keep saving. I just started a separate savings account for a down payment, but I still probably have way too much in my "emergency fund"…but I guess emergency can mean job layoffs, medical bills, or other unexpected financial hits.

11 RainyDaySaver

I like the 6 months' worth of expenses number for my savings — which will be about $20K. We're only 1/4 of the way there since we just started, but we'll get there. And then probably keep saving past that number!

12 Duddes02

$15,000- which is 12 months of expenses.

I was unemployed and I had $1730 a month on UE insurance-which covered everything for the month.

My savings fund would be for a case where I don't get UE insurance (traveling..etc)

It'll take me about 7 months to save the 15k and then I will be quite happy

13 Anonymous

My EF is $5,000 in my online bank and I have a $1,000 buffer (emergency emergency fund?) in my normal bank. I like this number, but I currently have a wedding, house and Roth fund. I think my actual 'number' would be more like $10,000 because I know I could use my other funds if I absolutely needed to

Courtney

14 SingleGuyMoney

My number is extremely high compared to some of the comments above. I am currently aiming for $50,000 in savings/emergency fund. I’m currently at about $35,000 so I have a little way to go. Once I hit $50,000, I will be shooting for $75,000.

I don’t want to have a need to borrow money again. I have a mortgage so I don’t need anything else to be financed. Having a large savings account means I can self finance anything I need.

15 Lydia aka Ms. MoneyChat

My initial goal was 6 months of living expenses. I currently have 6 – 9 months (the time frame depends on what discretionary items I include or exclude in the monthly budget). Ideally I’d like to have 12 months of living expenses, to include certain discretionary items that I would like to maintain as a part of my life;-). In total those discretionary items are about $200 – $400 a month.
.-= Lydia aka Ms. MoneyChat´s last blog ..5 Benefits of the Great Exodus =-.

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