[Jeremy]

42, married with one kid (14) and two elderly family members(69&81) in the house. We just paid off our debt and started investing.

We have $2k in savings, $4k invested in Robinhood and Acorns, and both cars are paid off. We have just set up weekly recurring investments ($25 Acorns/ $200 Robinhood).

We have about $500 month that we are just putting into savings. What is the minimum you would be comfortable with being in your savings account?

How much should I have in savings before I shift my focus to investing in passive income?

[Bradon]

congratulations on paying off your debt and getting serious about investing. That’s a huge milestone, and you’re in a great position to start building real wealth.

How Much Should You Keep in Savings?
Since you have a child and two elderly family members depending on you, it makes sense to keep a solid emergency fund.

A good target is three to six months of essential expenses in savings.

If your monthly necessities (housing, food, utilities, insurance, and medical expenses) are around $3,000, then having at least $10,000 to $18,000 in savings would give you a strong safety net.

That said, having too much in savings can actually slow down your financial growth.

With inflation eating away at cash sitting in a bank, investing in assets that generate passive income will get you much closer to financial freedom.

You’re already investing in Robinhood and Acorns, but to accelerate your journey, you should aggressively lean into private real estate investment trusts (REITs).

Unlike stocks, private REITs pay out steady income through real estate assets, which can help cover expenses or reinvest for faster growth.

Many private REITs outperform the stock market over time, and they’re not subject to the daily ups and downs of the market like your Robinhood investments.

Stocks may appreciate, but real estate creates consistent cash flow. With private REITs, you can reinvest dividends and watch your income grow exponentially.

While stocks fluctuate wildly, private REITs are backed by tangible assets, making them a more stable investment option.

Unlike owning rental properties, you don’t have to deal with tenants, repairs, or property management. You just collect income.

Since you have about $500 a month going into savings, you don’t need to wait until you hit a certain number before starting private REIT investments.

A better approach? Keep one or two months of expenses in cash and move the rest into REITs that generate passive income.

At your stage, aggressively prioritizing passive income through private REITs could put you in a position where your investments start covering monthly expenses within a few years.

Instead of just watching your portfolio value rise and fall with the market, you’ll have real cash flow that gives you financial security and flexibility.

[Robert]

I think this is less of a FIRE question, than a basic money management question. (but it’s all good; because we are here to help.) I would hit up Dave Ramsey.

He’s got a lot of good YouTube videos that speak to the to the basics when it comes to building your financial future.

As far as the amount of the minimum that I would be comfortable with having in my savings account… There’s no one-size-fits-all answer to that question.

In my own case, the minimum amount is what enables me to sleep at night; but that number will be different for everyone.

Dave Ramsey basically recommends 6 to 12 months of income in your emergency fund before you start investing; but if the elderly family members who were living with you are contributing to household expenses via their Social Security checks (and I certainly hope they are doing that) then perhaps you will need less.

[Alfredo]

Congratulations on paying off your debts, the relief is so satisfying…

You could keep about $20000 in savings as a safety net. With inflation, cash sitting at the bank isn’t exactly the same.

Investing in assets and passive income brings you much closer to financial freedom

[Author]

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