| I'd set three milestone goals: 1) enough to weather a one-time unexpected event and necessary expense without going into debt (car needs brakes replaced, dog needs surgery, someone spills an entire frappuccino into your open laptop, you break a bone and have medical bills, you need to fly cross-country for a good friend's wedding, etc). For most people, $1000-2500 is enough for this. Keep it in an interest-bearing checking account or a "high yield" (yeah, right) savings account that supports easy transfers to checking. There is a 99.9999% chance you will need this money in the next 10 years. This is the money that keeps you off the knife's edge of a debt spiral. 2) enough to live on for 1-3 months of unemployment. Even if you can easily get a programming job within a month now, that may not be the case if the startup bubble bursts. And besides, even now you don't want to be beholden to the first thing you find. If the first job you take turns out in the first couple months to be a nightmare, you'll need to be ready to handle another month or more of unemployment while you find something better. Or you can afford to take a month of vacation to recover from burnout once you've completed the stressful process of job hunting. This also gives you a cushion to take small risks like switching specialties or moving to a new city. Keep this in an easily accessible "high yield" savings account. There is a 98% chance you will be glad to have this money some time in your life. This is the money that gives you security. 3) 3-12 months of living expenses. This lets you weather larger life events (a parent is diagnosed with cancer and you want to stop working and move back to be with them for the last several months of their life). Or take bigger risks like moving abroad or going back to school or even switching careers or starting your own business. Or deal with a severe recession as some other posters mentioned (the market for programmers seriously bottomed out when the first dot com bubble burst!) This money can and probably should be invested as long as it's not in a retirement account with penalties for early withdrawal. There's an 80% chance you'll want to access at least some of this money some time in your life. These are the savings that give you freedom. And yes, I have personal experience of using my savings - I've started a freelance business that took longer than I'd hoped to reach profitability. I've founded a startup. I've taken anywhere from three weeks to two and a half months between jobs, largely voluntarily. Always glad to have these funds. |