@Nicolai Oliden, thanks for that answer!
@Jayvon Garth, I'd like to add that another personal decision of what to be done with the emergency fund is whether to keep it in cash or invest it. Currently, interest rates for high yield savings accounts aren't too high, and cash can lose value over time due to inflation. An alternative is to invest those funds into stocks or bonds for example. HOWEVER, have in mind that once the funds are invested, the balance will fluctuate and you may end up paying higher capital gain taxes also if the funds are withdrawn before a year. On the flipside, you have the potential of getting a larger return than by having your cash just sitting in the bank.
There is no right or wrong answer here. It all depends on your situation, how well you can sleep at night if you have your funds invested, how experienced you are with investing, and what your risk tolerance is, among others. Very personal decision, so just wanted to share it so you can now the options and decided what you believe is best for you.
Good luck and all the best,
Salvador
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Salvador Bentolila P.E., ENV SP, M.ASCE
AECOM
New York NY
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Original Message:
Sent: 05-11-2021 05:25 PM
From: Nicolai Oliden
Subject: "Ask Me Anything" - Personal Finances for Civil Engineers
Jay,
Awesome work with the freelancing! When it comes to an emergency fund, typically 3-6 months of expenses is what you want to shoot for. Not income, but expenses. The idea is to be able to support yourself if you lose your job and can keep paying the bills until you get a new one. Any more than 6 months you end up with too much cash that could be better used for investing.
3 vs 6 is a personal decision. I am currently a single income household with 3 kids. I went for the full 6 months. Our low end budget monthly expenses are about $4k so we saved $24k. Right out of school pre-family, I would have been perfectly comfortable with 3 months of expenses saved ($6k-8k)
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Nicolai Oliden P.E., M.ASCE
Roadway Team Leader
ETHOS Engineers
Tempe AZ
Original Message:
Sent: 05-11-2021 10:05 AM
From: Jayvon Garth
Subject: "Ask Me Anything" - Personal Finances for Civil Engineers
Tirza,
Thanks for this topic. I really appreciate this topic as this has become something I've personally begun taking really serious and something that I rarely see civil engineers discuss amongst us.
I'm doing freelance structural engineering work with the intent to go full time in the future. One of the things I'm working on is building an emergency fund to supplement income from my work if necessary. My questions is how large of an emergency fund should I consider and what should I consider in regards to where I stash it?
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Jay Garth P.E.
Structural Engineer I
Progressive AE
EWB: An Engineering Culture Shift
Grand Rapids, MI
Original Message:
Sent: 05-09-2021 06:56 PM
From: Tirza Austin
Subject: "Ask Me Anything" - Personal Finances for Civil Engineers
Personal finances play a major role in the life of a civil engineer. Do you have questions about how you can improve your personal finances? You're invited to participate in an workshop on personal finances. Please post your questions in this thread until Friday, May 14. You will receive answers from @Salvador Bentolila and @Nicolai Oliden until Monday, May 17. Find out more about them here. You can find tips on personal finance here.
Quick reminder: All questions need to comply with the ASCE Collaborate Code of Conduct.
I look forward to hearing from you!
****This event is for ASCE members only. You can join ASCE here.
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Tirza Austin
Manager, Online Community
American Society of Civil Engineers
1801 Alexander Bell Drive
Reston, VA 20191
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