Do you keep a cash reserve?

[WDWHound]

Most financial advisors recommend that you try to keep a certain number of months worth of salary as a cash reserve. I have seen recommendations ranging from 1 month to to 1 year, but most seem to recommend that you build up to the equivilantof between 3 and 6 months of salary as a cushion against hard times or unexpected unemployement.

So, do you keep a cash reserve and if so, how many months (or weeks) of salary do you keep? I'm not interested in a dollar figure, just how many months of salary it represents. Also note that a cash reserve does not have to be cash per se. Anything that is very liquid (like a savings account) qualifys.

 

[monkeyboy]

3 months cash in a safe at home

began at Y2K

 

[Bob Slydell]

Yep. 3 months or so in a liquid account and a couple weeks worth in cash at home.

 

[EsmeraldaX]

I try to keep one months but it's hard to put that cash away, keep a regular savings, pay bills and still be able to take trips, have fun etc.

I'm not that concerned. I'm lucky in that although it is not a high paying job, or an exciting one, my job is pretty secure, and I have always been able to get by without government aide and am confident that I would find a way to get by should I ever lose my job.

I'm sure I'll get flamed for this, but I'd really rather enjoy my life now, because if there ever was an emergency/disaster, who knows, I might not make it out of it alive and I'd rather know that I lived my life living, rather than putting cash away for what if's.

 

[Jolie C]

6 month cash supply in the bank, one month in cash at home.

 

[castlegazer]

I have about 2 1/2 months in savings which is not adequate - but that is cash equivalent to cover both our salaries. If it were to cover one of our jobs it would cover a little over 4 1/2 months.

I thought you were asking about cash available without going to a bank which is very advisable in times like these. I was just talking to my husband about this saying we should have some significant cash on hand in the house in a safe should anything like the blackouts or something worse like the hurricanes happen to us. Once phone lines go down, banking transactions stop.

 

[NMAmy]

We live on DH's salary and my entire salary goes into a savings account. We were able to pay for a new car in cash this way and still have a significant amount of money for emergencies etc.

We still have money for fun and trips, etc. I came from a marriage with a man who believed in spending every cent and he declared bankruptcy during our divorce. I swore I would never end up like that again. I feel so much better knowing that we have money stuck aside for a rainy day.

We only keep a couple of hundred at home for emergencies.

 

[aprincessmom]

I currently have a year's worth of living expenses liquid -- enough to live out a full year with all the bells and whistles which means I could stretch it to at least a year and a half if I was very frugal and careful. I have more available if I need but it isn't as liquid.

I worry about having to support myself and my daughter if I were to lose my job. In this economy no one is safe and it could happen at any time so I want to be prepared.

 

[jrydberg]

6 months, trying to build it up a bit, actually.

 

[believe]

Working on saving enough for 6 months of salary. We can actually cut things and live on less.

 

[luvwinnie]

BAD topic for today...finances are a mess right now...between my medical bills and the dogs, well, we have been hit hard. Spent $6000 in vet bills this year. My meds are $200 per mth WITH INSURANCE.

 

[clutter]

I've got 6 months in the bank. I also get about 20% - 30% of my annual compensation (after taxes) in a lump sum. I won't use that for day to day expenses, but that's used for cleaning service, trips, home repairs and furnishings. So I generally have at least some of that money hanging around, too.

(Pretty funny when it's tough to go out to dinner, or to justify paying for any cable service, month to month, but you can afford to go to Disney.)

 

[missypie]

Sort of. I have to pay quarterly estimated income taxes, so we always have that huge amount liquid until the payment date, then we start again for the next quarter. We save a lot more, but the rest is not very liquid.

As for cash...we are pathetic...we use credit cards everywhere. We'd be up a creek if we had to live on cash for more than about 3 days. (All those state quarters I have stashed away wouldn't last long!)

 

[FINFAN]

we have varied amounts at varied times...just depleted a good portion tho....needed to send to family in Florida to help with hotel/meals etc. It adds up quickly. So, had a reserve...but needed it for more important things, so looking at a very low cushion at this time.


Pam

 

[sweet angel]

Only about 2 months here...and that's ear-marked to pay off Disney trip. I'd like to have more, but at this point, I'd rather pay off credit card (9.99%) debt than earn 0.25% in a savings account.

 

[mt2]

We have 2 months now and working towards more. This is a great topic.

my Best Friend's husband was laid off for 9 months. My DH was finally able to get him a job with his company. The only thing that really saved them was that her mother had passed away and she was left with about $40K. It was completely gone in that nine months. With their house payments, car payments, two kids, one dog and three cats, it was a mess. He was laid off the Friday before Christmas. He didn't get paid for that months work due to the company going bankrupt. They kept putting everybody off with it's coming.


I would like to get to the point that my aunt and uncle are. They have enough liquid cash for 5 years of living. I don't even know about their stocks and such. It's not my sand box. That is my goal.

mt2

 

[Toby'sFriend]

I had a fairly good sized emergency fund, but it is a bit deflated after a huge family emergency this summer.

October is a 3 paycheck month and I hope to build it up again then. Also, year end bonuses are looking pretty good -- so if nothing ELSE major happens this year, we should start next year off ok.

I always used to take out $50 every paycheck in cash and put it in our safe. DH and I have both gotten into a very bad habit of using that as our ATM machine though.

 

[EsmeraldaX]

(Pretty funny when it's tough to go out to dinner, or to justify paying for any cable service, month to month, but you can afford to go to Disney.)

Not really. None of those three things are needed to live or get by and most of the people I know who go to Disney a lot sacrifice things like cable or dining out all the time to pay for trips instead.

We don't go out to eat, ever. Maybe 3-4 times a year and even then, only to places like Unos that are super cheap.

We have a basic cable package (no sports or movie channels) and we skimp on other areas as well. We buy store brands when we can, we hardly ever buy new clothes and when we do we buy cheap ones. Most of my nice clothes were Christmas gifts from my parents.

After you pay for your day to day necessities, what you do with your "fun" money is really up to whatever your priorities are. My priority is vacations. I prefer vacations to extensive cable, movies, dvds, fancy resteraunts etc.

On the other hand though, I would never put a vacation on a cc (well, I would but only for security reasons and I'd only do so if I had the cash to pay it RIGHT off). I hate seeing people go into deep debt to take trips.

 

[Galahad]

We keep about the equivalent of a year's net income in money markets rather than other investments. DW also tells me that if anything should ever happen to her to "look all over the house" for the odd envelope here and there.

We also do most things with cash, putting a month's budget for various things in envelopes at the beginning of each month. Use a credit card for gas, larger items, paying it off each month. We've used the "cash in envelopes" method for many years and I highly recommend it.

 

[caitycaity]

my parents do the cash in envelopes thing too, galahad.

dh and i just paid off a rather significant amount of debt, so we are working on saving up a cash reserve (in one of our savings accounts right now). our goal is 6 month's salary. right now we only have a little bit (like less than a month) because we just paid off all that debt. by the end of the year, though, we'll have it almost all saved.

i never thought about keeping large cash reserves around the apartment. it makes me feel uneasy. we do have about $100 in cash between myself and dh at any one point though.