[not_the_fda]

1. Live below your means.

2. Have 6+ months living expenses in cash equivalent.

3. Build retirement / investment savings.

4. Build skills and be able to demonstrate you can ship product.

I've seen many co-workers get laid off in my career, they all landed back on their feet.

[willio58]

> Live below your means.

To me, this is the hardest to do. In the U.S., this means going against society's narrative that more/better material things will make you happier. Beyond a certain amount of income, material gains lose their material benefit, but it's hard to detach yourself from society's thinking that you'll be happier if you have a $130k car instead of a $30k one.

One thing I like to remember is that billionaires are no happier than people who make a little more than ends meat. Bezos and Gates got divorced in the past few years. Musk is obviously searching for happiness and meaning to little avail. I know lots of people on fairly meager incomes who are much happier than these men.

[scarface74]

As someone who in the past year who with my wife has gotten rid of our house, cars and everything else that couldn’t fit in three suitcases and now spend six months a year flying across the US staying in hotels and the other half staying in what would usually be a second home/investment property in Florida (warmest place you can stay in the US and state income tax free) , we gave up keeping up with anyone. Our monthly expenses didn’t increase and is actually trending down.

[jen729w]

> 1. Live below your means.

Advice from someone who didn't do this and should now have waaaaaaaay more savings than he does: don't reduce your spending on experiences (dinner, drinks with friends, holidays), but try to reduce your spending on objects.

It is so true that the dopamine hit from buying a thing is short-lived. Now you have that thing, which you probably won't use all that much, and you have to carry it around your life. It wasn't worth it.

Of course this applies more to more expensive objects. Cars boggle my mind. I'm lucky enough to live somewhere that I can walk or cycle everywhere, but still. If I needed a car, people spend what? A hundred k on a fucking Toyota? Are you out of your goddamned mind?

[jacknews]

I agree experiences are what make a life, but things are relatively cheap, and services are expensive. The best thing to save on is paying less rent, better financed mortgage, shop around for cheaper insurance, etc, etc.

For things, focus on tools that help you do more, save time, etc, not bling, and buy the best quality you can afford. Specifically go for quality, not just the most expensive, which will have often have added bling and exclusive price tags to attract people with more money than care.

[jen729w]

I might even disagree with 'less rent' (although better finance for sure, yes).

Living somewhere nice, that isn't old and moldy, that doesn't leak, that isn't cold in winter and hot in summer, that is close to amenities, is a massive quality of life improvement.

Things might be relatively cheap as single items, but the cost of them all adds up. And I'd still say, question every purchase. I mean don't agonise over it, but if you can get in to the habit of generally not just buying shit all the time, I think you'll be better for it.

[jacknews]

Yes, of course, I don't mean live in squalor, but don't be extravagant and showy with your place, get something smaller for example.

[WheelsAtLarge]

>1. Live below your means.

Take this seriously. Make sure you invest the surplus cash in an index fund. In time you'll have enough money to not fear a job loss. There's a lot of freedom in that. Keep in mind that most of the stuff you want ends up in the trash or on some shelf collecting dust. So, think twice about what you buy.

[theandrewbailey]

> Make sure you invest the surplus cash in an index fund.

That depends on what you eventually want to use the money for. Don't put your 6 month emergency fund in stocks or index funds! If you get laid off along with everyone else, stocks will be down, and that means the money you set aside for an emergency is gone!

[WheelsAtLarge]

Good point, a six month emergency fund needs to be easy to access and in a safe savings' place.

[bokohut]

For those seeking official sources of direction which include these points and more I highly encourage starting with the basics of financial management. While these basics lead into many other areas of complex understanding always start with the basics. This one college class guided me more than any other outside of my career path of software development and I still have that college book. Financial management should be taught starting in elementary school but getting it into high school curriculums is good a start.

"In the last two years, five states — Ohio, Mississippi, North Carolina, Nebraska and Rhode Island — passed legislation requiring that students take a full semester standalone personal finance education course in high school, doubling the total number of states with such a mandate."

[tdeck]

I wonder if the confidence OP is detecting from their collegues is more due to unspoken 1, 2 and 3 rather than the explicitly mentioned 4. In our society it's considered kind of gauche to say something like "I could take a 100k pay cut and still pay the bills" or "I've got enough savings to go years without a job" but for many software engineers living well below their means these could easily be true. There are lots of people out there making $200k/year and spending less than $40k/year, particularly people without kids.

[TylerE]

Who are these people living on $40k/yr, and what size cardboard box do they live in?

[kthejoker2]

40 might be a bit of a stretch with inflation, but even with 4 kids and a dog my yearly expenditures to live in a very nice (3800 sqft) house with 2 (paid for) cars is only about $67k/year.

$37k mortgage $15k bills - electric, water, Internet, car insurance, cell phones, etc. $15k - food, gasoline, clothing, haircuts, other "necessities" (many of which are not)

Then of course there's vacations, Christmas/birthdays, and unexpected large purchases (e.g. the out of warranty laptop broke), so maybe add on another $10k?

But we could also easily tighten the belt a bit and cut those bottom 2 items to $20k with only a little bit of pain.

When you're walking home after taxes with $175k/year you definitely get a little flabby on what should be sensible cost cutting (e.g. I'm sure I'm paying a few hundred dollars a year for streaming/subscription services I don't use enough to justify, but it's not worth the hassle.)

We are of course extremely privileged to not have any major medical issues, a good support system for child care, 2 work from home parents, and to have somehow avoided most of the crazy tuition hikes of the 21st century.

[rr808]

> only about $67k/year.

Which is >100k/year before tax which is well above median household earnings.

[kthejoker2]

Right, but we're also an above median family size (again: 4 kids.)

I could easily drop 20-25k from that spending if we didn't have kids - in fact, at the time I had my first kid, my mortgage was $24k/year, my bills were nearly 40% lower than they are now, and I didn't track food and clothes budgets back then but even if they were 80% of present day levels (I suspect it was much lower) that'd put us right around $40k/year.

But I also am on the real estate property ladder, so I think it'd be foolish for me to spend any less of our income on our housing than I do, so counting it as pure "expenditure" is a bit misleading.

Also since someone asked this year I paid $2,200 in healthcare distributions on top of $750 annual premiums.

[rr808]

Thanks for putting all the numbers down its always interesting. I'm jealous and scared of having 4 kids. :)

[TylerE]

Not to mention I see no mention of healthcare costs. I - a single 30-something with some chronic issues, easily spend $5k on healthcare a year - more if I get hospitalized, which has happened 3 times in the decade.

That’s not even counting the portion that comes out of my check.

[FreakLegion]

What kind of answer are you looking for? There are people who live on less than $40k without even meaning to. It's not an outrageous number, but sure, would be harder with chronic health issues and so-so insurance.

[ilikecakeandpie]

With a roommate, a paid off used car, and a not extravagant lifestyle in a smaller city/town, it's not impossible. It ain't as easy as it was ~8 years ago when I was doing that though

[TylerE]

That’s not living if you’re making 200k a year. A roommate? Seriously?

[rr808]

Maybe this is an American thing? I lived with roommates until mid-thirties, was pretty normal in London.

[tdeck]

Have you never lived in the SF bay area? I had multiple friends colleagues who lived with housemates while making six figures in software jobs. It's very normal.

[mud_dauber]

Agreed, plus: 5. Be a gracious human being regardless of context. Memories are long-term things.