IS Saving $5,000 a year a good idea?

[Savingmonster]

For a 30 yr old? Do you think it's enough to put into an emergency fund?

This will be a consistent $5,000 I would be saving for years.

do you think I should be saving more? Do you think 5k a year is healthy?

I realized I wanted somethings, and I can't save 15k a year as I originally planned.

The thing is, I want to do everything during the year, like Travel, pay auto insurance, pay rent, food, etc and still make it my goal to save 5,000 at least a year.

I enjoy saving & I think I've gotten pretty consistent at it, but I need to have fun and get things I want to do while I'm still young, which is very important to me.

[dossin1]

Emergency fund is supposed to be 3-6 months of expenses, so I guess it would depend on what your expenses are. It's supposed to be a hedge against job loss, sickness, etc when you have little or no money coming in. So I would put off travel and luxuries until I had that cushion.

[Savingmonster]

Also, I finally started a 401k . Its a measly 3% I'm contributing now. But next year i will double it and at the end of each year after that, I plan on adding 1-2%....



SAVING IS REALLY A CHALLENGE. Getting the joys out of life and saving is tough. lol

[Broken Arrow]

As a rule, I'm all for creating as much positive cash flow as possible!

[tinapbeana]

Originally Posted by Savingmonster

SAVING IS REALLY A CHALLENGE. Getting the joys out of life and saving is tough. lol

perhpas you should challenege yourself to find things you enjoy that result in savings, rather than sticking with methods of of saving that you "don't mind" or "can tolerate".

for some people it's cooking at home, baking, etc. they really enjoy these activities, and the fact that it helps them save money makes it even better. for others, it's home or auto repair, or sewing and crafting. and for some, real joy comes from finding ways to bring in more money rather than finding ways to spend less money.

just because i save/make extra money one way doesn't mean it's the best way for you or anyone else. the best way for you is the way that you'll enjoy and stick with.

[Aleta]

As long as you're contributing to your retirement plan at work, you're doing well. It would be better in the long run if you would contribute the maximum now so you can receive the advantage of your investments compounding. My spouse is self-employed so we truly do have an emergency fund in case he's out of work or because of sickness. We also have other funds for house maintenance, car maintenance, house furnishings, etc. If you could find a number for 3 months and start there, that would be great. I agree with TinaPBeana to find things that you can do that would result in savings. You can go to places like SkyAuction and get great places at great places for travel. I think that just giving yourself challenges would make it more interesting for you so that you could see progress and your bottom line growing.

Something that some people do is to ladder an emergency fund into 3 month increments in CD's. So that way, your money is earning money for you.

[fairy74]

I agree with dossin but I also think just getting started is the key...get yourself going and then work up to more. Also is there a way that you can compensate with smaller trips or luxuries until the EF is built up to your comfort level, I believe it is still important to reward yourself so you don't resent saving and feel too boxed in.

[threebeansalad]

I also think the size of your emergency fund depends not only on your monthly expenses, but your other obligations in life. For example, if you are 30, renting, and single with no kids I think you can get away with less in an emergency fund than if you are 30, own a house, and have 2 small children, etc, ...assuming you'd be willing to downsize if the sh*t hit the fan.

When I was first starting out on my own (around age 23), I actively chose to divert more money into my 401(k) than build up an emergency fund. I was paying $860 / month in rent, but I knew that if I had a crisis, I could make some major changes (move to a less expensive neighborhood, get a roommate, etc.).

In other words, if I was out of work, I'd move someplace cheaper rather than drain my savings to stay put. I knew I would have socially acceptable options if a crisis came. This allowed me to sock away some money while I was young. Depending on how much you have saved in retirement and your personal obligations, you might re-consider if you really need 15K in a savings account when you're 33 *if* that means that little would be saved for retirement.

[bjl584]

It's a matter of perspective. If you are earning 100,000 a year and are only saving 5000, then I would say that you aren't saving enough. But if you are pulling in 30,000 or so, then saving 5000 is a good place to start. That would be saving 17% as opposed to only 5%.

[Savingmonster]

I am actually 28, the reason I say 30 is because I know it's all down hill from there (J/K, lol). Seriously, I've never been a saver, when I started saving in JUNE of last year, I really started seeing the benefits. In my thirties, I definitely want a 'good' amount of money to fall back on, so I am starting now.

I would like to quadruple my 'emergency fund'. I am so used to saving now, if I don't save, I feel guilty, thanks to you guys on here for that . I just have to have a healthy amount in my checking account to feel comfortable. You know what I mean?

I am Single
No kids
I Rent

[Savingmonster]

Actually, I am earning 62k a year.

I always been horrible with money. I am much better. But one of my goals was to get a car before I am 30, it's always been a life-long dream of mine. I learned how to drive and got my license 3 yrs ago.

Now I am looking into getting that CAR and putting it into my budget. I don't know how some people do it. Based on my budget, I can save 400-500 a month as apposed to 1000 a month. I've been saving $1000 dollars a month the past 8 months or so.

[QueenOphelia]

Originally Posted by Savingmonster

I am Single
No kids
I Rent

You don't mention your salary but with no kids and no mortgage I think you are in a fine position to sock away as much as you can in retirement. If you do get married and have kids, retirement is often the put on the back burner.

[bjl584]

Well, it sounds like you are on the right track. Just keep at it!

[Savingmonster]

Originally Posted by bjl584

Well, it sounds like you are on the right track. Just keep at it!

Thanks. Even with no kids no mortgage and NO CC DEBTS, I owe about 20k in student loans though (which is ok as long as it's not Credit Cards)..

When I was saving 1k a month, gosh, that felt good. I would have liked to continue saving 1k a month, because with 1k you really feel and see results.

I don't travel, but plan to travel at least twice a year soon as I turn 29 and of course the CAR. After everything, I still want to save atleast 4-5 hundred a Month.

But even with my salary, bills, etc, it's almost impossible to save 1000 a month now. I was working with the #s to see if it's still possible if I get the Car. I factored in Car Payments, Insurance, etc.... It was not happening for me.

A couple of years ago, I would never have do any type of budgeting to see If I can afford a car, I would have just gotten it and deal with it AFTER.

ONE THING I learned, people can save a lot w/o a CAR lol.

[Broken Arrow]

Originally Posted by Savingmonster

I would like to quadruple my 'emergency fund'. I am so used to saving now, if I don't save, I feel guilty, thanks to you guys on here for that . I just have to have a healthy amount in my checking account to feel comfortable.

Checking? Maybe this is just me being nit-picky, but I'd recommend sticking your emergency fund in a high yield savings account instead.

I was bad with money too, when I was younger. And spendy... and didn't even have the remotest of interest in saving, budgeting, invest, or whatever. I guess I was a typical guy in that respect. Now, I'm racing as fast as I can to turn things around. Better late than never, eh?

[bjl584]

What kind of car are you planning on purchasing? You can get a nice used car for a few thousand that shouldn't effect your savings goals too much, unless you have your eye on something in particular that will cost a lot.

[Savingmonster]

Originally Posted by Broken Arrow

Checking? Maybe this is just me being nit-picky, but I'd recommend sticking your emergency fund in a high yield savings account instead.

I was bad with money too, when I was younger. And spendy... and didn't even have the remotest of interest in saving, budgeting, invest, or whatever. I guess I was a typical guy in that respect. Now, I'm racing as fast as I can to turn things around. Better late than never, eh?

No, I do have my savings in a high yield savings account at Capital One. Thats one of the first thing I signed up for since I got serious about saving.

[Savingmonster]

Originally Posted by bjl584

What kind of car are you planning on purchasing? You can get a nice used car for a few thousand that shouldn't effect your savings goals too much, unless you have your eye on something in particular that will cost a lot.

Something in the 14-18k range. I have my eye on something particular. I can just get a hooptie, but I don't feel I deserve that, I work to hard for that. its not like I want the newest Car at 30,000. I am looking for a car within that range only because I wanted to make payments and still be able to save a good amount.

[Ima saver]

I say you should be saving about 10% of your income each paycheck. It is very smart to start a car fund too.

[Savingmonster]

Originally Posted by Ima saver

I say you should be saving about 10% of your income each paycheck. It is very smart to start a car fund too.

I know I can save 15% each paycheck w/o too much effort. Even after the purchase of a car plus payments, insurance, etc.