reasonable amount of money to keep in the bank...

Discussion in 'Business, Careers & Education' started by thekunk07, Sep 7, 2010.

  1. otc

    otc Senior member

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    There are better places to earn a buck and still go liquid in 3-4 days.

    +1

    There is only so much that you really need to have in straight cash (though if you have a high yield savings account that is doing better than current CD rates, why not?).

    No need to keep 6 months of living expenses in cash if you can keep 1 month in cash and the rest somewhere that is accessible in less than a month. Pio's suggestion of laddered CDs works, and even if you need more than what is expiring that month, you are only forgoing interest when you cancel them.
     
  2. gdl203

    gdl203 Affiliate Vendor Dubiously Honored Affiliate Vendor

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    Have you guys checked interest rates recently? This is a non-issue.
     
  3. Piobaire

    Piobaire Not left of center?

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    Sadly, that is very true. Old habits die hard though.
     
  4. thekunk07

    thekunk07 Senior member

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    this is in line with my thinking, more on the 50% side.

    30-50% of your current pre-tax household income, depending on your aversion to risk and how easy it is to find decently paying work in your field
     
  5. Connemara

    Connemara [URL='http://www.youtube.com/watch?v=6jST2Sv63WQ']

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    this is in line with my thinking, more on the 50% side.
    But that's only two months' worth of steroids. [​IMG]
     
  6. thekunk07

    thekunk07 Senior member

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    supplies are good now.[​IMG]
     
  7. gnatty8

    gnatty8 Senior member

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    I aim for a minimum of 4 months worth of normal cash flow at all times. I would say anywhere from 3 to 6 months of cash expenses is probably the sweet spot, depending on your tolerance for risk, investment alternatives, and access to other, less liquid assets..
     
  8. svelten

    svelten Senior member

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    I only have about 15% of my yearly income. That's around 7k, and I still think that's too much as it's doing just about nothing for me. I threw the rest of my money into a mix of stocks, bonds and etfs and pray to the fairy godmother they do better than they did 2 years ago.

    Real estate would be the smartest thing to do, but I just haven't found a place I want to settle yet.
     
  9. globetrotter

    globetrotter Senior member

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    Strictly my opinion and keep in mind my PoV was shaped by a very poor childhood:

    One year of living expenses. Divide by 12 and use laddered CDs.

    People will give you a million reasons why this is wrong and that doesn't bother me. I sleep very soundly though.



    I'd like to do this, I can only swing half though, and I sleep very soundly, too.
     
  10. SField

    SField Senior member

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    My first really big deal went to my bank, haven't touched it since. It could be working for me but I enjoy the peace of mind.
     
  11. Radagast

    Radagast Senior member

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    ..
     
    Last edited: Oct 23, 2011
  12. Nil

    Nil Senior member

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    I have about 5 months of normal living expenses. I could easily stretch this quite a bit longer if I lived frugally which I imagine I would if faced with a situation where I would actually have to use those funds. Note that I'm single and have no kids, so I could easily go back to my 18-19 year old ways without causing anyone else any inconvenience.
     
  13. rajesh06

    rajesh06 Senior member

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    Recognize that I am on the aggressive side - but I keep 0.5% to 2% of my annual pre-tax income in the bank. I aggressively auto-debit the rest into various investments. I borrow from a personal credit line if I have a moderate crunch and liquidate in a bigger crunch.

    I would argue that this will force you to save more and spend less - but it is not a strategy for everyone.

    I have a good job and good job prospects (strong professional network including many that have told me that they'd hire me if I was interested) As such, I am not concerned about being out of work for any extended period of time.
     
  14. Explosivo

    Explosivo Member

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    Strictly my opinion and keep in mind my PoV was shaped by a very poor childhood:

    One year of living expenses. Divide by 12 and use laddered CDs.

    People will give you a million reasons why this is wrong and that doesn't bother me. I sleep very soundly though.


    This is damn solid advice if you can afford to implement it. Good show.
     
  15. lastlight

    lastlight Senior member

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    If your job is an easy one to find again, 3-4 months of full budget including savings deposits, + extra emergency buffer. If you are more specialized save as much as possible. Keep it seperate from any RSP/401K, Savings for other future things, etc
     

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