How much savings is truly necessary?

Question

I once heard that having six months living expenses was ideal. I have to admit this is a little tough to accrue.

I have a decent savings together, but where to draw the line and be able to place money in other places like my IRA or other expenses like future car.

Your experiences and thoughts would be appreciated...

Answer 1

I think that 6 months of living expenses is reasonable; a three month minimum is a must. But first consider what is really living expenses and what is leisure expenses. I have a few friends and family that are out of work right now and it has been about six months before they found full employment (don't forget that you can probably find part time work and extend that saved money, but part time work won't pay the bills for long). Also, hubby was out of work for several months after a surgery, even if short and long term disability kick in, it is still not full salary.

As for saving for a car and/or other items, I found that putting a little money away each month adds up to a tidy down payment. $50 a month over 3 years is $1800; $100 a month over 3 years is $3600 - get the picture. Saving a little accumulate a lot. Ira's are nice, but if your employer offers a 40lK match, take him up on that.

Saving is very challenging and I wish you good luck and good fortune.

Answer 2

I think a decent place to start is by saving 3 months income. Then start the IRA and saving for the car. When you have leftover $$$ put a little in the savings. You would be surprised at how quickly it adds up.

Answer 3

You heard right. You should save enough to live 6 months to a year in case something happens and you don't have a job for that length of time.

You should also start your IRA as soon as possible. This will ensure your retirement at an early age. The sooner you start saving, the more $$$ you'll have when you retire.

Answer 4

It really depends on your age and family situation. If you are single, own an apartment or living with someone, then 3 months should suffice. If you own a home, or have a wife and kids, then save 6 months of living expenses. The older you are, the more you should save.

Answer 5

Well at the very minimum you need a months worth of living expenses, but 3 would be much better if you can afford it.
If you were to loose your job you'd need an couple of weeks until your unemployment would kick in and you need some for a car repair if some thing were to go wrong with it.

Answer 6

i been saving for 2 years now, but i still spend money here and there. i still have last years tax refund and now that im getting this years i can afford to buy my car in full. is no bmw or anything like that, but is deam good for a person my age(19) own a honda 2000

well hopes that this gives you some motivation.
good luck! and remember to save but not too much, dont forget to have fun and reward your self now and than. after all that what you take with you when you got to the other world

Answer 7

6 months is excessive.
3 months living expenses should be enough so in the event you lost your job you could support yourself for enough time to get the cash flow running again. You want back up but certainly don't want your money hidden away. GIC's or guaranteed investment credit's are great way to put away money and enable you to operate borrowing and building equity. You should go to your local bank and talk with a financial adviser.

Answer 8

if your IRA has a higher earning potential, put it there, you can pull it out if you really need it, but what you are saving for will determine how much you need are you just saving for the sake of saving?
get AFLAC

Answer 9

Better to have money and not need it than need money and not have it.

6 months is nice, 3 months at a minimum.

That is just the jumping off point when talking about personal finance and money management.

I refer you to:
http://www.daveramsey.com/

Check out his site, listen to his show.

If you only buy one book, make it:
http://www.wealthybarber.com/

Good luck