My general philosophy has been moderately upgrade your life style every 3 bumps in earnings- this has led me to live pretty bare bone in a lot of aspects. In my

My general philosophy has been moderately upgrade your life style every 3 bumps in earnings- this has led me to live pretty bare bone in a lot of aspects. In my case I was very lucky with my overall earning increasing about 10-15% a year, yet I lived in the same apartment, drove the same car and pretty much only spent money on travel and food (my vices). This also allows you to cut down a lot easier in the case of a pinch. I don't own but rent - economically in the long run buying would be more advantageous but being able to move in a heartbeat or quit my job to start my own business took priority over that. I am religious about saving cash. Every month before my paycheck (used) to drop in my account I would put a decent percentage into savings - this was after 401k contributions (which I did about ~10%). If i received a bonus at work 90% would go directly to savings either in the form of my personal investment account or cash reserves (with 10% always going to 401k). The remaining 10% was for the family slush fund. From a financial planning perspective 10% might be low for 401k but I believe I can make my money work harder outside of it. My household cost is similar to yours (~45k), I add 10k to keep sanity (vacations with wife, anniversary presents, etc). Disclaimer: This is working for a established tech firm paying towards the high end of industry average and working there for 5 years. If you are in a startup your salary is lower and lopsided towards equity so achieving this cushion I imagine is a lot harder.