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.
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.
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?
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.
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.
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.
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!
"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."
$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.
Which is >100k/year before tax which is well above median household earnings.
That’s not even counting the portion that comes out of my check.
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.