The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Zola. on February 05, 2018, 03:44:32 AM
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Just curious as to how much you guys aim to save in cash every month? E.g. do you invest a lot more than you would keep in cash, or do you try to build the actual liquid cash accounts up a lot too?
I invest about 20% of my income each month into funds, the next 60% goes on bills etc and the remaining slowly tops up my cash account.
Does this seem right?
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I keep a lot more in cash than most people on this forum seem to. About 10% of my asset allocation is cash (and by cash, I mean in a checking or savings account. I have like $20 in actual cash). Note: I do not include my house in my asset allocation.
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I keep a lot more in cash than most people on this forum seem to. About 10% of my asset allocation is cash (and by cash, I mean in a checking or savings account. I have like $20 in actual cash).
Sorry yes I meant actual cash in a bank account, not in funds.
I am the same, I never have actual cash on me!
I am just not sure how much cash should be kept in the bank and how much in funds.
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It's up to your comfort level. No one can tell you what is right for you, you need to come up with your own investment plan.
Some people don't keep any cash....a credit card can float any emergency until you can cash the stock. Others (probably not on this board) keep 100% cash.
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Like @iowajes, we also keep around 10% of non-real estate invested assets in safe, fairly liquid accounts (combination of money markets and I-bonds). But our situation might be different than some others, since both me and my spouse have jobs that are not very secure at the moment.
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I like to have at least 6 months worth of spending, and sleep better when it's closer to 12. If I lose my job, I think it may take a while to find a new one. If I was in a dual income household, then I'd be okay with having less.
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The only cash we have is our emergency fund (5-7 months for us), and then the revolving door of our checking account which usually never has more than 1-3 paychecks worth of money in it just to cover our budgeted expenses.
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We keep about five grand in cash. We own our home, have no debt of any kind, and are a dual income household working different jobs in different industries. I lost my job the Christmas before last, and there was no problem paying all the bills in the five months I was looking for a new one. Our investments are a 60-40 equity-bond allocation, so there's always plenty of easily accessible money should the need arise.
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We are currently cash heavy, sitting on approx. $400K in checking and savings that needs to be invested and put to work. I'm pretty comfortable keeping about $100K in checking and savings.
Still have a few places that pay me with checks rather than direct deposit, so I keep some cash when those show up. Not unusual to have $5-10K actual paper money cash on hand at any one time.
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the cash i have on hand varies based on how much i owe credit card companies - which are paid off monthly. i usually keep a net 0 to negative number in cash to whats owed to credit card companies.
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I used to budget down to always have $200 cash remaining, but these days I have been too lazy. I have no idea why I chose that number... These days I usually keep <$5K. I am feeling inspired now to work on my cash flow planner though!
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I have about a year's salary in cash.
I feel like I invest enough in the stock market and after tax I don't feel a need to put it elsewhere.
It kinda just sits there sadly.
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On average I keep about 50k cash on hand. I know it's a lot, but after having to circle the wagons several times in my life time to fight off different attacks as I call them it's an amount I feel safe having at a moments notice. This year instead of just leaving the money in one place I've started doing different bank account churning to generate some kind of return. So far I've cashed in $600 and another $400 will be paid out in less than 30 days. My goal is to make $3,000 off of bank account bonuses with this money this year. Shouldn't be too hard with both my wife and I doing it.
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I have vowed to *only* keep $100k in cash moving forward. It's been piling up over the past few years of good employment stint.
Now I take any excess cash over that amount and invest in taxable account.
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We have a large emergency fund in cash. We replenish it when needed, but don't really add to it any more. If we're saving for a specific large expense, we do so in a sub-account. If we were still building our EF, then yes, we would allocate a portion of each paycheck to it specifically.
If you mean liquid cash for normal monthly expenses, we have that amount in our checking account at all times, with steady flows in (paychecks) and out (bills). We don't manage it extremely closely.
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I personally keep 1 months expenses in cash. Everything else is shipped to index funds. I have a large brokerage account, if an emergency happens I would use my CC until my brokerage can be liquidated.
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Most of my money is in an after tax account, so it can be liquidated quickly if I was ever in a pinch. Bare bones monthly expenses are around $2k. After bills are paid there's usually $2,500 in checking and my savings account is heavily ignored. There's probably ~$2,600 in there at the moment, so I'm comfortable with $5k cash and the rest is invested. At the moment about 5% of my NW is in cash while the rest is split between 401k, IRA, HSA, and after-tax accounts. I've done this for 3 years so far and not had to dip into my savings account or investment accounts. Next year this will change, as I'll finally start saving for a down payment on a home.
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I like ~6 months expenses in checking/savings accounts. Historically, that's the longest it's taken me to find work, though I expect my skills are more marketable now than when I just got out of school. I keep it scattered across a few savings accounts that yield 5%, and the rest in a regular high interest savings account.
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Emergency fund (one year of minimum spending), savings for major purchases (car replacement, etc.), and a month or so of regular spending in cash.
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When I first found MMM 3 years ago...100k in cash, but our retirement stache was zero.
Since then I've been maxing all retirement accounts and living off the 100k to draw down my cash. Currently I have about 55k in cash or short term investments (By the way, our stache is up to 214k as of last month)
The plan is to keep drawing all that down till it's about 15k in cash.
At that time I'll tone down my retirement contributions if needed so that my bank account levels right around 15k.
That works for us, you have to do what works for you. Boarder, who replied earlier, is an example of a person who optimizes things a little more efficiently than my wife and I do, but I suspect he has to monitor things a little more closely too. He'll likely retire a little sooner than me as a result, and perhaps a little wealthier too, and that's commendable. There's lots of great ways to get there.
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We keep 12 months of basic living expenses (rent, food, bills) in a checking account. We have 2 years worth (after LTCG taxes) in taxable investments. Rest is in retirement accounts.
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We keep around 3K between the two of us as a bit of a slush fund, but it's more for booking vacations on a whim than anything serious. Our net worth is about 325K right now, so... less than 1% I guess? 3K would be a little over two months of expenses for us, which seems extremely ample.
I also have about 8K in laddered term deposits that I set up a long time ago and am moving into my investments each year when a "rung" matures. But it's not there because I want it to be there, and I eagerly await the day they're all gone. Three more to go, one biting it next month!
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$2-5k cash in my checking account. More than that goes into the market.
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I keep $0-300 in my wallet (I generally withdrawal $300 for "free spending" and then rarely use it, so it lasts months).
I keep ~$500-1000 above my expected expenses for the next week in my checking account.
I keep my vacation funds for the year (or what I've put in to cover them so far) in a savings account ($0-5,000 depending on where I'm at on savings and what vacations I'm taking that year).
The rest of my money is invested. I've been strongly leaning towards moving my vacation funds to my brokerage as well, but old habits die hard.
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I am preparing to FIRE, so I currently have almost 2 years expenses in cash and short term bonds. Probably not relevant to most.
I have kept at least $20k in cash as a true emergency fund for 20 years, or ~5% of total. I have been laid off before, and it really came in handy. I keep it as a money market fund, and any excess is for investment, unexpected or annual bills, and fun.
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10% of our asset allocation is cash, which counts all cash on hand, whether it's "budgeted" or not. But although we're Mustachian in most things, our AA is much more traditional than most on this board.
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I have about 5% of my assets in cash right now, and that's going to go up in the next few months as I save for a wedding followed by a house downpayment (both within the year, hopefully). Since both those expenses are in the near-term, I'm not comfortable putting them in anything volatile. Once those are done, I'll go back down to a 3-month emergency fund. I know intellectually that it makes more sense to use a credit card for emergency expenses, but it helps me not worry, so for me the less than optimal returns are worth it for the lowered stress.
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Right now, it's waaaaaay too much, but we are closing on a house this month!
The general plan is to keep $5K in the checking account at all times, and invest the rest, but we are lazy and it sometimes piles up.
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I have $13K in cash in my regular savings account. I have $2K in cash in my brokerage account. And trying to get up to $2K in short-term (cash) reserves in my rIRA. Once I get the last accomplished then I'll try to increase the cash amount in the brokerage account. ...Should always have a bit of dry powder for a bad month.
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Usually $2-5k in my checking account. Anything past $5k goes to index funds.
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I keep a $1000 buffer in my checking account, $500 in an individual savings account, and about $10k in a joint savings account. The joint savings is mostly used for household projects. If it gets much over $10 we start making principal payments on the mortgage unless we have it earmarked for something specific.
For anything over that, I have pretty high limits on credit cards, and a bunch of VTSAX in a taxable account that could be liquidated if necessary.
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$250 + bills to be paid between biweekly paychecks.
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Around $10k, everything else gets invested automatically.
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Family of four, 120k invested, around 30k in cash. So quite a large percentage, really. I like liquid assets. We have a lot of potential expenses--kids, travel, etc., and are actually trying to save more cash in case an interesting real estate opportunity comes along. We also own a condo in a fairly decrepit building and are planning for a special assessment in the next five years (it just seems inevitable).
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We are FI, which is important. We already have enough invested to pay for our retirement. We also like to buy properties to flip or BRRR. We aren't willing to risk the market being down when we need cash, so we keep a shitload of it liquid. Not ideal if you are not FI yet, but it suits our goals.
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2 years of living expenses are in money market accounts. Heavy for now but there will be some home improvements this year. Once those bigger ticket items are done I will probably only keep about 1 year in liquidity and keep the rest invested.
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Very little...$1.4mil invested, just under $20,000 sitting in cash.
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Very little...$1.4mil invested, just under $20,000 sitting in cash.
Have you kept that same amount of cash through your accumilation phase or has it fluctuated? And if so, at what phases of your journey have you made changes?
We personally have abouy 10% in cash funds. Spread between checking, savings, and i series savings bonds. But for us the total amount hasnt really changed. The percentage has slowly dropped as our net worth has increased.
I keep considering putting more in taxable accounts and suspect i will at some point but haven't quite hit that tipping point. I do consider my i bonds a part of my portfolio so i guess i have started that process on some level.
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As little as possible. The only "cash" is what remains of a paycheck before it gets distributed to bills or investments. The investment accounts also don't have any long-term cash, either.
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Very little...$1.4mil invested, just under $20,000 sitting in cash.
Have you kept that same amount of cash through your accumilation phase or has it fluctuated? And if so, at what phases of your journey have you made changes?
We personally have abouy 10% in cash funds. Spread between checking, savings, and i series savings bonds. But for us the total amount hasnt really changed. The percentage has slowly dropped as our net worth has increased.
I keep considering putting more in taxable accounts and suspect i will at some point but haven't quite hit that tipping point. I do consider my i bonds a part of my portfolio so i guess i have started that process on some level.
I've been anywhere from 10% cash to negative 3-4%...
By negative cash I mean when the market started collapsing back in early February, I was $25,000 in the negative into my margin line buying an S&P 500 ETF ahead of a couple cash inflows I had. I wouldn't recommend it for everyone, but I knew I was buying the fund in March regardless, so I would rather have it at those prices.
I've never really carried much cash in the accumulation phase because I've always either had a home equity line and a standing line of credit against the brokerage account in case I really needed anything. I'd like to get that number up to 5% when I declare retirement, but right now I'm planning on using some of the final cash inflows from work to meet that number. 5% would represent two years of living expenses
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4 months minimum spending in checking emergency fund
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I have more in cash than I need but part of it is to appease my wife. As part of our overall portfolio it is a very small percentage so not a big deal.