Parents: Where do you put your money after paying expenses?

[Anonymous]

Between paying for mortgage, living expenses, child care, school, 529s, etc., we divert most of our other income into retirement and put very little (nothing most months) into our savings account to pad it. We have a modest savings. Is this what we should be doing? Should we be putting less into retirement and more into savings? Or more into 529? Just wondering what the opinions are on this. TIA!

[Anonymous]

You should have emergency savings for a near-term emergency. We have about six months worth. I've heard up to a year. Really depends on your lifestyle I think.

Then retirement.

Then college.

Then specific items, like vacation, Christmas, etc.

[Anonymous]

emergency fund that can cover 6 months of bills.

[Anonymous]

jinx!

[Anonymous]

Where do you park your emergency savings? We have an ING (Capital One) account, but the interest rates are nothing these days. Any recommendations for easy-access (not year-long CDs for example) savings locations?

[Anonymous]

Anonymous wrote:You should have emergency savings for a near-term emergency. We have about six months worth. I've heard up to a year. Really depends on your lifestyle I think.

Then retirement.

Then college.

Then specific items, like vacation, Christmas, etc.

+1, but we put our short-term accessible savings in low-risk mutual fund, that can be easily accessed if needed, we don't just let it sit in the bank.

[Anonymous]

Anonymous wrote:jinx!

Lol, hi, Son. Don't forget to say my name

[Anonymous]

I keep about $10K completely liquid and another $15-$20K in non-retirement mutual funds that I could easily liquidate if need be. Next, I'd tap my dad or my 401K for a loan. Worst case, I'd sell my house; properly-priced houses in my neighborhood sell in a few days, and I could send my kid to her current school from a rental anywhere in Arlington.

[Anonymous]

We run a small business so right now we are trying to get it off the ground. Its doing well but there are expenses. I try to save money but with helping out family and fixing up our house right now there isn't much in savings.

The plan for the near future is:

Emergency fund, Pay off some debt and Put the extra money in savings for retirement, then college, then vacation fund (if we ever get to take one!)

[Anonymous]

Why not put the 529 money into something that can be used for retirement or college?

[Anonymous]

Well retirement contributions never come into our checking account - goes straight from employer to retirement account with matching - so, after expenses, the remainder goes into savings and 529s. We have a couple different savings accounts but prioritize one of them for our immediate purposes. I also keep a much smaller one that's less accessible - don't have any aims in mind for that, but figure it's good to keep some rainy day funds off on the side that we will forget is there unless we need it some day.

[Anonymous]

How old is your home and what major and minor repairs and replacements are likely in the next 5-10 years? What is the deductible for your car and homeowner's insurance? Would you be able to afford a replacement car if something happened to one of your cars? How secure are your jobs?

You need to be able to cover these kinds of expenses without incurring credit card debt. It sounds like you should stop the 529 contributions and divert that money into a savings account until you've built up more money. Hopefully, your childcare expenses will decrease over time and you can use the money spent there to go back to the 529 contributions.

[Anonymous]

Anonymous wrote:How old is your home and what major and minor repairs and replacements are likely in the next 5-10 years? What is the deductible for your car and homeowner's insurance? Would you be able to afford a replacement car if something happened to one of your cars? How secure are your jobs?

You need to be able to cover these kinds of expenses without incurring credit card debt. It sounds like you should stop the 529 contributions and divert that money into a savings account until you've built up more money. Hopefully, your childcare expenses will decrease over time and you can use the money spent there to go back to the 529 contributions.

This.

You need a 6month-1year emergency fund. Save until you have one. If you have that then try to save a few hundred extra each month for stuff like cars, home maintenance, etc, which pop up suddenly.