Not so much in response to your specific question, but when trying to figure out what I can afford, I actually take a pretty simple approach: my liquid assets (mostly in the bank) plus things I could easily liquidate (stocks, etc.) minus a “rainy day fund” (this has varied in size over the years, but tends to sit at between 2 and 10 thousand USD, based on how hard I think it would be to get a job or find housing in the event that I lost one or both). Things like 401K and HSA are omitted; they’re already earmarked for specific things and mean I don’t have to worry about keeping other funds back for those purposes. Assets that are technically resalable but either not worth the effort or of high utility to my daily life (my computer, my car, etc.) are also omitted, though in a pinch I would of course sell them too.
The result is the money I can afford to spend. I can use it on video games, or vacations, or gifts for people, or a new car (at which point I would sell the old one), or fighting malaria. I can trickle it away on living expenses if I decide to quit my job and pursue hobbies or whatever (I would start looking for a new one once I got within “expected job hunt time * cash outflow rate” distance of the bottom of this wealth, though I could dip into the rainy day fund if needed).
I can also invest it into riskier things than a savings account, like stocks… or into any other kind of betting.
Not so much in response to your specific question, but when trying to figure out what I can afford, I actually take a pretty simple approach: my liquid assets (mostly in the bank) plus things I could easily liquidate (stocks, etc.) minus a “rainy day fund” (this has varied in size over the years, but tends to sit at between 2 and 10 thousand USD, based on how hard I think it would be to get a job or find housing in the event that I lost one or both). Things like 401K and HSA are omitted; they’re already earmarked for specific things and mean I don’t have to worry about keeping other funds back for those purposes. Assets that are technically resalable but either not worth the effort or of high utility to my daily life (my computer, my car, etc.) are also omitted, though in a pinch I would of course sell them too.
The result is the money I can afford to spend. I can use it on video games, or vacations, or gifts for people, or a new car (at which point I would sell the old one), or fighting malaria. I can trickle it away on living expenses if I decide to quit my job and pursue hobbies or whatever (I would start looking for a new one once I got within “expected job hunt time * cash outflow rate” distance of the bottom of this wealth, though I could dip into the rainy day fund if needed).
I can also invest it into riskier things than a savings account, like stocks… or into any other kind of betting.