Savings and/or Investments

[Brian_Earl_Spilner]

Just curious how people split their pay. How much of it goes into savings, or investments, or both? What's your goal? To be prepared for any emergency? Live off of passive income? Become wealthy?

[iced]

From each paycheck:

- 4% goes into HSA (maxed out)

- 14% goes to Roth 401k (maxed out)

- 10% goes into ESPP (maxed out)

- 10% goes into savings 

- ~35% goes to misc taxes

From bonus checks:

- ~60% goes to savings (literally everything that didnt get taken out for taxes)

- ~40% goes to misc taxes

From savings:

- Keep around $40,000-$50,000 in cash, amounts over that amount get transfered to investments

Goals: to be able to retire before I'm 100, to outlast any emergency, and to have the flexibility to move quickly on opportunities. 

[Brian_Earl_Spilner]

---

@iced wrote:

From each paycheck:

- 4% goes into HSA (maxed out)

- 14% goes to Roth 401k (maxed out)

- 10% goes into ESPP (maxed out)

- 10% goes into savings 

- ~35% goes to misc taxes

From bonus checks:

- ~60% goes to savings (literally everything that didnt get taken out for taxes)

- ~40% goes to misc taxes

From savings:

- Keep around $40,000-$50,000 in cash, amounts over that amount get transfered to investments

Goals: to be able to retire before I'm 100, to outlast any emergency, and to have the flexibility to move quickly on opportunities. 

---

That's quite a significant portion going to savings and investments. I thought I was keeping living expenses low at 25%. You don't have any discretionary funds that you use for wants and entertainment?

[iced]

---

@Brian_Earl_Spilner wrote:

---

---

That's quite a significant portion going to savings and investments. I thought I was keeping living expenses low at 25%. You don't have any discretionary funds that you use for wants and entertainment?

---

Depends on what you consider discretionary. The remaining money from each check covers expenses with about $1,500/month left over for food and discretionary combined, so little things are covered there. If my wants are reasonable, they can come from the discretionary funds. 

I also tend to get gift cards for xmas/birthday gifts that pile up for several years before redemption, so a lot of those medium discretionary purchases can be offloaded onto gift cards.

if they're larger than can fit within that budget, I usually rethink buying it, though in those rare instances where I can justify it, it can come out of savings. A notable recent example is that we're making a $340,000 down payment on a home next month that will come from savings and investments.

[tacpoly]

DH and I save about 30% of gross income. 40% or so goes to taxes. The remainder is used for necessities, more savings, and frivolities, in that order.

Savings confer freedom -- we can move almost anywhere, take a job or leave a job, etc.  We're not limited by cost (up to a point).  Our goal is to keep that freedom. 

ETA:  savings equals investing for us. 

[CBrow]

From rough percentage estimates of each paycheck:

• 10% into ESPP (max they allow)
• 15% into 401k (roughly 50-50 split between pre-tax and Roth contributions)
• 5% into emergency fund, which is already over 6 months of expenses
• 1% into HSA. Yeah, that should be changed, triple tax advantage, yada yada yada. But at least it covers my deductible for the year.

The one thing I didn't know how to put into percentage terms, is that every year I cash out my entire ESPP and then use that to max out my Roth IRA, and then put the difference 50-50 into savings/other investments.

I think that my goals being young are relatively simple. I'm just trying to get the most benefit for my money, while still being able to have some stupid spend here and there

[tacpoly]

---

@CBrow wrote:

...The one thing I didn't know how to put into percentage terms, is that every year I cash out my entire ESPP and then use that to max out my Roth IRA, and then put the difference 50-50 into savings/other investments....

---

Depending on your current tax bracket and how you see your company's performance over the next 2 years, it may be worth keeping those ESPP purchases through the required holding period to benefit from the lower capital gains tax rate (and maybe an even higher share price).  

[Anonymous]

50% of our paychecks goes straight into retirement accounts. It should come close to or might barely max out my Simple IRA ($13,500) this year. It will not come anywhere close to maxing out DH's $401(K) but they had a 50% cap.

We withold extra for taxes so we don't even see it.

Of the remainder that we receive, we max out our IRAs, spend on necessities with a $60/month budget of discretionary spending between the two of us, and all remainder is invested in a taxable brokerage fund.

Ultimate goal is to live off passive income/investments. Might be delayed considerably if start a family and/or need to take care of a particular kid family member by moving out of the cheap RV living arrangement we've enjoyed the past couple years.

[importxpresions]

We set aside roughly 6 months of expenses for our emergency fund which is in a high yield savings. This is our rainy day fund for emergencies over the balance we keep in our debit accounts. For retirement:

-401K which pulls 7%

-company has an ESOP and matches 4.2%.

-5-7% monthly into an IRA and my day trading account.

-10% into savings 

I'd like to retire early and owning several rent houses and businesses. We are pretty conservative with our money because I don't want to live paycheck to paycheck like my parents did past retirement.

[Revelate]

I admit I am bad; it costs me little to unwind some non-performing assets (not that I have very many of those lately, things are just absurd this year) and as such I don't really keep the traditional reserve.  I am also a proponent of shuffling that into a mortgage anyway as a HELOC can suffice for that too when talking cash short fall.

Anyway I do have something of a budget though my discretionary spending is pretty small these days, 10% to ESPP, started late this year so I am at like 20% to 401K currently, and maxing out the HSA which I think is like 3.5K and everything else not taken by taxes and food goes to servicing debt and investments, both of which are about building net wealth.

I managed to invest over 50% of my gross income last year, I don't think I will get to that this year as my expenses are up and I don't think I will make as much money as last year (we'll see but I need a break) and I am accelerating some debt payments but that is my target regardless.