Hadi said:
I’m a firm believer everyone should contribute to HSA. If only our government cared enough for the working class.
Not everyone can.
Why don’t you do a Roth IRA so that your withdrawals are not taxed? You can do a backdoor Roth IRA even if your income is higher.
A six-month supply of cash in a money market account is not a bad idea.
You could also put money in a dividend fund and use the dividend to fill the money market account. It would not be a bad idea to build up the dividend income to $3,000 a month or more. At that level, it could cover most or all of your living expenses (bills, food, housing, etc.). So if you lost your job, you would have some income. What is worse: being unemployed and not having anything to eat, or paying a bit more in taxes?
The last thing you could do, which you might be doing already, is buy growth stocks or ETFs that don’t pay a dividend or pay a very small dividend. No dividend, no tax. You could save several years’ worth of income in stocks to cover expenses that exceed your cash and dividend income. Although these assets don’t produce income, they could grow through capital gains.
So the taxable account could provide a cash reserve, passive income, and a sizable reserve for serious emergencies. In short, you can create a FIRE account: Financial Independence Retire Early.