What is Your Current Financial State?
"The average amount in a checking account is $3100. For retirement accounts, it depends on your age. It is $12000 for people 25-32; it's $61000 if you're 33-44"- Source unknown
A while back I wrote a post that talked about how most people do not have more than 2000 in their accounts. If their car blew a transmission, they would be hard pressed to come up with the money to repair it without having to borrow it. What was also surprising about that post was that 25% of people that made 75k-100k had to borrow the money also.
This quote which I read today proves that point. What is $3100? Not enough to handle most small emergencies. Definitively not enough to handle a mid size emergency- 5-20k.
I think that most people realize that point but do not have a plan on how to get to a position where they have a large enough emergency fund that could handle a job loss for one year and all of the bills associated with trying to continue life as it was before the job loss. This blows my mind. No plan means an expectation that someone else will save them from life little bumps.
The picture does not look much better when it comes to retirement money. If you go with the max amount of 61k and you consider your monthly spending amount, how many months could you last? If average income is about 44k and nothing is saved implies that a monthly spent is $44k/12~$3700 per month. In other words 61k/3700=16.5 months. You would be able to live 16.5 months without touching social security assuming you do not have an early withdrawal penalty.
Painful state of affairs!
Today's question is:
"What does it take for you to build up your emergency fund to be able to cover 6-12 months of expenses?"
"The average amount in a checking account is $3100. For retirement accounts, it depends on your age. It is $12000 for people 25-32; it's $61000 if you're 33-44"- Source unknown
A while back I wrote a post that talked about how most people do not have more than 2000 in their accounts. If their car blew a transmission, they would be hard pressed to come up with the money to repair it without having to borrow it. What was also surprising about that post was that 25% of people that made 75k-100k had to borrow the money also.
This quote which I read today proves that point. What is $3100? Not enough to handle most small emergencies. Definitively not enough to handle a mid size emergency- 5-20k.
I think that most people realize that point but do not have a plan on how to get to a position where they have a large enough emergency fund that could handle a job loss for one year and all of the bills associated with trying to continue life as it was before the job loss. This blows my mind. No plan means an expectation that someone else will save them from life little bumps.
The picture does not look much better when it comes to retirement money. If you go with the max amount of 61k and you consider your monthly spending amount, how many months could you last? If average income is about 44k and nothing is saved implies that a monthly spent is $44k/12~$3700 per month. In other words 61k/3700=16.5 months. You would be able to live 16.5 months without touching social security assuming you do not have an early withdrawal penalty.
Painful state of affairs!
Today's question is:
"What does it take for you to build up your emergency fund to be able to cover 6-12 months of expenses?"
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