6 months expenses, not 6 months salary.
When you are living paycheck to paycheck, that number is probably the same.
And when 6 months of expenses exceeds 6 *months of pay?
Then you’re boned without help or better pay.
Had me in the first half. 😢
If your expenses are more than your pay then you can either get a better paying job, cut your expenses by moving, or die
There are other ways to cut expenses too. I’ll bet a lot of people (not all, but a lot of them, maybe even a majority) are paying for things they don’t need when they’re living paycheck to paycheck. Things like Spotify, Netflix, fast food, car washes, probably even car payments on a car that is beyond their means or at the least way more car than they need.
Every friend of mine I’ve helped get to a financially stable and responsible point in their life could do it without having to increase their income. Obviously an increase in income makes it a lot easier to do this, but if you don’t have the behaviors down, then you’re just going to creep your lifestyle when you make more money.
You are correct, of course; I’m being facetious because half the comments here seem to be from people who are renting somewhere that costs their entire salary
I figured as much with death being one of the options. Haha.
paying for things they don’t need
What you mean by ‘don’t need’ is ‘don’t need as long as they don’t want to have a slightly better level of life quality than if they were dirt poor.’
You don’t literally need things like Netflix or fast food, but they make your life more tolerable right now so that you don’t die of the endless stress and misery.
Sure, there are ways some people can cut expenses. There are also ways people could cut expenses, but at the expense of their own basic mental health.
Not having Netflix and the like does not make one dirt poor. That is such an entitled view to have. Literally first world problems if your mental health can’t handle not having the latest entertainment. Go to a library for goodness sakes.
I didn’t say they were. Please re-read what I wrote:
What you mean by ‘don’t need’ is ‘don’t need as long as they don’t want to have a slightly better level of life quality than if they were dirt poor.’
Yes, you can go to a library. I love libraries. My wife is a librarian. That doesn’t mean I don’t think people shouldn’t spend $7 a month for a lowest tier Netflix account just to make their lives a little better. Maybe Netflix wouldn’t make your life better. Someone with kids who wants them to be able to watch Teletubbies or Peppa Pig whenever they want, that makes both the parents’ lives and the kids’ lives better.
You are doing something no different from the “stop eating so much avocado toast” guy. Maybe not having avocado toast is a first world problem, but those people don’t live in a third world country. So why should they live like they do?
I was super poor in the 1990s. I still bought CDs and DVDs because they made my life better so I wasn’t unhappy all the time. Sure, I could have gotten all of my music and movies from the library. On the other hand, I couldn’t have listened to the music I liked any time I wanted. Could I have instead saved that money for an emergency or for retirement? Sure I could have. It would have made my life worse and, yes, been damaging to my mental health. I’m not sure why you think libraries existing cure any mental health issues brought upon by not being able to afford to have a better quality of life in a first world country.
I’m not saying Netflix and fast food are keeping people poor like that guy about avocado toast.
I’m saying that if you can’t afford an emergency, that’s an emergency itself.
Buying fast food and Netflix (and all the other things that go with that) instead of saving up so you can afford an emergency is irresponsible.
Not being able to afford Netflix and/or fast food isn’t being “slightly better quality of life than if they were dirt poor.” I may not have been dirt poor. But I was buy expired milk and bread to freeze, can’t afford minutes for my flip phone while my friends have smart phones, poor. And my quality of life wasn’t “slightly better” than “dirt poor.” I had a furnished apartment, a color TV, and was able to borrow videos from the library for entertainment.
And for the people who that is the value?
Then you save 6 months expenses.
Also, 6 months may be more than needed depending on your field. If you lost your job today how long would it take you to find a new one? It could be six month but maybe less. I keep 3 months of expenses on hand because it has never taken me more than a month to find a different job.
Do- do you think I don’t have to spend most of my pay every month just to survive…?
Didn’t anyone notice during covid these “highly responsible business people” couldn’t make it a couple months without the “to big to fail” bailouts or free covid money?
Months? Dune couldn’t make it 2 weeks. Just standard issue capitalist hypocrisy.
The restaurant chain sweet tomatoes didn’t even last the two weeks. MFs where running on fumes.
“too”. I’m sorry to be a Grammar Nazi, but I see this all the time here and I’m literally only trying to elucidate…
It isn’t 6 months salary, it is 6 months worth of expenses
So 9 month’s salary - got it.
Oooff bruh
I don’t have 6 hours of my salary in savings most days.
Yeah, im glad if I manage to play off my debt by 30 lmao
So if I want to accomplish this in a year I should be putting away half of every paycheck? Between rent, bills and groceries, who the fuck can afford that?
You can’t accomplish it in a year.
Most people can’t afford it in a year.
People who inherited a sizeable amount of money or are in the top 10% of earners are able to do so.
Yeah this is a 5+ year goal right?
I world say it’s getting to 3-months first, then paying down debt with high-interest rates, then trying for 6-months of expenses. Could easily take a decade, but the idea is that once you have that 6-months saved, it’s less likely that you’ll re-enter into high-interest debt in the first place.
Saving 3 months in an emergency fund while accruing high interest debt seems crazy to me.
Most people, especially those not very knowledgeable about personal finance, really should follow the Dave Ramsey baby steps.
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How long is a piece of string?
Depends on how much you earn, what are your expenses, and how much you have saved already.
It’s a however long it takes goal. I’m hoping to have it done in 2, although 3 and change is more realistic.
Unfortunately, if you can’t afford to live with financial security, you can’t afford to live. I haven’t had an entertainment budget in over a year, and food has basically been what’s on sale at the grocery store and maybe a gyro every month.
I wish you the best of luck. It isn’t easy. Getting out of debt and having a fully funded emergency fund is a great feeling.
You don’t have to. Start early, save aggressively, get it done before you worry about upgrading your lifestyle.
Also, maxing out the $23.5K of the 401K retirement account.
Easy, have a side hustle selling drugs and pay everything cash.
“Just start a small business.”
That’s what I keep hearing from Republicans.
I actually owned a small business, which is why I understand what bullshit advice that is.
Just stop eating and photosynthesize like the rest of us responsible adults
Psh look at this sun breather. I just de-evolved myself by my bootstraps and float near a hydrothermal vent like a real adult
People with less expenses, people with a higher salary, people who live in a less expensive area, etc, etc.
Most people don’t accomplish 6 months emergency fund in 1 year, no. It’s a marathon, not a sprint.
I make plenty of money and it took 15 years for me to get my emergency fund up to scratch.
Edit: of course, you can probably do it faster if you don’t have any emergencies while funding the account lol.
6 months of expenses, not income.
Most people can. I make $40k per year in a major city, and I’m getting there.
Considering rent or mortgages alone takes a vast percentage of many people’s paychecks before you factor in things like student loan and medical debts, most people cannot.
And I have no idea how you can even live on $40k a year in a major city unless you’re eating beans and rice with every meal and living in a studio apartment with 4 other people.
Median income here is in the mid $60’s. I’m definitely poor, but I do save some money.
I live alone, and cook basically all my meals. Eating out and processed foods from a grocery store are both too pricey for more than once or twice a month. Mostly buy meat and fresh produce because carbs tend to give me stomach issues in large amounts.
Unfortunately, I am disabled. So while I have insurance, I cannot afford to see a specialist as regularly as I should. To be fair, this is out of network and like $700/month on top of my existing premiums and HSA contributions.
If nothing too crazy happens in the next year, I’ll be able to change jobs and get my medical care back in network, meaning I don’t need to ration doctor’s visits for my disability. If nothing happens in 2 or 3, I’ll have my emergency savings in a very good place. If nothing happens in 5, I might pay cash for my next car.
After that, fuck it. I’ll be financially stable, I’ll have another decade before I have a planned major expense like a car, and home ownership is a pipe dream here anyways. Last I looked, they start around $400k, which would mean coming up with about $180,000 for my down payment lol
Edit: Since you brought it up specifically, my rent and utilities is about $1200. I live in a very old building in a shitty neighborhood. The jail is right across the street, so there’s enough of a police presence to keep it safe. It is clean, but my landlord is fucking terrible and I have to sue or threaten to sue to get anything fixed.
Sorry that you have to go through all of that. I’m dealing with a mystery illness right now which involves food, so I understand.
It’s supposed to be living expenses, not salary.
I’m nearly there, I’m about -8 months away!
Great job, Dumbass!
Are you LARPing as his dad
It’s remarkable how this is basically exactly where I’m at, too. I’m two months of salary away from zero.
I’m exactly there too. Same as it’s been for 8 years.
I had 9 months saved in 2020. I’m taking out loans this month because it’s at zero. It’s been a hell of a ride. This economy is fucked though.
Hey man, you live in a democracy. Go vote to change it. Oh wait. You can’t because you don’t live in a democracy.
Yeah! Take THAT person in an unfortunate situation. I bet you feel stupid for not having enough money to move, poor-y
You are so smart. Why don’t poor people just move to a democracy? Its only requires a bunch of money and sacrifice. Poor people should just abandon all of their friends, families, and connections by spending all of that money that poor people are known to have. That way they can live in a democracy and vote not to be poor, or whatever.
In what universe is this even possible for most people? Because it’s not this one.
Its possible in this one, it just isn’t easy, takes a while, and generally isnt super pleasant.
When people say to “live within your means”, they don’t mean “don’t spend more than you make”, they mean “save enough to maintain your financial security”.
I was that person until mid 2019.
Then some unexpected huge home expenses vaporized the emergency savings.
Then COVID happened and I lost my job! TWICE! This was after being an engineer at the same company for 16 years. My shit was stable AF before it all started.
Now I’m a much happier person with a much better job, but my finances are LOLfukt. Fortunately due to me trying to be careful in the past, I already owned a small cheap home in a reasonable COL area, so I can’t complain.
Now I’m a much happier person with a much better job, but my finances are LOLfukt.
Not really; you just found out why an emergency fund is important.
Oh I extracted the full potential of my rainy day preparedness, no doubt.
But the three things in that sentence still hold true. My finances are not fucked because of the better mental state and job, they’re just fucked all on their own due to recent history. But at least I can work on it now.
It is in this one. Unfortuanlty its not easy, and any medical event, car issue, house issue, or girlfriend can wreck that in a day.
If you stay home with your parents for a year or two, you’d get plenty of savings if you’re careful. I know I did.
I know in more individualistic countries not moving out by 18 or 20s has traditionally been seen as taboo, but the current housing situation makes that traditional social rule very impractical for many. Besides, from what I heard in the USA, still living at home with parents is less stigmatised than before.
My savings where wiped out buying a house. Now it’s fucking impossible between maintenance and god knows whatever else is flung at me.
Moving out at a young age is only a norm in just a handful of countries, mainly the English speaking ones. Reason being that they were more developed than the rest of the world, making it possible for them to move out when they turn 18. Poverty is a big reason why families are closer and live together for a much longer period. But many of these developed nations seem to be regressing these days, with more money flowing upwards than downwards.
I agree though. The best time to move out is after you’ve worked and saved up enough for a down payment for your own place. Those few years are perhaps the best opportunity to save up that most of us may never get again.
It wasn’t even really common in the US until the 70s-80s.
I have about $10k socked away into an HSA account from when I had a high deductible insurance plan. With an HSA you can leave the money in an investment account, you don’t have to withdraw it when the cost occurs. You just need to have receipts for the amounts you withdraw so you can show them to the IRS is bed be. So I save all my receipts for doctors visits, prescriptions, OTC medicine, glasses, dental, and anything else allowed. Then I have tax free money sitting in an investment account that I can withdraw tax free if I have a real emergency.
You can also put money into a Roth IRA and you can withdraw your contributions tax free.
There’s a bunch of ways to make your money work for you and still have access to it in a true emergency.
In any universe. Just stop wasting money for a change.
Lots of good reasons why someone might end up in debt. I got divorced and laid off. Dog needed $2k surgery to not have a terrible quality of life. Got a terrible staph infection on my chest after losing health insurance. This all happened in a four month period. I moved to a cheaper apartment, cut off any subscription aside from internet, which I need for two of my four jobs, got a cheaper phone plan, and mostly ate rice and beans every day. Still, it’s taken a year just to get back to zero.
That’s why it is important to build an emergency fund.
Meanwhile giant megacorps after 2 weeks of lockdown go bust bcs free money.
Multiple times now, I’ve had people on Lemmy tell me that I am either not caring about my future or not caring about my child’s future because I buy myself an occasional chai latte and her an occasional smoothie or some Taco Bell food.
I hate this idea that you should deny yourself any and all pleasures in life so that you can have a decent 10-20 end-of-life years when you retire. People made fun of the avocado toast guy, but suddenly now he’s got the right idea?
I’m not going to have major retirement savings if I put the maybe $20 a month at most that this costs and it makes our lives a little less miserable right now.
Yeah, generally agreed.
I think more people should actually track what they’re spending, though. Sometimes what feels like “just $20 every once in a while” isn’t. A coworker of mine realized he was spending a lot more than he thought on fun food and drink when he actually added it up and put it in a spreadsheet.
Not saying that’s you! But actually checking your spending in detail every once in a while I think is a good idea for everyone.
I definitely track spending. I’m just tired of people acting like that. I’m talking to someone in this very thread who is saying $7.99 for a Netflix account is not something you should pay for if you’re poor as if not spending $7.99 a month to make your life a little better would cover any medical bills or car repairs or anything else that might qualify as an emergency.
Their reasoning was “I was poor once and I saved money and I did fine.” Too bad they mentioned that they had a color TV when they were poor, as if you could still even buy a black and white TV in the last 20 years.
I really agree with you. There needs to be a balance between saving money and living your life.
I put $25/ week into a college savings account for my 4 year old. I do weekly for dollar cost averaging, rather than trying to time the market. I started it with a few $k and it’s up to about $5k right now. It’s tax deductible and is invested with a target date fund. Even if the investment only keeps up with inflation, that’s $25k or so in today’s money. Probably enough for at least a semester or two.
Taco Bell used to be what you bought because it was dirt cheap. Is it supposed to be a luxury now?
No, is basically dog food.
I’m 38 and I just achieved that goal.
Don’t stress about this shit (too much).
Go to concerts, take trips, eat your avocado toast. Indulge.
You’re only young once, and everyone is poor in their 20’s. Unless you’re lucky or it’s given to you.
It sounds trite, but success will come. However you measure it.
I got 12k debt and 300 in the bank haha
I have a little more in my account today, but last week I had the fun of saying, “I have $36 in my bank account but I’m still richer than Donald Trump.”
I still consider that a victory.
But you’re not. Trump is still living a lavish life full of excess, despite his debts.
Wealth is about lifestyle, not numbers.
That’s what people like Trump think, yes
Could… C-Could this be one of my people? It is! It is one of my people, hello! \o/
6 month of work just sitting thete getting eaten away by inflation doesn’t spund smart. Either invest that shit or boof that shit while getting your dick sucked.
It is very smart. If you lose your job or have a major expense, not having to put it on credit provides you with a lot of stability, and you don’t have to pay interest.
-someone still paying off 4 months of unemployment a year ago
You can have your emergency funds in a high savings account as long as you can withdraw it without a pnealty
I have my emergency fund in a savings account with 3% interest rate. So my bank is giving me money each month for doing nothing really and I can withdraw my money whenever I want.
Where in the fuck are you getting 3% interest??
6mo CDs: up to 5.3%, no minimum
Bank Norwegian is currently at 3.25%. Of course at times of 4% inflation it’s not enough
Around here, it’s usually not at a local physical bank. My online high yield savings is currently at 4.5% though; that’s where my emergency funds are.
I’m sure anyone reading this in the UK is already aware of MSE but just in case: https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/#easyaccess
A quick glance suggests most of those really high ones are time-limited bonus offers, but other places are doing quite high interest in general e.g. Marcus is paying 4.75%.
I am not endorsing this because I don’t have it myself and know nothing about it beyond this, but the savings account Apple introduced a year or two ago has 4.5% interest.
In germany. I don’t know how long these offers will be available but some banks already reduced the interest to 1,75% or something. I just switched bank for my emergency fund. I’m trying to be above the inflation rate which is currently something around 2,5%
Here’s a few lists I might use (Finnish):
Just over 3% is common. Terms and conditions may apply. Your local selection might naturally be different.
You are barely keeping up with inflation, don’t think that’s an investment. That said, you are doing the right thing, keep that money available if needed.
Everything on top of 6 months expenses, you should invest in something less liquid that on the long term yields decent returns.
It’s not smart to use your emergency fund as an investment. The point is that you keep your emergency fund in an savings account that has at least an interest rate like the inflation rate and you should be able to use that money any time.
I never said that I’m doing an investment with that. No idea why you mention this.
This part made me think you were saying that was an investment, sorry I misunderstood
So my bank is giving me money each month for doing nothing really
USD Inflation is ~3% per year currently, which is easy to beat with a high yield savings account. Anything more than 6 months should definitely go into an index fund though.
Pretty fucking difficult when you’re living paycheck to paycheck
Living paycheck to the Monday after the paycheck. Then it’s just survival until the next one.
Consider crimes against the state
Just uh, you know, buy less avocado toast!
Do people actually do that?
Recent surveys find that 3/4ths of Americans live paycheck to paycheck so no.
Yeah, “advice” like this always just comes across as “well have you tried not being poor?”
