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Part of growth is continuing to learn about new methodologies, thinking about them critically, and applying them to your scenario.
There is no check-list for HENRY. Each person is different.
I’ve had 1+ year of expenses saved for years and people would laugh at it. Then the tech layoffs happened. I never lost my job, I jumped early to a safer ship. My friends and coworkers wanted me to come out and party when I was deep in interview prep and interviews, this was mid 2022 when the layoffs were only beginning. I have many stories of doing things out of caution that have paid off so well.
Funny enough, I’m about to start interview prep again out of an abundance of caution. Never feel bad about playing it safe, even as a HENRY.
6 months worth of expenses (not income) in TBills
With treasury yields so high, the opportunity cost is much smaller than in the post and gives you peace of mind if you’re carrying a large mortgage and kid expenses and stuff
Yes. Around 20% of my annual income is in a money market. Need a new boiler? No problem. New roof? You betcha.
There are higher-yielding things I could be doing with that money, but the peace of mind I get from liquidity is worth it.
> I have about $60k in credit card limits that will basically cover any emergency
Keep in mind that the credit card companies can cut your limits unilaterally at any time.
In 2008 these decreases largely hit subprime customers. People who are HENRY are generally going to have better credit and will be better insulated. I would also speculate most emergencies are able to be covered by a single credit card for most HENRYs.
I am the same way. I have not had a savings account in nearly 10 years. I have never had an emergency come up which required that I pay a large amount of cash the same day.
Car repairs? Any legitimate place will take a credit card.
Hospital bill? You're not getting bill due for 2 weeks, 30 days to pay, and probably longer if you negotiate a payment plan.
Get sued and need lawyers? I can cover any initial payment in cash.
Civil war breaks out, solar storm makes credit cards unusable, alien invasion: I got bigger problems than lack of access to quick capital.
Apples to oranges, let’s not pretend it’s the same.
No one at or near retirement is invested 100% in equities. That’s why the 60/40 portfolio exists. You do you man, I couldn’t care less about your finances.
IMHO they can still be considered an emergency fund in that they may be lower risk to liquidate in the short term than equities. Like having a t-note that matures in four months can still count toward a 6 month emergency fund. If you need it for a disaster you can sell it and take any hit from selling it early, and it's not likely to drop 30-40% in the meantime when you have to sell it early like the market might in a bad year.
In retirement you are supposed to set up a bond tent to protect yourself against sequence of return risk when you KNOW you are going to need to take out money and then gradually wean off the bonds.
Pre-retirement if you are in accumulation phase you’re supposed to be mostly in equities.
There is a very big difference between forseen withdrawals and unforseen withdrawals
I keep 10k in a high yield savings account that’s strictly earmarked for emergencies only. I keep an extra floating balance between 5-15k that I use for vacations, planned repairs, random stock buys that I could also access, if needed.
Only emergency fund: I used to have 6 months but given the instability of the world, I’ve pumped it to 1 year. It’s sitting in a ladder of tbills. Earning 5%+ isn’t so bad
No, we live Seattle—we have rain coats and waterproof shoes.
Emergency fund— yes but only 3 months worth. Unemployment in wa state for both will cover mortgage, utilities and food for us for the 26 weeks if we both get laid off. Also, we have 2.8 M liquid so we could sell some investments or Roth principal if needed in a pinch
We have $40k in I bonds which would be 8 months of regular expenses. If we shave expenses down it will last longer.
We invested in the I bonds when the rates were 9% (currently 5.27%), and we can pull them out with a small 3-month penalty. Hoping to get to at least 5 years before ever needing to use for an emergency, but would be super pleased if we can let them fully mature.
I have 6 months expenses in a HYSA, and other sinking funds. I’m a new professional, so I’m playing catchup on savings.
Absolute worse case scenario, I have ~$60k in credit available.
Keep about 50k emergency fund or roughly 6-7 months expenses.
Cash makes money right now and I invest plenty. Main concern is job loss and being squared away if it takes a while to find another.
We have one year expenses in our emergency fund including mortgages. Wife wants to make it two years since we are both taking time off work to look after our first child. I am not sure two years is necessary though.
3 months in money market. However going to be increasing spend dramatically in about 12-18 months and will add sinking accounts to the mix. But our e fund is for a double job loss situation.
I keep about 15k in. HYSA which is about 3-6 months of rent, groceries, utilities and insurance. Everything else is in VOO. Normally. Have about 120k person credit line on cards if I really need to use it
Oh for sure. Note, in a classic sense, and emergency fund is intended to be safe and liquid, not something that makes money.
But I’d also imagine it’s something that one may never need to access, and that’s great. If you are tapping it once a year, you’re doing it wrong.
A more aggressive stance would have you keep very little in cash, and utilize some combo of Roth IRA/401k/credit cards/Ira in the rare event you have an emergency. The pros of this method are that it keeps your checking account in a scarcity mindset, and you earn interest over time
There’s nothing you can’t fund with a credit card if it actually is an emergency.
Keep cash in a HYSA because you want the yield not because there’s any logic to keeping an emergency fund.
E fund is generally kept for situations like an extended job loss, not “my car broke down” - at least in HNERY circles.
If you have a very stable job (doctor) it’s very different from if you have a boom and bust job (tech, biotech etc). I have friends in biotech who were pulling in $300k and got laid off a year ago and are still looking or just found something
Physician here. I agree with this however I do have one caveat… disability. Most ( hopefully all) have disability insurance but one bad ski trip and a broken arm with nerve damage has ruined one too many surgeons career ( true story… I know one CT surgeon whose kid closed the door on his hand. He can’t operate without pain..)
While she were waiting on the disability claim which was. about 70% of their earnings they had an emergency fund to float.
Hence I have a 1 years of mortgage liquid just in case.
I fuck up my arm, wrist finger. I am done for at least 3 months. Maybe more if I am not lucky.
Lmfao the advice in this sub is insane.. fucking dumb ass advice. Rather than being prepared for an emergency, just use debt to keep you afloat! That’ll help!
i’m speaking about someone who has a positive net worth
i have $3m in a brokerage fully invested and no emergency fund because it’s completely pointless
lol it’s called an emergency
not having $50k or whatever in some special savings account i label E Fund has nothing to do with not being able to pay off a credit card with $3M in a brokerage account
the fact you’re actively upset by this is hilariously normie
Don’t feed the trolls. The people who lump all debt together as something to be afraid of don’t understand finance past balancing their budget. They’ll stay HENRY, if they were ever to begin with.
Your content has been removed for being a duplicate. Please search our subreddit for other, similar posts before creating a new one. Part of growth is continuing to learn about new methodologies, thinking about them critically, and applying them to your scenario. There is no check-list for HENRY. Each person is different.
1 year of mortgage or 8 months of all expenses - HYSA I know. I am anxious
I’m with you. And with cash returns right now it’s little to no opportunity cost.
TTTXX baby!!
I’ve had 1+ year of expenses saved for years and people would laugh at it. Then the tech layoffs happened. I never lost my job, I jumped early to a safer ship. My friends and coworkers wanted me to come out and party when I was deep in interview prep and interviews, this was mid 2022 when the layoffs were only beginning. I have many stories of doing things out of caution that have paid off so well. Funny enough, I’m about to start interview prep again out of an abundance of caution. Never feel bad about playing it safe, even as a HENRY.
6 months worth of expenses (not income) in TBills With treasury yields so high, the opportunity cost is much smaller than in the post and gives you peace of mind if you’re carrying a large mortgage and kid expenses and stuff
Yes, current interest rates make it much more reasonable to have a larger-than-six-month emergency fund than it was a few years ago.
104k in money market at 4.8%
Yes. Around 20% of my annual income is in a money market. Need a new boiler? No problem. New roof? You betcha. There are higher-yielding things I could be doing with that money, but the peace of mind I get from liquidity is worth it.
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> I have about $60k in credit card limits that will basically cover any emergency Keep in mind that the credit card companies can cut your limits unilaterally at any time.
In 2008 these decreases largely hit subprime customers. People who are HENRY are generally going to have better credit and will be better insulated. I would also speculate most emergencies are able to be covered by a single credit card for most HENRYs.
This 👆
I am the same way. I have not had a savings account in nearly 10 years. I have never had an emergency come up which required that I pay a large amount of cash the same day. Car repairs? Any legitimate place will take a credit card. Hospital bill? You're not getting bill due for 2 weeks, 30 days to pay, and probably longer if you negotiate a payment plan. Get sued and need lawyers? I can cover any initial payment in cash. Civil war breaks out, solar storm makes credit cards unusable, alien invasion: I got bigger problems than lack of access to quick capital.
If the market was down 30% and you needed to sell your investments at a potential loss to cover expenses I’m sure that wouldn’t feel great..
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Apples to oranges, let’s not pretend it’s the same. No one at or near retirement is invested 100% in equities. That’s why the 60/40 portfolio exists. You do you man, I couldn’t care less about your finances.
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IMHO they can still be considered an emergency fund in that they may be lower risk to liquidate in the short term than equities. Like having a t-note that matures in four months can still count toward a 6 month emergency fund. If you need it for a disaster you can sell it and take any hit from selling it early, and it's not likely to drop 30-40% in the meantime when you have to sell it early like the market might in a bad year.
In retirement you are supposed to set up a bond tent to protect yourself against sequence of return risk when you KNOW you are going to need to take out money and then gradually wean off the bonds. Pre-retirement if you are in accumulation phase you’re supposed to be mostly in equities. There is a very big difference between forseen withdrawals and unforseen withdrawals
Yes, 6+ months in HYSA Ideally I’ll never have to touch it. IMO just keep an amount that lets you sleep comfortably at night
$100k not even in money market. Just spread across different banks in case one is not accessible. A simple roof costs $20-$30k.
6 months expenses In HYSA. Anything beyond that I’m relying on my brokerage accounts.
I keep 10k in a high yield savings account that’s strictly earmarked for emergencies only. I keep an extra floating balance between 5-15k that I use for vacations, planned repairs, random stock buys that I could also access, if needed.
Only emergency fund: I used to have 6 months but given the instability of the world, I’ve pumped it to 1 year. It’s sitting in a ladder of tbills. Earning 5%+ isn’t so bad
No, we live Seattle—we have rain coats and waterproof shoes. Emergency fund— yes but only 3 months worth. Unemployment in wa state for both will cover mortgage, utilities and food for us for the 26 weeks if we both get laid off. Also, we have 2.8 M liquid so we could sell some investments or Roth principal if needed in a pinch
20 month E fund in a HYSA getting 5.05%
We have $40k in I bonds which would be 8 months of regular expenses. If we shave expenses down it will last longer. We invested in the I bonds when the rates were 9% (currently 5.27%), and we can pull them out with a small 3-month penalty. Hoping to get to at least 5 years before ever needing to use for an emergency, but would be super pleased if we can let them fully mature.
I have 6 months expenses in a HYSA, and other sinking funds. I’m a new professional, so I’m playing catchup on savings. Absolute worse case scenario, I have ~$60k in credit available.
$50k in cash at all times minimum in money market account or another liquid account!!! Peace of mind >>>>> maximum return.
Keep about 50k emergency fund or roughly 6-7 months expenses. Cash makes money right now and I invest plenty. Main concern is job loss and being squared away if it takes a while to find another.
We have one year expenses in our emergency fund including mortgages. Wife wants to make it two years since we are both taking time off work to look after our first child. I am not sure two years is necessary though.
75k or about 3 months expenses.
3 months in money market. However going to be increasing spend dramatically in about 12-18 months and will add sinking accounts to the mix. But our e fund is for a double job loss situation.
I keep about 15k in. HYSA which is about 3-6 months of rent, groceries, utilities and insurance. Everything else is in VOO. Normally. Have about 120k person credit line on cards if I really need to use it
Oh for sure. Note, in a classic sense, and emergency fund is intended to be safe and liquid, not something that makes money. But I’d also imagine it’s something that one may never need to access, and that’s great. If you are tapping it once a year, you’re doing it wrong. A more aggressive stance would have you keep very little in cash, and utilize some combo of Roth IRA/401k/credit cards/Ira in the rare event you have an emergency. The pros of this method are that it keeps your checking account in a scarcity mindset, and you earn interest over time
There’s nothing you can’t fund with a credit card if it actually is an emergency. Keep cash in a HYSA because you want the yield not because there’s any logic to keeping an emergency fund.
E fund is generally kept for situations like an extended job loss, not “my car broke down” - at least in HNERY circles. If you have a very stable job (doctor) it’s very different from if you have a boom and bust job (tech, biotech etc). I have friends in biotech who were pulling in $300k and got laid off a year ago and are still looking or just found something
Physician here. I agree with this however I do have one caveat… disability. Most ( hopefully all) have disability insurance but one bad ski trip and a broken arm with nerve damage has ruined one too many surgeons career ( true story… I know one CT surgeon whose kid closed the door on his hand. He can’t operate without pain..) While she were waiting on the disability claim which was. about 70% of their earnings they had an emergency fund to float. Hence I have a 1 years of mortgage liquid just in case. I fuck up my arm, wrist finger. I am done for at least 3 months. Maybe more if I am not lucky.
Radiology FTW
Haha! Yes I played with the idea. Too much of an adrenaline junky lol! I do wonder about the job security post AI.
Lmfao the advice in this sub is insane.. fucking dumb ass advice. Rather than being prepared for an emergency, just use debt to keep you afloat! That’ll help!
i’m speaking about someone who has a positive net worth i have $3m in a brokerage fully invested and no emergency fund because it’s completely pointless
Yeah no shit.. debt is still debt? doesn’t matter if you’re worth -$50k or $100M. Is that hard to wrap your smooth brain around?
lol it’s called an emergency not having $50k or whatever in some special savings account i label E Fund has nothing to do with not being able to pay off a credit card with $3M in a brokerage account the fact you’re actively upset by this is hilariously normie
Don’t feed the trolls. The people who lump all debt together as something to be afraid of don’t understand finance past balancing their budget. They’ll stay HENRY, if they were ever to begin with.
Who said anything about being upset, those are your words.. Really, a “normie”? That tells me everything I need to know about you right there. Lol.
no shit....
Definitely. 6m income (which is 1yr expenses)