Liquid cash

[Anonymous]

How much money do people typically have as liquid cash in the bank? Talking about a family of 4 (2 adults and 2 elementary level kids).

[Anonymous]

Anonymous wrote:How much money do people typically have as liquid cash in the bank? Talking about a family of 4 (2 adults and 2 elementary level kids).

Really depends on your income.

[Anonymous]

We always maintained 6 months of cash/emergency funds, just in case. And then spouse was laid off. When he started working again, I insisted on 12 months worth.

In 27 years, he has now been laid off a total of 3 times (fickle industry, every time we ended up better off after, but it was always stressful to me).

I would day it depends on your income, your level of risk, and what is dependent on your income (house/kids v single)

[Anonymous]

It all depends as others have said. I’m inching upon retirement and I have about 8% of my investments in short term instruments (money market funds, CDs, I bonds, MYGAs, etc.). Not optimal but helps me sleeep well, as don’t want to have to worry about sequence of returns risk the day I retire.

I had much less in “cash” earlier in my career.

[Anonymous]

The amount will obviously vary with income and expenses. I keep low five figures in credit union checking to pay monthly bills, high five figures in a credit union money market account to be a reserve to replenish checking if needed while earning a higher interest rate in the interim, and low-mid six figures in a settlement fund at my investment company, where it is invested in another money market fund which can be instantly exchanged with funds at my bank if additional liquid funds are required. The rest is in equities and bonds, mostly low-cost ETFs, in both taxable and non-taxable accounts. The ETFs are liquid, able to generate additional cash instantly if ever required.

Cash and cash equivalents, which provide relatively low returns in exchange for safety and liquidity, represent around 3% of my portfolio.

[Anonymous]

Twelve months of expenses.

[Anonymous]

Savings account is liquid. $8k in checking and $10k in savings. We are family of 2 with low expenses.

[Anonymous]

Depends on where you invest and how good you are. People not good with investing, or investing in less flexible vehicles like RE tend to have more liquid cash just because they don't know what to do with it and how to make it make money for them. Those who know how to squeeze 10 cents from every dollar, keep little in savings, just for emergencies. That's been my experience and observation. But also some people just live paycheck to paycheck after contributing to their standard retirement vehicles and don't have much cash they can come up with in general.

[Anonymous]

We keep about $75,000 cash on hand for upcoming vacations, our home maintenance fund, and the max OOP medical amount. Our home is about 20 years old and needs a new roof, two new HVAC systems, and a new water heater probably in the next 2-5 years. This is a small portion of our assets but helps me sleep better at night.

[Anonymous]

In a marriage if one income is stable is enough to cover the basics, I think it is fine to have as little a 3 to 4 months. As a teacher I have a very stable income with good benefits and have purchased disability insurance. With my lifestyle and income I try to have no more than $16k in savings at the moment.

[Anonymous]

Also agree it depends. I keep about 5% of my net worth in cash (checking) or short-term investments/bond funds that are easily sold.

I'm not sure why i would need more. If for some reason my wife and I both lost our jobs, and we couldn't cut back on expenses, we would eventually have to sell other investments. Odds of those things happening while those investments are way down are pretty low (knock on wood!) so keeping extra cash to avoid losses in the event of asset sales seems dumb.

[Anonymous]

We have too much - 270k in cash, another 180k in ibond/T-bills. We are not big spenders so 270k would last us for years.

[Anonymous]

One year’s worth of expenses.

[Anonymous]

I always keep at least $150,000 despite the fact that my expenses are like $3,000/month.

About 10 years ago, when I first bought my house, I embarked on an expensive renovation that went over budget. I hadn’t planned on the fact that since I now had a nice house, I also wanted nice furniture, which cost a lot more than I anticipated. I ended up burning through what I thought was a lot of cash and having to borrow money from my parents.

After that, I never want to go even close to the edge. Cash is like oxygen – you only have to be short once to realize how important it is.

[Anonymous]

None. Just what we need for liquidity management, around $20k on average.

About 22 percent of our asset allocation is in bonds though so we could access that if necessary. We also have large limits on credit cards and a heloc we could access in the unlikely event we needed to.