How much savings do you need as a buffer?
· 4 min read · Spaarradar editorial team
A buffer absorbs the broken washing machine and, if need be, a few months without income. How to use your fixed costs to decide how much to keep to hand, where to put it and what to do with everything above it.
Before you think about the highest rate or a five-year deposit, there is a duller question: how much money has to stay available straight away? That amount is your buffer. There is no figure that is right for everyone, but you can get close for yourself.
What a buffer is for
A buffer is money for expenses you cannot plan, but which do come. There are two kinds of setback, and it helps to keep them apart.
- Unexpected expenses. A washing machine, a car repair, a leaking roof, a large dentist's bill. Big and necessary, and you do not want to borrow for them.
- Loss of income. Losing your job, falling ill as a freelancer, a divorce. Then you have to be able to keep paying your fixed costs for a while.
A buffer is not a pot for a holiday or a new kitchen. You save for those separately, with their own goal and their own time frame.
The rule of thumb: three to six months
A widely used rule of thumb is three to six months of fixed costs. It is not a law, but a reasonable starting point. This is how you work it out:
- Add up your fixed costs per month. Rent or mortgage, energy, insurance, subscriptions, transport. Get out your bank statements; most people estimate too low.
- Add the groceries. You have to eat in a bad month too.
- Multiply by three to six. Where you end up in that range depends on the points below.
With fixed costs of, say, €2,000 a month, that brings you to €6,000 to €12,000. That amount is an example, not a standard.
When you need more, and when less
| Situation | Direction |
|---|---|
| You are a freelancer or have a fluctuating income | More |
| Your household runs on one income | More |
| You own your home or a car | More: maintenance is at your expense |
| You have children | More |
| You have a permanent contract and a partner with their own income | Less is possible |
| You rent and have no car | Less is possible |
The Nibud, the Dutch budgeting institute, has a BufferBerekenaar (buffer calculator, in Dutch) that works out an amount for your household. Good to know: by a buffer the Nibud means the money for unexpected, necessary expenses, and not a reserve for when your income falls away. The rule of thumb of three to six months is about exactly that. So use them side by side: the Nibud result as a floor for expenses, the months of fixed costs if you also want to be able to bridge a period without income.
You do not need to have the amount all at once. A fixed amount per month, transferred automatically on the day your salary arrives, works better than waiting until something is left over.
Where do you keep your buffer?
A buffer has to be there on the day you need it. That means:
- Instant access. Not a deposit and preferably not a long notice period either. The highest instant-access rate is now 3.03%; at the big banks it is 2.00%.
- Not in your current account. There you usually get no interest and you spend it without noticing.
- Check the conditions. With a promotional rate the rate drops back after a few months; how to work that through is in promotional rates: when do they pay off. Some accounts limit the number of withdrawals.
All accounts are on instant-access savings, worked out for your amount.
And the money above your buffer?
Everything you do not need in the short term does not have to stay instant access. That is where the choice really starts.
- A notice account for money you can do without for a month or three's delay. The highest rate is now 2.55%; see notice accounts.
- A deposit for money you are certain not to need for a while. A one-year deposit now pays up to 3.40%; all terms are under deposits.
- A deposit ladder if you do not want to lock everything away at once. You spread the money across several terms, so that a part comes free every year. Building a deposit ladder explains how it works, and the ladder planner works it out for you with today's rates.
If you do not know what suits you, the guided choice asks three questions and puts the results side by side.
Do you have debts at a high rate, such as an overdraft or a credit card debt? Then paying those off is almost always better value than saving alongside that debt. Keeping a small buffer remains sensible, so that a setback does not lead to a new debt.
Not advice. Rates are gross and can change; the tables in this article show the position at the moment you open the page. How we calculate and check is described in the methodology.
