CASH
Cash Emergency Fund:I live in an earthquake area. I think it's important to have cash (and water!) on hand just in case...
SAVINGS LINKED TO CHECKING
Slush Fund:The goal is to have one full month's worth of expenses. I know many people set aside some money every month for upcoming and irregular expenses such as car insurance. None of my irregular expenses are more than a typical months worth of expenses. In addition, I like to have a full month of savings easily accessible to my checking account such that I can pay the bills if something happens to my paycheck (there were 5 months straight that my university messed up my paycheck...I may have become paranoid) so I aim to have a months worth of salary in my slush fund.
HIGH INTEREST (and separate!) SAVINGS
I've been saying that I'm shooting for a 12 month emergency fund but I've since decided that I'm really striving for two different goals. I think my comfort level is such that a 6 month emergency fund is enough. However, since I know that I will be having a big life change in the next couple of years (graduation - hopefully) I want an additional 6 months for security. I think the difference is that I have no problem spending this additional 6 months worth of money after I graduate in order to find a job that will fulfill me, and hopefully provide a small break to recuperate when I finally finish my degree. Thus I've now separated these in my mind to be a "6 Month Emergency Fund" and a "6 Month Play Fund." At the moment the following goals are being kept in one account, which I deposit money into on every paycheck.6 Month Emergency Fund:
My living expenses just dropped considerably, which resulted in an exciting realization that I now have 6 months in my high interest savings account! Yay!
I don't have a retirement account yet. However, since my move has freed up a lot more of my cash I've been thinking about starting one this year. When I've saved up enough money and done the research to start a retirement account, this will separate from the high interest savings. For now, this is the best and most out-of-the-way place to store it. They have just become separate items in my spreadsheet.
6 Month Play Fund:
I want to fill this by the time I graduate.
Has anyone else found that as their financial goals are constantly shifting?
Is it possible to get earthquake insurance in an earthquake zone?
ReplyDeleteMy goals are always shifting - at the end of the day, my biggest desire is to be financially stable and to be able to do the things that i want.
I had never thought about earthquake insurance before you mentioned it! Apparently you can get it, but it's usually separate from your normal insurance policy. However, I don't own a home or even car so I don't think that would help me. My earthquake preparedness is mostly related to having enough food and especially water to go for at least a week without because the main concern (in this area) is that things like water will get disrupted if we have "the big one" and it would take time for things to be repaired. I want to have cash on hand in case there is no electricity such that it's still possible to buy things even if cards aren't an option.
DeleteI totally agree, financial stability is the ultimate goal, but it's too big of a goal for me to work towards! I need smaller goals or I lose all motivation.
Our goals are always shifting. It's hard to tell what income and expenses we will have in the future!
ReplyDeleteI totally hear you - especially on the income side of things! I assume that my income will go up after graduate school but you never know what could happen. It just seems that you have to be a little bit flexible with your goals (and the way you think about goals!) to find what's right for you.
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