Monthly Savings-How Much is Enough?

[misstina87]

I'm looking to buy a house within the next few months. I had to do some calculations and such to figure out how much I could afford.

After bills are paid (and I always allot myself $100 a month for fun money), I have about $230 leftover that will be placed into my savings account at the end of the month. I have a second "job" on ebay. My business is doing well. I lowballed my estimated profit at $500 a month but it could go as high as $1600 a month depending on how well I do. Anyway, $230 is the lowest amount I will have to put into savings.

My question is this: When it comes to savings, is there such thing as too little? I know many people who have nothing in their bank account by the end of the month and they are perfectly content with that. I, on the other hand, was always taught that I need to tuck some money away into savings to use for unexpected bills, vacations, etc.

So what are your feelings on savings?

[ms.mel.who]

I love savings.

I think of it as different savings for different things. Is this amount above retirement savings, and emergency savings?

We have three (comfy) months to (six rice and bean) months in savings. We save about 11% of pre-tax for retirement. Conventional wisdom says 10%, Dave Ramsey says 15% +.

Then there is college savings, car repair/replacement savings, vacation, home maintenance/repair.

If I could home buy over again, I would have bought less house and had more ability to save. And I would definetly have the 3-6 month thing in place before buying a home.

How exciting for you to be on the road to home ownership!! Good luck!

[frugal is fun]

I would save the absolute most that you can if you want to buy a house. You can never have too much money!

I bought my house last year and I had $4000 set aside for "home improvements". I can't even begin to tell you how quickly that $4,000 got spent. The most expensive item I bought was a new toilet so the price of light fixtures, paint, painting supplies, and all the kind of stuff adds up very quickly.

This was separate money from my true savings. However when that $4,000 was gone, the home improvements came to a halt. Now if I want to do something, I research it, compare prices, save for it and then buy it.

[mek42]

If you're in NY or NJ, you might want to look into the First Home Club savings / grant plan through HSBC. We looked into this program before we bought our home, but my work hours weren't stable enough to commit to any particular class time.

[stinkbug]

Savings should never be what's left at the end of the month. Savings should come FIRST.

[ladykemma2]

10% tithing first, 10% retirement second, 10% savings third, fill sinking funds, live on the remainder

10,10,10, SF, 70.
live on 70 percent of the takehome.

[craftypam]

I have always had a savings account. Never know when emergencies will come up.

[misstina87]

Savings should never be what's left at the end of the month. Savings should come FIRST.

Well how does one determine how much to put into savings if you don't have a set income? Someone else mentioned putting away 10% of your income for savings and living on what is left. I would rather have a set budget and stick to it and put whatever is left into savings. I can save far more doing it that way rather than only putting 10% into savings and living on the rest.

[Greebo]

Well how does one determine how much to put into savings if you don't have a set income? Someone else mentioned putting away 10% of your income for savings and living on what is left. I would rather have a set budget and stick to it and put whatever is left into savings. I can save far more doing it that way rather than only putting 10% into savings and living on the rest.

There isn't a hard and fast answer to this. Everyone manages their money a little differently.

If you want to set up a budget, and strictly follow it, so that your needs are met, you have a little money for having a life, and there's plenty of surplus left and save that, that can work. If you want to save 10% up front and live on the rest, that can work too.

Saving 10% up front works best for people who start out like that. If you haven't lived on a budget in the past, and have all kinds of obligations on a monthly basis as a result (bills, fun, debt, etc) then you CAN'T necessarily save first then live on the rest, until the finances get under control.

I'd strongly suggest you look into taking the Dave Ramsey "Financial Peace University" class - for $100 you'll get a WEALTH of information on how to manage money and ideas that you can make use of.

[Jethro33]

I would second taking the FPU classes. Not that its the only place to learn finances and how to save money, etc. But its a good place to start. Saving money is not a financial equation its a life style. And that life style is far from being normal.