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Started By
Message
What's a "normal" amount of money for a late 20s person to have in savings?
Posted on 7/26/13 at 9:13 am
Posted on 7/26/13 at 9:13 am
First, I know there is no "normal". It varies person to person based on income, debt, expenses, etc. Also I'm sure there are some calculators out there to give me a percentage of income or something similar. But I'd rather ask real people.
The only reason I got to thinking about this is because it's something that you definitely can't/don't ask people IRL. And I don't really want to ask my friends honestly, it's none of my business and it doesn't affect my life at all, I'm simply curious.
I don't make a ton of money, but I make more than I ever have before so I'm happy with that. Still, most of my friends make a good bit more than me. So when they say they don't want to go out because they're trying so save money and other things like that, it just makes me really curious as to what people consider a good amount of money to have in the bank. I have literally zero idea whatsoever if how much I have saved up is awful, normal, pretty good, or whatever. No clue.
I'm not talking about money tied up in investments, or retirement accounts, or stocks, or anything like that. I'm simply talking about money on hand in the bank. Sooo, what do yall think is a rough estimate of a good, normal amount for someone in their late 20s to have in savings?
The only reason I got to thinking about this is because it's something that you definitely can't/don't ask people IRL. And I don't really want to ask my friends honestly, it's none of my business and it doesn't affect my life at all, I'm simply curious.
I don't make a ton of money, but I make more than I ever have before so I'm happy with that. Still, most of my friends make a good bit more than me. So when they say they don't want to go out because they're trying so save money and other things like that, it just makes me really curious as to what people consider a good amount of money to have in the bank. I have literally zero idea whatsoever if how much I have saved up is awful, normal, pretty good, or whatever. No clue.
I'm not talking about money tied up in investments, or retirement accounts, or stocks, or anything like that. I'm simply talking about money on hand in the bank. Sooo, what do yall think is a rough estimate of a good, normal amount for someone in their late 20s to have in savings?
22
Posted on 7/26/13 at 9:14 am to WG_Dawg
6 months of living expenses should be sufficient
Posted on 7/26/13 at 9:15 am to WG_Dawg
3-6 months of emergency savings. Emergency savings should be the sum of your necessity fixed and variable expenses.
Any less than this, and you are being risky. Any more than this, and you are typically being overly conservative barring any planned cash expenses (mortgage/loan down payments, etc...)
Any less than this, and you are being risky. Any more than this, and you are typically being overly conservative barring any planned cash expenses (mortgage/loan down payments, etc...)
This post was edited on 7/26/13 at 9:18 am
Posted on 7/26/13 at 9:18 am to WG_Dawg
I thought I read somewhere in Money Mag that 60% of your salary was a real solid number at age 27. Sorry, no link, just what I thought I had read.
Posted on 7/26/13 at 9:21 am to WG_Dawg
Like others have said, 6 months of living expenses...
Additionally, I would hope you would have money in a retirement account of some sort?
Additionally, I would hope you would have money in a retirement account of some sort?
Posted on 7/26/13 at 9:28 am to WG_Dawg
what's normal? probably less than a month worth of living expenses
what should you have? at least 3 months worth of living expenses
what should you have? at least 3 months worth of living expenses
Posted on 7/26/13 at 9:31 am to Lsut81
quote:
Like others have said, 6 months of living expenses...
Well that's a little muddy because I just moved home from out of state so I live at home and have relatively little living expenses. Currently in savings, I have roughly 13 times my net monthly income, so I guess that's a little high. Keep in mind I don't make a ton, and taxes/insurance/retirement come out before it goes into my account, so it's not like I'm hoarding 6 figures in a savings account.
quote:
I would hope you would have money in a retirement account of some sort?
I do, I have a good retirement plan through work and my company matches as well.
The thing is, I can see myself getting a newer vehicle in the next 6-12 months and I would really prefer to pay most/all of that without having to finance it. Also, I will obviously want to move out of parents house soon which is another reason I want to have a good bit saved.
I guess that leads me to what to do from here on out since I apparently have more than enough just sitting in savings. Should I open some sort of investment account to throw extra money into? I'm completely ignorant on that sort of thing. With my retirement through work it's set, so it's not like if I have extra money I want to invest I can just put it there. Are there investment accounts I can open and put as much or as little into it periodically as I want?
Posted on 7/26/13 at 9:31 am to WG_Dawg
It is better to have as low a cash balance as possible. Invest it in fairly liquid assets that return a yield of some sort. That and/or have access to a HELOC with a nice low rate that you can tap if you need to.
Having a lot of cash lying around "just in case" is not a great way to use money. It is more important to be able to get cash when you need it, which is not the same thing at all.
Having a lot of cash lying around "just in case" is not a great way to use money. It is more important to be able to get cash when you need it, which is not the same thing at all.
Posted on 7/26/13 at 9:36 am to foshizzle
quote:
Invest it in fairly liquid assets that return a yield of some sort.
I don't have any idea how to do go about this.
Posted on 7/26/13 at 9:37 am to foshizzle
I just turned 30 and keep ~25k in a savings account.
Married, 2 kids.
Married, 2 kids.
Posted on 7/26/13 at 9:38 am to WG_Dawg
I'm still in school and have almost 6 months of my expected salary 
Posted on 7/26/13 at 9:39 am to WG_Dawg
I've got about a year's salary in savings, so probably more than the average person in their 20's. I'm not too worried about it sitting there right now b/c interest rates are so ridiculously low and I like having it liquid in case I need it. I've also got a 401k, stocks and bonds, etc. so I'm well diversified.
Posted on 7/26/13 at 9:41 am to WG_Dawg
quote:
I don't have any idea how to do go about this.
A couple of ways come to mind.
1) Open a Roth, invest at least something in bonds or bond funds. If an emergency happens, pay for it up front with a credit card. Then withdraw from the Roth (there's no penalty so long as you don't withdraw more than you put in) to pay the CC bill in 30 days so you don't have to pay interest.
2) If your Roth is already maxed, open a brokerage account and do the same thing.
Either way, you can tilt more to equity investments once you have enough to meet the minimum emergency stash.
ETA: This is another way how responsible use of a credit card is wonderful. Here, it buys you 30 days of time to liquidate an investment that pays better than a savings account fund or a CD.
This post was edited on 7/26/13 at 9:43 am
Posted on 7/26/13 at 9:41 am to WG_Dawg
Are we talking about savings or net worth?
I'm 29 and am right about $100 net worth, split about 60/40 between savings and retirement. I need to do something with that 60% because it is literally just rotting away in a savings account.
I'm 29 and am right about $100 net worth, split about 60/40 between savings and retirement. I need to do something with that 60% because it is literally just rotting away in a savings account.
This post was edited on 7/26/13 at 9:45 am
Posted on 7/26/13 at 9:42 am to barry
quote:
Married, 2 kids.
Well theres your problem
I didnt know you were married
Posted on 7/26/13 at 9:44 am to foshizzle
I know you can probably open a Roth online, but can I just go to my bank and do it there? Since all this is new (the only investment type account I have is my retirement through work) I'd prefer to actually talk to someone face to face as I get started.
Posted on 7/26/13 at 9:45 am to foshizzle
quote:
Then withdraw from the Roth
You don't mean Roth IRA, do you? I thought you had to wait 5 years before you could withdraw without penalty? Or is that just on gains?
ETA: Checked again, it's just on earnings. Any contribution amount can be withdrawn tax/penalty free. I should have already known this, but
anyway.This post was edited on 7/26/13 at 10:08 am
Posted on 7/26/13 at 9:50 am to WG_Dawg
3 months living expenses is what I would aim for as far as what you have in your immediate savings/checking account. Depending on your circumstances that is around $5k. I think that's a pretty healthy number to aim for.
Posted on 7/26/13 at 9:50 am to foshizzle
That's an interesting strategy - Wasn't aware there were no penalties on a Roth. Are there any other advantages to this other than tax savings, as opposed to doing this with a normal investment outside a 401k?
Posted on 7/26/13 at 9:52 am to sneakytiger
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