Funds - how to divide?

amother

Mon, Dec 11 2023, 11:34 am

Our savings (aside for retirement ) are all lumped together and it looks like we have a nice amount. I got advice to divide the savings into funds so that I can get a clearer picture of what money is actually there and available. This would also benefit my husband who says oh but we can afford it because he sees dollars in an account.

So far this is what I have. Please tell me any categories I left out and how much you would aim to have in each of these categories.
-emergency fund: 3-6 months living expenses
-simchos fund: ???
-new car fund: ???
- home repairs and renovations fund ????
-big ticket item fund: 5k (shaitel, vacation, furniture)

What do you think?

amother

Candycane

Mon, Dec 11 2023, 1:40 pm

Simchos fund would depend how many children and gender - basically 10k per bar mitzvah, and 50k per wedding. How much you put in a month will vary - we do $250 a month per kid - 250 x 12 months x 20 years = 60k, and its in a mutial fund to hedge against inflation.

For higher education - seminary and college, there are special savings accounts wioth tax benefits. We wont save for this because we are in Israel, and college is only 10,000 nis a year, and seminary is also pretty affordable, we can swing it as part of our regular budget.

Retirement is complicated - it depends on what your long term plan is. A lot depends on what kinds of benefits you get thru work, assets you have. Think about the fact that you will retire with a payed of mortgage and whatever money you save + social security.
While we put a percentage into a 401k we are working on buying a second house as an investment, so that we will have payed it off using rent by the time we reture, and then it will be income.

The house improvement fund, new car fund depend on what kind of work you want to do or what kind of car you want. For emergency home and car repairs - I think having 5-10k is a good goal.

The small splurges fund I put 100 a month in unless we are working towards a specific goal. I also put extra cash that we where not expecting there ( a bonus, a cash gift)

amother

Bronze

Mon, Dec 11 2023, 1:43 pm

amother OP wrote:

What are the ideal numbers for these funds?

Think about how much those items would cost you. If new car means brand new then you'll want $30-40k so you don't need a loan. What simchas do you have coming up in the next few years? What home renovations are you planning or how close are your appliances to needing replacement?

Also, most people don't keep more than just a 6mo emergency fund so liquid. A year max unless there's something specific you're going to use the funds for in the short term. The rest is better to put in a brokerage to get the higher yield interest and replenish your regular savings as needed.