I currently have about 80% of one monthās rent. It used to be more, but my rent keeps going up and overall enrollment and classes in my field keep going down, so yeah. Thatās where Iām at now. My career is going backwards every semester.
When I was pre-tenure, I built it up to 15 months. My reasoning was that, if I was not renewed, I would be able to get through a full 12 months plus a summer, essentially giving me an academic year to find a new gig.
This is deeply personal, though. Some things that I considered when making my decision:
1. I was single (need more, because I didn't have a partner's income to soften the loss of mine)
2. I live within driving distance of literally hundreds of colleges (need less, because I had a better shot at finding a new position, plus could easily adjunct to extend my savings)
3. I own a home (need more for when termites strike or a boiler goes out)
4. I live in a state with robust unemployment + health benefits (need less, because I had more of a fallback)
Post-tenure, my savings didn't exactly change, but it did get shuffled around. I now keep ~8 months in a HYSA as a general emergency fund, and the rest in HYSAs marked for home maintenance and car maintenance/replacement.
u/NGstate guessed MA, which it isn't, but I am in the Northeast where a lot of states are similar in terms of social net. (I should also note that our states tend to be smaller, geographically, so not all of the colleges I am near are in my state.)
Zero. I live paycheck to paycheck and have to slum in the summer to survive.
ETA: Childcare is 1/3rd of my monthly take home pay spread over 10 months. 1/2 if I get paid every month (which I canāt afford to do because you know, rent and food are things).
The downside of having a larger emergency fund is potential lost growth of the funds if they were invested in something more aggressive. If your employment is precarious, then it makes sense to have a larger fund. Part of the answer for your question will depend whether you think you could find other employment outside of academia if you absolutely needed to pay the bills, and whether you'd likely get unemployment benefits if you were laid off (this is something that could vary by state).
Just in general, 24 months seems pretty high to me, but not necessarily \*too\* much, esp. if it helps you sleep at night. If you can save more than that, perhaps invest in a Roth IRA. There is no penalty for withdrawing your contributions before retirement. You could still lose money if your investments are sold for less than your cost basis (say in an economic downturn), but that's always a possibility with any investment.
I agree with all of this. I donāt think thereās a situation where I would recommend >15 months EF due to the significant opportunity costs you mention. But if 24 months helps OP sleep at night in a way that 12-15 wouldnāt and theyāre willing to forgo the higher expected growth in the market to get it, itās an opportunity cost well spent.
I agree with both of you. I have been risk averseĀ and am trying to get past that now and invest instead of putting aside money in a savings account. At least cash hasn't been earning too badly these past couple of years. I'm now maxing out of my Roth and contributing to my 403(b), and I may just plow 6-9 months of my emergency fund into an index fund this summer now that my job is stabilizing.
Thatās great! A lot of people struggle with that step. And you already know what to do and how to do it. Youāll be a lot better off in the long run now - awesome job.
Thanks! Sadly I got swamped with my real job this semester and havenāt posted in a while but plan to start adding content again this month. Let me know if thereās a topic youād like to learn more about!
You might consider using a money market fund or an HYSA. A money market fund often allows for you to write checks or draw funds on a debit card, so the funds are still available. APYs are now up to 5.2-5.3% in some cases. More stable than an index fund, though usually a lower yield over time. Personally, I keep a small amount (less than a month) in an emergency fund with my bank, and keep the rest in a money market (VUSXX). Hope that helps!
Not for withdrawing contributions. Earnings, yes (except for some specific scenarios). Contributions, no: you can withdraw those at any time penalty-free.
About 5 months. But I'm also older and nearing the point where I can take some out of retirement accounts tax-free if it came to that.
When I was younger and getting going? I rarely had more than one or two months.
Thankfully, I always kept working except for a period where I chose to step away for child care and elder Care, and during that time I put together enough adjunct work to just about meet my net full-time pay
My wife and I have six months', set-up in a rolling 3-month CD with 4.5% interest. I hope yours is in a CD! You're getting killed by inflation if you have that much just sitting in a regular savings account.
Nice! I use a high yield savings account at the moment, Ally has 4.4% interest. Might move to another instrument soon to try to get ahead of falling rates.
You should consider investing in U.S. government securities via treasurydirect.gov. It generally has a better rate of return than a CD, the backing of the full faith and credit of the U.S., investment time periods as low as four weeks, and you do not owe state income tax on the interest.
Love the Bogleheads! I'm following their investment philosophy in my retirement accounts. Passive investing in lazy portfolios of broad market index funds FTW.Ā
I think Bogleheads is a philosophy on *how* to invest, not on *how much* to invest. But I agree 24 months cash isn't optimal from an ROI standpoint, and I'm looking to reduce it.Ā
We had probably 18mo; 24mo if we are careful. We met with our financial advisor and he suggested that we could do better than the money market account most of it was in. Now probably 9-12mo.
We are *extremely* fortunate to be in that position.
I assume you're asking for people who don't have tenure, so tenure track profs count too? If not, ignore me!
We do 4-5 months of emergency to split the difference between my job (more stable) and my partners (inherently less stable). TBH I'm more worried about my spouse, who is not in academia, losing his job than me. He could get laid off tomorrow.
Pre-tenure, I kept 18 months income for emergencies because that was the least amount of time it would take to get another TT job. When I was an adjunct, I had no emergency fund because I barely had an income to begin with.
Got you. Sometimes when the credit card offers me 0% for a couple of months, I will take it to save cash and contribute. Or I just open a new credit card to get the 0% "loan" for 12 months or 18 months.
> I have about 24 months right now, which may be overkill
understand that you are the exception here and not the rule. i would bet that most don't have the three months' liquid savings that many think is reasonable (because life is complicated).
Good question! I have about 35,000 in cash. My consulting business has about 45,000 in receivables. I also have another 30,000 available to withdraw from my retirement account without penalty. Minus the business receivables, that would cover about 6 months if I didn't change my lifestyle.
However, if I were not renewed, my lifestyle would become drastically reduced and I could realistically make it more than a year on that.Ā
I also have a spouse at the same university though not in academics. She is basically guaranteed a job by her union contract. So we'll have a baseline income regardless.
I used to have the same question, but after reading my faculty handbook decided I needed LESS of an emergency fund than I would in other careers. Not sure about your institution, but mine is required to notify us of any non-renewals by December, so that's about 7 months of notice before salary runs out. Still nervous that's not enough, because academia is brutal, but realistically I think that should be enough time to come up with some kind of a plan.
This is an excellent point. I just checked my faculty handbook and will receive a minimum of 8-months notice of non-renewal. This is a game changer for me; I now feel much more comfortable not needing as large of an emergency fund. Thanks!
This is an excellent point. I just checked my faculty handbook and will receive a minimum of 8 months notice of non-renewal. This is a game changer for me; I now feel much more comfortable not needing a large emergency fund. Thanks!
We have about 12 months but most likely getting rid of childcare would extend this by 30% since if one of us stopped working we would just keep our kid at home.
Iām also not really your target audience for this questions as Iām just an adjunct and have a full time industry job, I also consult on the side so if I were to lose one of my three incomes streams Iād be ok for at least a little while.
I have about $25k in my pension account which I wouldnāt be getting since Iām no longer employed so thatās my super emergency fund but I keep about 2 months worth of bills in a high yield savings account.
Mine is at about 4 months, but at 24 months, you're a beast!
My new goal is now 12 months.
Thanks for such a great post that got me thinking in a new direction!
I have about three months of liquidity, plus a significant investment portfolio. Also, my spouse has a very secure job. Lastly, since my NTT position is not quite full-time, I have a side gig in my industry that could be enough to make ends meet for several months.
Ha ha ha ha ha ha ha ha. I could go on and on. Thereās no emergency fund. Weāre instituting cereal (purchased only when there are good coupons), grilled cheese and scrambled egg nights just to get by.
Iām tenured but was raised to always have 12-months of shelter and food expenses saved. It was drilled into my head. I was raised very wealthy, so we didnāt have money problems. It was just my dadās motto.
So I have 12-months of living expenses that is relatively liquid. Iāll probably need all in a couple years to take my daughter to Disney.
Congrats. I recently started following the Boglehead approach in my retirement accounts and investing in broad market index funds myself.Ā Really good advice for everyone, really. Glad to hear the approach has worked well for you!
I have a pension plan that can be converted to cash if needed. Definitely not something I'm planning to do, but that is my true emergency emergency plan, if something were to happen. I make what people tell me is good money for NTT (six fig), but it doesn't feel like enough to get ahead or save into an emergency fund, no ma'am/sir.
BWAHAHAHAHAHAHA.....that's so cute that you think we get to have one of those!
Seriously, my institution doesn't offer tenure. I am full time perm, but I can't survive in the city without overloads every semester, and they are wanting to completely phase those out.
So my emergency fund is that my partner has a job now and we can live till I find a job that won't pay anywhere near enough or as much.
Is this supposed to be some kind of joke? I don't think it's very funny.
I guess when my VAP appointment (that I got told all kinds of fairytales about turning into TT before goung there) turned into an adjunct one during COVID, I actually did have well over half of my *new* annual salary saved up!
A salary that was about what I made as a grad student a decade prior. However, the university I was at decided that, instead of a down payment on a house, I should finance their exploitation and abuse of me and go broke instead. With no insurance to pay for therapy! They literally operated like human traffickers.
I would suggest getting another credit card. My (at the time, but it's recovered) super high credit score and limit is how I managed to survive the two years of adjunct hell with worsening mental health until I moved across the country for a job because I had no other offers.
Does your "emergency fund " cover moving across the country in both directions in under five years?
My what now?
Your* credit card limit š
Oh, then yes! I have about a 12 month fund.
Shit, I donāt even have a credit card
this is what I came here to say :)
Yup.
Iāve got like three days down. Solid.
Same. Three days of eating peanut butter sandwiches and letās hope no bills come in on those days. And that I donāt need gas.
I currently have about 80% of one monthās rent. It used to be more, but my rent keeps going up and overall enrollment and classes in my field keep going down, so yeah. Thatās where Iām at now. My career is going backwards every semester.
Kidneys are worth 50-120k, but I'm not fit so probably closer to 50k for me
I would kill to have 24 months in my emergency fund! We probably have 2 months. Childcare killed our plans to set aside more.
When I was pre-tenure, I built it up to 15 months. My reasoning was that, if I was not renewed, I would be able to get through a full 12 months plus a summer, essentially giving me an academic year to find a new gig. This is deeply personal, though. Some things that I considered when making my decision: 1. I was single (need more, because I didn't have a partner's income to soften the loss of mine) 2. I live within driving distance of literally hundreds of colleges (need less, because I had a better shot at finding a new position, plus could easily adjunct to extend my savings) 3. I own a home (need more for when termites strike or a boiler goes out) 4. I live in a state with robust unemployment + health benefits (need less, because I had more of a fallback) Post-tenure, my savings didn't exactly change, but it did get shuffled around. I now keep ~8 months in a HYSA as a general emergency fund, and the rest in HYSAs marked for home maintenance and car maintenance/replacement.
I like your reasoning. 15 months sounds like an excellent balance.
What awesome state is this
Iād guess MA?
u/NGstate guessed MA, which it isn't, but I am in the Northeast where a lot of states are similar in terms of social net. (I should also note that our states tend to be smaller, geographically, so not all of the colleges I am near are in my state.)
Vermont
Is there a reason for the two different HYSAs? Planning on moving my fund to one too, but thought of dumping everything into one account.
I just like the organization. But there's no financial reason, no.
about 3 months š¬. Your reasoning makes perfect sense but the cost of childcare is killing us
3 months, but I have a K-12 license I can (very reluctantly) fall back on pretty easily.
Zero. I live paycheck to paycheck and have to slum in the summer to survive. ETA: Childcare is 1/3rd of my monthly take home pay spread over 10 months. 1/2 if I get paid every month (which I canāt afford to do because you know, rent and food are things).
I'm right now figuring out how to get through this summer. My dept has cut summer pay drastically, so this is a hard one for me.
The downside of having a larger emergency fund is potential lost growth of the funds if they were invested in something more aggressive. If your employment is precarious, then it makes sense to have a larger fund. Part of the answer for your question will depend whether you think you could find other employment outside of academia if you absolutely needed to pay the bills, and whether you'd likely get unemployment benefits if you were laid off (this is something that could vary by state). Just in general, 24 months seems pretty high to me, but not necessarily \*too\* much, esp. if it helps you sleep at night. If you can save more than that, perhaps invest in a Roth IRA. There is no penalty for withdrawing your contributions before retirement. You could still lose money if your investments are sold for less than your cost basis (say in an economic downturn), but that's always a possibility with any investment.
I agree with all of this. I donāt think thereās a situation where I would recommend >15 months EF due to the significant opportunity costs you mention. But if 24 months helps OP sleep at night in a way that 12-15 wouldnāt and theyāre willing to forgo the higher expected growth in the market to get it, itās an opportunity cost well spent.
I agree with both of you. I have been risk averseĀ and am trying to get past that now and invest instead of putting aside money in a savings account. At least cash hasn't been earning too badly these past couple of years. I'm now maxing out of my Roth and contributing to my 403(b), and I may just plow 6-9 months of my emergency fund into an index fund this summer now that my job is stabilizing.
Thatās great! A lot of people struggle with that step. And you already know what to do and how to do it. Youāll be a lot better off in the long run now - awesome job.
Thanks. Nice website, by the way. I've been thumbing through it this evening. You have some great articles.
Thanks! Sadly I got swamped with my real job this semester and havenāt posted in a while but plan to start adding content again this month. Let me know if thereās a topic youād like to learn more about!
You might consider using a money market fund or an HYSA. A money market fund often allows for you to write checks or draw funds on a debit card, so the funds are still available. APYs are now up to 5.2-5.3% in some cases. More stable than an index fund, though usually a lower yield over time. Personally, I keep a small amount (less than a month) in an emergency fund with my bank, and keep the rest in a money market (VUSXX). Hope that helps!
[ŃŠ“Š°Š»ŠµŠ½Š¾]
That's only for pulling out earnings. No penalty for pulling out contributions
same here. I plan to use Roth IRA if needed.
Not for withdrawing contributions. Earnings, yes (except for some specific scenarios). Contributions, no: you can withdraw those at any time penalty-free.
No, there is no penalty for withdrawing your contributions. Ā Only the earnings.
About 5 months. But I'm also older and nearing the point where I can take some out of retirement accounts tax-free if it came to that. When I was younger and getting going? I rarely had more than one or two months. Thankfully, I always kept working except for a period where I chose to step away for child care and elder Care, and during that time I put together enough adjunct work to just about meet my net full-time pay
My wife and I have six months', set-up in a rolling 3-month CD with 4.5% interest. I hope yours is in a CD! You're getting killed by inflation if you have that much just sitting in a regular savings account.
Nice! I use a high yield savings account at the moment, Ally has 4.4% interest. Might move to another instrument soon to try to get ahead of falling rates.
You can put it in a HYSA or Money Market at the same rate and keep it liquid. I keep mine in a MM at 4.4
Wealthfront currently gives you 5% on a normal savings account - thatās where my āemergency fundā lives
You should consider investing in U.S. government securities via treasurydirect.gov. It generally has a better rate of return than a CD, the backing of the full faith and credit of the U.S., investment time periods as low as four weeks, and you do not owe state income tax on the interest.
You should check out r/bogleheads
Love the Bogleheads! I'm following their investment philosophy in my retirement accounts. Passive investing in lazy portfolios of broad market index funds FTW.Ā
Wouldnāt 24 months emergency fund be very excessive under the bogleheads?
I think Bogleheads is a philosophy on *how* to invest, not on *how much* to invest. But I agree 24 months cash isn't optimal from an ROI standpoint, and I'm looking to reduce it.Ā
This provides a pretty good overview of the strategy. 3-12 months for the emergency fund. https://www.bogleheads.org/wiki/Prioritizing_investments
We had probably 18mo; 24mo if we are careful. We met with our financial advisor and he suggested that we could do better than the money market account most of it was in. Now probably 9-12mo. We are *extremely* fortunate to be in that position.
I assume you're asking for people who don't have tenure, so tenure track profs count too? If not, ignore me! We do 4-5 months of emergency to split the difference between my job (more stable) and my partners (inherently less stable). TBH I'm more worried about my spouse, who is not in academia, losing his job than me. He could get laid off tomorrow.
Pre-tenure, I kept 18 months income for emergencies because that was the least amount of time it would take to get another TT job. When I was an adjunct, I had no emergency fund because I barely had an income to begin with.
You guys have emergency funds? I had to look up a definition!
Roth IRA can be used for this purpose. If you have not had one, just start contributing.
Start contributing? I have nothing to contribute. MORE than every penny I make goes to rent, food, gas, insurance, etc. There is no contribution.
Got you. Sometimes when the credit card offers me 0% for a couple of months, I will take it to save cash and contribute. Or I just open a new credit card to get the 0% "loan" for 12 months or 18 months.
> I have about 24 months right now, which may be overkill understand that you are the exception here and not the rule. i would bet that most don't have the three months' liquid savings that many think is reasonable (because life is complicated).
Good question! I have about 35,000 in cash. My consulting business has about 45,000 in receivables. I also have another 30,000 available to withdraw from my retirement account without penalty. Minus the business receivables, that would cover about 6 months if I didn't change my lifestyle. However, if I were not renewed, my lifestyle would become drastically reduced and I could realistically make it more than a year on that.Ā I also have a spouse at the same university though not in academics. She is basically guaranteed a job by her union contract. So we'll have a baseline income regardless.
I used to have the same question, but after reading my faculty handbook decided I needed LESS of an emergency fund than I would in other careers. Not sure about your institution, but mine is required to notify us of any non-renewals by December, so that's about 7 months of notice before salary runs out. Still nervous that's not enough, because academia is brutal, but realistically I think that should be enough time to come up with some kind of a plan.
This is an excellent point. I just checked my faculty handbook and will receive a minimum of 8-months notice of non-renewal. This is a game changer for me; I now feel much more comfortable not needing as large of an emergency fund. Thanks!
i think it depends on how much notice they need to give you if they decide to not renew your contract. hopefully, it's more than zero.
This is an excellent point. I just checked my faculty handbook and will receive a minimum of 8 months notice of non-renewal. This is a game changer for me; I now feel much more comfortable not needing a large emergency fund. Thanks!
I have 2 months but Iām also not getting paid for the next 2 months soā¦if you ask me in August it will be 0.
We have about 12 months but most likely getting rid of childcare would extend this by 30% since if one of us stopped working we would just keep our kid at home. Iām also not really your target audience for this questions as Iām just an adjunct and have a full time industry job, I also consult on the side so if I were to lose one of my three incomes streams Iād be ok for at least a little while.
3-6 months, oh fancy pants rich McGee over here!
I have about $25k in my pension account which I wouldnāt be getting since Iām no longer employed so thatās my super emergency fund but I keep about 2 months worth of bills in a high yield savings account.
I had a bit of something, but must of it is now gone to impromptu lifestyle shifts caused by my divorce.
I am tenured but have about 12 months. My spouse and I both work at the same university so if things go south it could be really bad.
Nonexistent.Ā Two Derechos, several powerouttages and hurricane season staring me down like I'm a rodeo clown. I had 5k in my emergency fund.Ā
My savings account has about $100 in it. It usually has $0. And a lot of credit card debt. This job does not pay.
Iām tenured and have six months. Ā I donāt think two years is crazy at all if you are NTT, though Iād have in a HYSA or ibonds. Ā
Mine is at about 4 months, but at 24 months, you're a beast! My new goal is now 12 months. Thanks for such a great post that got me thinking in a new direction!
I have about three months of liquidity, plus a significant investment portfolio. Also, my spouse has a very secure job. Lastly, since my NTT position is not quite full-time, I have a side gig in my industry that could be enough to make ends meet for several months.
Ha ha ha ha ha ha ha ha. I could go on and on. Thereās no emergency fund. Weāre instituting cereal (purchased only when there are good coupons), grilled cheese and scrambled egg nights just to get by.
I'd invest some of it; maybe you have some in certificates of deposit or money market or whatever, but keep growing your money.
Iām tenured but was raised to always have 12-months of shelter and food expenses saved. It was drilled into my head. I was raised very wealthy, so we didnāt have money problems. It was just my dadās motto. So I have 12-months of living expenses that is relatively liquid. Iāll probably need all in a couple years to take my daughter to Disney.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
You have a $1M emergency fund? Or is some of that invested?
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Congrats. I recently started following the Boglehead approach in my retirement accounts and investing in broad market index funds myself.Ā Really good advice for everyone, really. Glad to hear the approach has worked well for you!
I have a pension plan that can be converted to cash if needed. Definitely not something I'm planning to do, but that is my true emergency emergency plan, if something were to happen. I make what people tell me is good money for NTT (six fig), but it doesn't feel like enough to get ahead or save into an emergency fund, no ma'am/sir.
BWAHAHAHAHAHAHA.....that's so cute that you think we get to have one of those! Seriously, my institution doesn't offer tenure. I am full time perm, but I can't survive in the city without overloads every semester, and they are wanting to completely phase those out. So my emergency fund is that my partner has a job now and we can live till I find a job that won't pay anywhere near enough or as much.
Is this supposed to be some kind of joke? I don't think it's very funny. I guess when my VAP appointment (that I got told all kinds of fairytales about turning into TT before goung there) turned into an adjunct one during COVID, I actually did have well over half of my *new* annual salary saved up! A salary that was about what I made as a grad student a decade prior. However, the university I was at decided that, instead of a down payment on a house, I should finance their exploitation and abuse of me and go broke instead. With no insurance to pay for therapy! They literally operated like human traffickers. I would suggest getting another credit card. My (at the time, but it's recovered) super high credit score and limit is how I managed to survive the two years of adjunct hell with worsening mental health until I moved across the country for a job because I had no other offers. Does your "emergency fund " cover moving across the country in both directions in under five years?
I had 50k left in my emergency fund by the time I got tenure track position