Save for a buffer

Your most important savings is your buffer, your extra money if something unforeseen should happen. With a buffer you won’t need to worry too much if you suddenly need to visit the dentist or if something breaks in your home. It’s also a safety net if something bigger would occur such as losing a job or rental agreement.

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The size of your buffer is therefore dependant on your current situation. A family in a house with kids need a larger buffer than someone living by themselves in a rental apartment

How much do I need to put in my buffer?

The size of your buffer depends on your current situation. A rule of thumb is around 2 months salaries.

What type of saving is best for a buffer?

The point of a buffer is that they should be easily accessible. That's why it’s best to put them on a regular account so you can deposit them instantly. Stocks and mutual funds are bad options for buffer savings since you can’t get it right away.

Calculating your buffer

Firstly you need to map your costs, how much is it to live for a month? With an overview you can feel confident that your buffer actually will cover you in case something should happen. Account for:

• Musts: Fixed costs such as rent and amortization
• Variables: Food, travel and leisure

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Don’t forget to account for your subscriptions.

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