How Secure Is Secure Enough: A Guide To Knowing When You’ve Made It

Analyzing your own risk tolerance and setting a personal target for your Age of Money can go a long way toward eliminating money stress and taking peace of mind to the next level.


If you are saving money, and living below your means, you are getting ahead. But you might still feel stressed.

At YNAB, we spend a lot of time talking, amongst ourselves and with customers, about reducing financial stress. Financial stress comes from not knowing what your money is doing,  feeling like you don’t have enough, or spending money that isn’t aligned with your priorities—but it doesn’t always end there.

Maybe you’ve gotten far enough ahead that you’re budgeting for some of next month’s expenses. Your Age of Money is pushing past 20 and even 30 days. You feel good, but you can’t help wondering how secure you are, really. And some of that stress creeps back in, no matter how well you’re doing.

It’s important to remember that if you are saving money every month, and living below your means, you are doing better than most of America. You have mastered this #adulting thing, and you should take a second to pat yourself on the back. Maybe even celebrate (if you have the budget for it!)—the point is, don’t squander the security you’ve built worrying about if you are secure enough. Just keep saving.

But, how far ahead should I be?

However, if you aren’t going to let it go, here’s an exercise that can help you determine the answer for yourself.

Just like giving every dollar a job that very first time you budgeted relieved some of your stress, analyzing your own risk tolerance and setting a personal target for your Age of Money can go a long way toward eliminating your money stress and allowing you take peace of mind to the next level.

There are really just two factors at play here: Your own risk tolerance and the variability of your income.

Risk Tolerance

Not sure what your risk tolerance is? Consider a scale, from one to ten—one being off-the-charts-cautious and ten being serial-risk-taking-junkie. 

Do you leave home in the morning with an umbrella if the forecast shows a 20% chance of rain between the hours of 3pm and 4pm? If you opt to stay indoors on such a day, you’re a one. 

Or do you live your life like that Seinfeld episode where Kramer pushes the limits on driving with an empty tank of gas? You live for risk! If so, you’re a ten.

Realistically, you’re probably somewhere in between. Just assign it a number and keep reading. 

Income Variability

How stable is your income?

Or are you a freelancer whose income ranges from two to five figures depending on the job? Are you just as liable to have no work as you are to be juggling nine jobs? If Black Friday outside the doors of a suburban shopping mall at 4:00 am feels more orderly than your income, you’re a one.

Does your incredibly stable employer, pay you the exact same amount (down to the penny), on the same day, every month? Your income is like an atomic clock—you’re a ten.

Get Your Geek On

There’s nothing better than a good matrix. (Not The Matrix, though naturally if we are geeking out, that’s good too.)

In this case, though, it’s a risk matrix. Remember those two numbers you chose? See where they fall here:

The further to the left and the lower you fall—or the closer your two numbers are to one—the further ahead you should be. You’re desperate for stability as a person, but you’ve got very little of it in your income. Tough combination, but your budget can make it work.

The higher up and further to the right you are, the more you have room for risk in your budget. Your money should be at least thirty days old, and maybe that feels too conservative for your risk-loving self. But establish that as a base and go from there.

Let The Matrix Be Your Guide

Based on this matrix, and your personal level of comfort and circumstances, which direction do you need to move?

Down = More Stability & Security Please!

You need more stability, more predictability, either because your risk tolerance is low, your income stability is low, or, yikes, both.

  • Age your Money Beyond 30 Days. Don’t stop when you can budget for all of next month’s expenses. Keep going. Keep getting ahead until the money you earn is being budgeted the month after next. And if you were way down low on the matrix, maybe another month after that.
  • Max out Rule Two. Rule Two: Embrace Your True Expenses means that you are putting money aside for larger, less frequent expenses. Similar to budgeting for next month, save for your True Expenses on steroids. Don’t just set aside enough for your next quarterly insurance bill, but for the next two. Get crazy—keep twice your annual deductible in your medical category! 
  • Hello, Emergency Fund! When your money is old, and you’ve budgeted for all your True Expenses, large emergency funds aren’t as important, because you’re prepared for those things that normal (non-YNAB-ing) people think of as emergencies. But in your case? It wouldn’t hurt to have a few months’ worth of expenses set aside beyond your True Expenses.

Up = Wow, I Could Loosen Up a Bit

Everyone should aim for money that is thirty days old, plus, fully stocked True Expenses categories. But perhaps you’re on the other end of this. If you don’t mind a little risk, if your income is incredibly stable, it’s possible that your Age of Money could eventually get too high. You may be just sitting on cash and missing other opportunities to build wealth or  provide security in other ways.

  • Quality of Life. Those categories are in your budget for a reason. Don’t be afraid to give ‘em some love.
  • Consider Life Insurance. Do you have life insurance? Maybe your risk-loving self isn’t inclined to worry too much about it. But you need it. Invest in life insurance. 
  • Speaking of Investing,… We aren’t suggesting talking about options schemes or currency derivatives, but retirement funds? Yes, yes, and yes. It doesn’t even have to be super complicated to get started. 

There is no right or wrong answer because it is completely personal and unique to each individual and situation. The goal is to reduce your stress and improve your quality of life. Financial security can do that and it is a wonderful feeling. When you find your happy place, you will know it.