Emergency Fund/401k/College Fund/Savings

Updated on September 15, 2012
B.L. asks from Auberry, CA
9 answers

We put money into our emergency fund (trying to get it at 6 month living expense), 15% into 401k and try to max on our Roth IRA (10k/year is max), and then we put $50/month into each of our children college funds which is nearly not enough and want to increase. We also have another savings account for big thing items - we need a new car and trying to save for downpayment on a house. Just wondering do you all save this much? I feel like most of our paycheck goes to all this and we don't have much left over! Oh I wish we could take a nice family vacation or splurge on some new clothes or hire a cleaning lady or just not have to watch everything we buy!! ;)

Just wondering as well are we being excessive with our savings? I know it never hurts to save more. Do you all feel like you are always cash strapped since you have to save so much?

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So What Happened?

Thank everyone! Great Advice! I know it's better to save a lot for retirement but right now I think I'm going to decrease our 401k to 10% as we are already trying to do 10k/year in Roth IRA so yes that is a lot for retirement a year. Instead right now I'm going to focus putting more into our fund for downpayment on a home. We are 33 years old. We really want to move by the spring and right now we can but we'd only have like have maybe 5 or 10% to put down depending on how much home we buy. I really would like to get that 20% to avoid PMI. So I'm going to increase our down payment fund and decrease our 401k till we move then I can go back to putting more in retirement. I think too once we move we will have more money since we won't need our downpayment fund. Then we will have extra cash to do fun things. I do think you are right too that we need to live in the moment as well. Thank you all!!

More Answers



answers from Des Moines on

You're lucky and doing it right.....we are strapped living paycheck to paycheck and saving nothing! Not proud of it, but I am currently unemployed and my husbands company moved him to another position cutting his pay by a 1/3 (because of downsizing...not my husbands performance). We are doing the best we can.

I would love to be strapped for cash because of saving....

1 mom found this helpful


answers from El Paso on

The generally recommended amount to be put into retirement savings is 10%. Since you have both a 401k (which you're putting 15% into) and a Roth IRA (which at 10k/year is probably a good chunk as well), I imagine you're putting close to 25% if not more into retirement savings alone. Not that that is a bad thing, obviously you want to have money around after retirement. That being said, I don't think you want to sacrifice the potential for great memories now just to be extra comfortable after the kids are gone.

The emergency fund is a needed thing, too, so that's good.

I really think you could cut back some on your retirement savings and give yourselves a little more "fun money." The other savings accounts (emergency & big money items) probably need to stick where they are or you could take extra money from the retirement cut back and put it into those for a little while to get them built up faster. Either way, you end up with a little more "fun money" in the end.

1 mom found this helpful


answers from Houston on

You all make way more money than us! We do 15% on retirement fund that is automatically taken from my husband's check and about 10% on savings and that's it. It eats at me, I really hope to be able to save more, so finding a second job or getting a pay raise would be very much welcome!

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answers from Chicago on

We kind of save that much. We do put 15% into the 401k, but we do not max out the IRA. We just put a a grand or two in there, and we put $120 per kid into their college fund.

We also don't put much into our emergency fund ($200). We do have a house fund that I am current putting money into (anywhere from 0-$800 a month). The amount fluctuations big time, however, because I'm trying to get things in order before third baby comes (we just bought a new snow blower, this weekend we are buying a nice Weber grill, etc.) I don't like feeling cash strapped, so I do allow us some flexibility.

In terms of vacations, we use hubby's yearly bonus for these things. When he gets it, I divide it up into three separate accounts (1) beach holiday, (2) Ireland fund (his parents live in Ireland), and (3) the rest goes into the Emergency fund. I also use our income tax return to make repairs/fix up the house, and anything left over goes into our house fund.

You say you are saving for a house? How old are you guys? If you are closer to 30 than 40, I'd cut back on retirement savings, kick up the house savings, and get yourself the house you want. If you are renting, you are throwing away large sums of money a year. Houses are money sink holes, but they are still cheaper than just renting.

It is only now that we are 40 that we are saving so much. I coupon, and am super frugal (paperless household, always cloth diaper, use vinegar to clean almost everything)...I do plan on coming up with a mommy life savor fund when the third baby comes (lawn service, maybe some cleaning help or babysitting help, etc.)

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answers from Kansas City on

what you are doing is a great thing - most of us only wish we could do so well.

but i am a firm believer that saved money for retirement and the future should not trump enjoying the life you were given. i also think that children should foot at least part of the bill for their own education. those are just my beliefs. so would i sacrifice family vacations year after year to save for retirement? nope. but you're doing an amazing job - and as i said i would love to do that well. so we each have our own path. do what's right for you. if you feel strongly that you guys need a vacation, make it happen. what's a few thousand dollars, when you're talking about as much as you are? vacations don't have to cost an arm and a leg. you can do it pretty cheaply. just my .02 :)



answers from Los Angeles on

What you are doing is amazing! Most people don't contribute to even one of those funds, let alone all four plus additional savings. Honestly, it's awesome and you're going to be in really great shape as time goes on. It sounds to me like you are very smart with your money.

However, if you are feeling cash strapped, it's ok to dip into the emergency fund or the savings account once in awhile. You could even lower your 401k contribution by 1 or 2% and have extra cash left over for things like new clothes and a cleaning lady.

I think you're in much better than most people on this board!


answers from Tulsa on

I personally would get the emergency fund funded before putting so much into retirement accounts. A huge retirement account is great for when you retire, but if something happens now, you'll have to pay taxes and penalties to touch that money. Once the emergency fund is set, you can ramp back up on the retirement savings. Just make sure not to cut back too much and lose any company matches that may be available.

I save quite a bit. A lot more than most people my age, but I don't max out any contributions. I try to balance between savings accounts for me and my son, 529 plan for him, and my retirement accounts. I also put a good chunk towards mortgage principal each month. I figure being more frugal now will benefit me as I get older and have more discretionary income and more vacation time at work.


answers from Dallas on

I think you are doing great. I don't know how old you are but hubby and I have been big savers since we met. We've been married 23 yrs and our daughter is financially set for college and we are beyond expectations for retirement.

We had and still have specific goals and we stick to them. Do we vacation, yes we do BUT we always manage to live below our means and be debt free with exception to our mortgage which is crazy low but that is because we've paid it down.

I am sure some would say that we are excessive savers but when it comes time for them to retire or send children to college, they can appreciate the sacrifice we made because we adjusted ourselves a LONG time ago.

We are fortunate in that we don't HAVE to live by a rigid budget, I don't coupon, we do shop, etc. Delayed gratification is wonderful and if you get used to it, your financial life is much happier in the end.



answers from Chicago on

You are doing great! Probably better than most people.

Last year, I got tired of trying to figure out which money goes where, so I opened up several free checking and savings accounts in addition to the joint checking account that my husband and I share and use to pay the bills.

For each month, we allocate:
$400 house repairs and kitchen remodel fund
$200 annual expenses (birthday parties, gifts, Christmas, clothes, etc)
$100 car maintenance/replacement fund
$100 health care items (we also do the flex spending plan at $2,500/year)
$200 vacation and family fun fund
$400 husband's mad money (eating out, booze, fitness supplements, toys)
$400 wifey's mad money (cleaning lady, eating out, clothes, girls' day out, etc)
$150 kids' college fund
$450 Roth IRAs

After all the savings and the bills, we pretty much have nothing left over. We are not maxing out our Roth IRA contributions each month, but we make it up at the beginning of each year with our tax refund.

I like having all of these separate accounts because I tend to rob Peter to pay Paul when it comes to non-recurring expenses like vacations, Christmas, and car repairs. Now I can more easily see where we are spending too much.

To answer your question, I DO feel a bit cash strapped since we have to save so much. We will save more for retirement and college whenever my husband starts making more money and we no longer have to pay for preschool. But I feel pretty rich having my own mad money account. It keeps me from feeling deprived when I know I can treat myself and the kids every once in a while.

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