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And depends what emergency.

There's a massive difference between losing your job to losing your job during a pandemic to having a long-term injury that will keep you out of work long term.

My general rule is at least 6 months of expenses as savings - i.e. if I wasn't working, I'd be able to live off that emergency savings for at least 6 months.
 

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depends how old you are, your income earning potential and how many dependents you have.

if you hold liquid, relatively liquid or assets you can borrow against and have no dependents and are relatively young, i doubt you need more than 3 months living expenses in cash.

also worth having a cheap low rate credit card to supplement any emergency fund you do have.
 
Gigantic said:
And depends what emergency.

There's a massive difference between losing your job to losing your job during a pandemic to having a long-term injury that will keep you out of work long term.

My general rule is at least 6 months of expenses as savings - i.e. if I wasn't working, I'd be able to live off that emergency savings for at least 6 months.
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Also pays to have a good handle of what your living expenses really are. If you've got a home loan/rental agreement, car, insurances etc. then it takes a solid chunk of cash goes out the door even if you look at things you can cut back on. And it's not always an even $x a month either. Some people choose to pay bills annually when they come, others get everything they can debited monthly toe smooth it out. But I reckon a few people still underestimate how much money they actually spend.
 
If you have access to a line of credit that doesn't incur fees for carrying it and you have some self-control, it can be argued that you don't need an emergency fund.

I'd argue most people (myself included) probably shouldn't roll the dice with just a line of credit, that said I feel that 6-12 months is too much, 3 months seems like the happy middle ground.
 
Yeah I was thinking about that (line of credit)

I was thinking of using my mortage redraw but ive just fixed for 3 years with no redraw so not ideal.

*can put up to extra $10k in without fees but cant access so in theory I could save up to $30k in the next 3 years and in 3 years time have access to $30k (not that I can put away that much at the moment).... I'm leaning towards that as a savings/emergency long term thing.

Hoping nothing major happens in the next 3 years

Even if I can save $5-$10k in the next 3 years it'll be handy
 
So I see Op is still active on BF after starting this topic 9 years ago. I don’t have my financial calculator so I’m not counting interest but $10 a week chucked into a random account nets $4680 at least.

I came up with this lame Cash is King 2020 plan in 2010 as I was walking in the city just having a think about life.

Well I’m no where near it now but resigned to it.
 
Here's my 2 bobs worth for you young uns from someone who's hitting the half century next year and worked bloody hard for the majority of that .

Lots of good advice on this thread .
Mine would be that I found that eventually your income will plateau ( unless you are in high paying job/ industry ) and it is really hard to get ahead .
Smart Money management and not spending more than you earn are critical .
To me exploring alternative revenue streams and up-skilling was the difference in having a life where I didn't have to watch every cent
Goes something like this :

In your 20"s work really hard to be as good as you can be in your profession which makes you valuable and easily employable . Choose an industry with growth potential.

In your 30's re-train and upskill to capitalise on the demand for your services.
Also look at alternative revenue streams ( sIde business that is manageable but doesn't distract from your core income stream )
Examples for the young generation would be limitless ( gutter repairs/ clean , yard cleans, demo jobs , sell stuff online , consult your services for a fee , post tic tic videos , buy some equipment and hire it out ..............)
Treat this extra income as investment money only . Don't spend it !
Learn about good investment - property, shares , trading- whatever you are comfortable with )
Do up old houses and sell them - whatever .....!

In your 40's take whichever of these things is working for you best and grow it . By now you should have the skills , experience, confidence and financial backing to go to the next level .
Work your ass off and keep investing!!!

In your 50's you should be able to back off a little while the good people you have put in place run things and you oversee , making sure the business is run well and your people are well looked after

After all that I don't know , not there yet 😜
Hope this is helpful to someone 🤞
 
sabre_ac said:
If you have access to a line of credit that doesn't incur fees for carrying it and you have some self-control, it can be argued that you don't need an emergency fund.
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I have 50k in a LOC and CC limit. That's for zombie apocalypse scenarios, not rainy day scenarios. If you are willing to stand up to banks then unsecured debt is not necessarily a major concern (if you know what you're doing).
 
utility said:
I have 50k in a LOC and CC limit. That's for zombie apocalypse scenarios, not rainy day scenarios. If you are willing to stand up to banks then unsecured debt is not necessarily a major concern (if you know what you're doing).
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With the 50k in your back pocket, how many months worth of cash do you keep in reserve?
 
Best thing to do with savings is not compare what you have to others around your same age.

I know people who had savings in their 20's and struggle with nothing 10 years later and people with nothing in their mid 20's but now have enough for a house deposit and frequent travel 10 year later.

Biggest mistake I've seen is people spending everything to travel for an extended period of time and come back to nothing and starting over again.

I think it's a very good idea at save hard for 2-3 years before you turn 30 so you have something to fall back on incase of an emergency on the future.
 

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sabre_ac said:
With the 50k in your back pocket, how many months worth of cash do you keep in reserve?
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I work off 12 months living expenses, supporting 2 young kids.

In the event we simultaneously lost our jobs, we could support everything for at least 12 months.

Which honestly put our minds at ease entering COVID considering we had already planned for a worst case scenario like it a few years prior.


It depends on what you spend, current asset liabilities etc, but for me I tend to try and hold around $150k in case of emergency.

Cash is an important diversification category and most serious investors hold an emergency cash reserve in case of disaster.
 
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Cruyff14 said:
Wow, that's heaps, but a great contingency.

I am assuming you both have very good incomes?
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You would be surprised how much 12 months in living expenses is when you do an actual audit of every single transaction and average it over a year or two.

I recommend it. I do it at least once a year and you are bound to find some sort of subscription etc that has been running in the back ground without your knowledge.

I also run a not very well known suite in Xero to track my personal finances, so I can look at them live without running through multiple bank accounts and spreadsheets.


To maintain our standard of living, cover land tax for investment properties, rates, utilities, all types of landlord/home/private health/car insurances, income protection/TPD/Life insurances, day care, school, maintain savings for my kids share portfolio's via our family trust, maintain current dollar cost investment in my share portfolio etc.

I've found that's the safe number with a slight buffer.

I think the important thing when trying to do something like this is not to bullshit yourself. For a long time I cut back on some of these estimations, but there's no use just assuming you are going to be able to switch off the tap when it comes to your cost of living. It's better to be conservative.

Our combined incomes aren't over the top. Approx $250-$300k depending on how much my wife works a year.
 
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iluvparis said:
So only in the top 1-2% of the population then.
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I think you've been looking up the wrong data.

Top 20% and on the border of that threshold. Neither of us are even in the top tax bracket.


1606103479086.png
 
Pykie said:
I think you've been looking up the wrong data.

Top 20% and on the border of that threshold. Neither of us are even in the top tax bracket.


View attachment 1017025
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www.abc.net.au

Can you guess where you sit on Australia's income ladder?

Test how well you know your place on Australia's income ladder — and then find out how your salary compares to your neighbours.
www.abc.net.au www.abc.net.au

1606270857198.png

Now take out the households where both breadwinners aren't in that bracket and you would get quite close to top 1-2%.

If you can't save properly on that household income even with 2 kids you are completely taking the piss with your lifestyle.
 

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