How much is too much in liquid savings - debate with husband.

[Anonymous]

Anonymous wrote:My spouse and I are early 30s, make ~$315K a year combined. Between the two of us, I make ~$50K more a year and both jobs are relatively stable but his definitely more so (think nurse or police officer). No children but currently TTC. We own a home valued at $700K with $500K to pay off, and all housing costs (utilities, mortgage, property taxes, HOA) come to about $3300 a month. $500K in retirement, pretty even split between accounts, and $100K in liquid savings currently parked in a HYSA.

I think this is way too much in liquid savings and have started pulling some of my contributions to the savings account into a brokerage. We aren’t planning to buy a new home until our hypothetical children are school age, and the ‘big’ expenses we’re anticipating in the next couple of years are a new HVAC and hot water heater. My husband disagrees and says he prefers to keep the money liquid in case of home repairs or job loss.

What do you think?

Always jobs available for those. As much as I love good amount of emergency funds, I don't think you need 100k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have the same disagreement. The issue is that he makes 3x my income, and our mortgage is based on our combined income. No way I could afford our mortgage and other expenses if something happens to his income (death, disability, divorce, job loss, etc). So, I keep 1 year of our cost of living in cash equivalents in my own separate account. He doesn't see it, so he doesn't harp about how it's not working for us, blah blah blah. It is working for me - it allows me to sleep at night. That's how I resolved this fight.

That is the purpose of insurance.

No insurance for extended job losses.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have the same disagreement. The issue is that he makes 3x my income, and our mortgage is based on our combined income. No way I could afford our mortgage and other expenses if something happens to his income (death, disability, divorce, job loss, etc). So, I keep 1 year of our cost of living in cash equivalents in my own separate account. He doesn't see it, so he doesn't harp about how it's not working for us, blah blah blah. It is working for me - it allows me to sleep at night. That's how I resolved this fight.

That is the purpose of insurance.

Yes, for younger people, but I prefer to self-insure for most things now. It feels more controlled and secure to have the money sitting in my own brokerage account than to have to fight with an insurance company, a trustee, or a soon-to-be ex-spouse for money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Invest as much as you can, OP. You're still young enough. You have to live leanly and maximize investments do you have a nest egg in a few decades. Don't be tempted to live large now. Emergencies can be put on credit cards until you can sell some stocks. It's all "liquid", except one of them makes you money and the other does not.

This is our approach, in our early 30s. OP if you haven’t already do some scenario modeling on investment returns in a broad index fund over 20-30-40 years. It’s staggering how much the compounding adds up when you start in your 20s/early 30s. And you have the time to ride out any dips and bumps.

+1

[Anonymous]

I think it’s totally depends on your goal and projection

Personally, I always end up wanting more cash during draw down time than I think I need (to buy the dip)

So before I used to keep cash like 10% plus emergency funds six months.
After 2008,COVID, 2022 etc I psychologically need more cash during those time.

Now I try to keep 20-30% cash plus emergency funds 12 months.

So I think it’s very personal.

I don’t just invest in index fund. I invest in high beta stock too. So when they 10x I sell some to keep my cash.

I always want dry powder. That’s just me.