My husband and I are 55, together for ten years. In the early years I begged to establish some savings and my husband (the spender) did not want to. He does have alot in his 401k. We have some debt but its from home renovations and we pay it off pretty quickly.
Recently he has started to see the value in savings and we had $10k saved up. He wanted to put 5 K into T-bills (better interest), than wanted to put 3k into Vanguard. We save $300 per month in regular savings, $300 per month in T-bills. He wants me to take the $300 for savings and put it into Vanguard since our savings is $2500 – liquid savings.
I get that liquid savings does not get as high of interest, but its for emergencies that might arise and it gives me anxiety to not have it.
So my question – what sort of liquid savings do you have and how much?
>we had $10k saved up.
If this is the entirety of your non-invested savings then congratulations, you have a small emergency fund. And it should probably stay right where it is.
>I get that liquid savings does not get as high of interest
You can get 5% on HYSA/MMF right now. An emergency fund getting *anything* is a bonus, since it’s really just an insurance policy and not a wealth-generating vehicle.
>I get that liquid savings does not get as high of interest, but its for emergencies that might arise and it gives me anxiety to not have it.
I just wanted to validate this thought process. The purpose of an emergency fund is to be there readily available in times of an emergency. Its purpose is not to earn you interest. Interest can be a side benefit, but if you are making it harder to access for that reason, then you are trying to make it do two things at once. Only doing the one thing, being your emergency fund, your safety net, is perfectly reasonable.
I have $100k in a HYSA and get over $400/months in interest while I figure out where to invest or whether we’re going to move etc.
Are you 100% sure he actually has a lot in his 401k? And is actually making money in all these other investments? It’s odd to me that he doesn’t want to put ANYTHING in the savings. I really hope (not accusing) that all this money he says he has is actually there. Also, are you listed on any of these accounts as well?
i have 85k currently, which is largely going to a down payment on a house soon. afterwards I will aim to keep 6-months emergency fund, and add more to it to save for a car down payment at some point in the next few years.
the point of an emergency fund is that it’s easily accessible. it doesn’t make you money (though high yield savings accounts should help keep it up with inflation) , but more importantly – it doesn’t lose you money.
my parents had to take money out of the stock market, at a loss, to pay for an emergency at one point. i don’t want to replicate that if i can help it.
First, it’s great that you’re making this a priority and you’re already off to a good start. T-Bills, HYSA, short-term CDs and money market can all great ideas – at this point, the best one is the one that you’ll use and stick with.
As a rule of thumb, a married couple with similar incomes should have 3 months of expenses in savings. If one of you doesn’t work, there’s a big difference in income or job that’s highly sensitive to an economic downturn, then 6 months of expenses is better.
Depending on your spending patterns, those numbers may feel out of reach but remember that it’s progress over perfection and you’ve made great progress already!
A high yield savings account would be a choice for you (you could probably find a local bank that has a decent high rate), or VG has VMFXX (their federal money market), which is paying a decent rate currently.
You want to consider having an emergency fund that would be equal to, at the very least, 6 months worth of expenses.
My absolute absolute bedrock minimum is one full month of expenses in a HYSA. Then, of course more is better. Personally, I’d like to have a year’s worth of expenses but honestly I’ve never achieved that. Because emergencies do pop up. But that’s my ideal goal.
For sure you want more than 2,500$ in a liquid savings account.
My bare minimum is the value of a (cheap) car or about 6 months of more bare than normal expenses.
It’s not challenging to find 4.3-4.4% in savings accounts or money market accounts (which can currently go up to 5+%). Because you already have accounts with Vanguard, you could park your whole savings in there and leave it uninvested – as long as you have check writing capabilities for the account you could use that as a liquid savings account that returns around 5%.
I keep one month’s expenses in local credit union account at minuscule interest. I have another five months expenses in TBills with staggered maturity dates so there’s al ways one maturing soon. I live in a LCOL city with no debt, so that’s $18k.
I currently have about $90k in CDs and TBills. I’m adding $800 a month. That’s for a major expense planned for my first year of retirement, which will be between 2025 and 2028.
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My partner and I are approximately your age. We had one bad month when we had to spend 15k on home repairs that couldn’t wait. We paid it in cash. We complained but it didn’t hurt us. We actually split it out of our personal savings, because we keep only 5-8k in the house fund. We are blessed to make enough money that we can keep enough money in our personal accounts. I try to keep 50k liquid, I want to be able to drop everything and move on a moment’s notice.
I don’t really think you need a huge emergency fund as long as your a functioning adult with jobs. Credit lines with low apr can function as an emergency fund considering how liquid illiquid funds are nowadays.
VMFXX pays a decent rate to chill in cash though
6 months worth of living expenses at least, and then any money you want to use in less than 5 years like for a wedding, car, down payment on house etc
CFPr here, 3 months of expenses plus large purchases(car,truck,refrigerator)belong in a savings/money market account paying near 5%. Balance should be invested for growth and income in a diversified,professionally managed portfolio utilizing Mutual Funds, Closedend funds, unit trusts, stocks, bonds and lastly ETF’s. Good luck!
Use a high yield savings account and emphasize the importance of a liquid emergency fund
I aim for 3-6 months of my take home salary in a savings account with the same bank I have my main checking account. It’s an emergency fund I can access 24/7 which is super important. I also keep $500 cash for similar reasons.
The best thing to do with money overall is to diversify it. Basically, you are right to be anxious about it because it’s not a good idea. Keep at least 3 months total income in a basic high yield savings account and use any additional savings in other ways to maximize it’s passive earning potential.
1.5 months in a checking, $2.5k in a local savings account. 3-6 months in a HYSA/MMF, and the rest invested.
I’d do 20% in a 17 week tbill, 20% in a penalty free cd, and 60% in a HYSA. Then you get pretty strong liquidity and take advantage of interest rates too.
Brokerage account money market funds are paying around 5% right now. So if he wants some money in Vanguard, any money that needs to be accessible for the next 1-5 years can stay in the core money market fund, and if you want to invest extra in something like an S&P 500 index fund, you can do that in the same account by adding the fund. There’s no reason to have a HYSA at one company and other savings or investments at others. We use Fidelity for all our savings and investments (taxable and IRSs). We have around $20k in cash for misc expenses and another $50k+ in car savings (we pay cash for cars).
Savings is for emergency purposes. So you can. Put 10k to 15k in emergency fund which should not be touched unless it’s urgency.
Anything beyond 15k you can put in Vanguard funds since they can generate more than 5% in the long run.
>So my question – what sort of liquid savings do you have and how much?
Opinions vary but generally the consensus is a bare minimum 3 months of “emergency savings” which should cover at least all of the following:
* Mortgage/rent/maintenance/utilities (totality of housing costs)
* Car payments & insurance & gas
* Food expenses
* Student loans (if any)
* Other needed expenses that can’t be changed e.g. medical expenses, supporting a family member, childcare etc.
Personally I think 3 months is nothing. We’re now in a job market where you can be sitting out for a minimum of 6 months and possibility up to a year or longer. I personally have much more cash savings on hand (1+ year of expenses).
Is your total sum age 55 or are you each 55? This is important
6 months of your expenses. My parents are 69 and 59 and have 10 months.
I only keep as much liquid savings as I need to. This entails having a 6 month emergency fund (which is $30K) plus other short term savings like saving for a house or other budgeted expenses. Any other excess cash not needed within 5 years or less gets invested in the stock market in order to get higher yields.
Of my e-fund, I have 3 months saved in money market funds while the other 3 months is in laddered 13-week treasury bills set to auto-roll. My money market funds (FZDXX) is earning 5.18% while 13-week T-Bills are earning around 5.5% and have no state or local income taxes.
For my remaining cash savings, I have it also split between money market funds and T-Bills. Basically any cash needed within a 1-2 month period stays liquid while the rest goes into t-bills. If rates were different I would consider CDs and no penalty CDs or iBonds if I don’t need the money for 12+ months. I also use my savings to churn for new bank account bonuses which yield around 7-9% APY.
Depending on the month, I generally float an additional $5K-$10K for planned budgeted expenses such as utilities, property taxes, home owners insurance, home repairs, etc. I also have other short term savings goals like a vacation fund, house down payment fund, etc.
I don’t mean to sound mean or offend you but having 10k saved up is not enough at your age. It’s a start, and everyone starts somewhere, but I encourage you guys to have a serious talk because one health issue or emergency can devour your current savings. I’d guess the 401k is also not sufficient for retirement bc if your husband never cared about saving, I don’t think he’d have that much in his 401k either. You both need to look at a retirement calculator and see where you guys are at. I don’t mean to scare you but there isn’t much time left to save before you are unable to actually work and earn due to age / ability.
Missing a big piece of info. How much is actually in the 401k
I aim for a 12 month emergency fund. It means saving 12 months of expenses. I could probably feel comfortable at 9 months but I like knowing that if SHTF, I am covered for an entire year.
Once upon a time, in the depths of the wood, There lived a young girl, so kind and so good.Her name was Little Red.https://t.me/rutor/13580
Once upon a time, in the depths of the wood, There lived a young girl, so kind and so good.Her name was Little Red.https://t.me/rutor/13580