Household Finances - Buffer Money?
Discussion
How much fluid "cash" do you try to keep back on a month by month basis just in case? Don't need actual figures / willy waving, just something like a months wages or some such, though feel free to let us know you have £5mil in the current account 
Obviously there are the two extremes of this, those that get paid on the 1st and by the 31st the current account is at or near £0 (or worse overdrawn / indebted to pay day lenders) and of course the powerfully built director types on here who have 2 years salary stashed away.
As I've got older and had more money I've always been quite risk averse in this sense as it's always in the back of my mind that the boiler will pack up or some other household issue will arise that will need a few £k spending on it. That or some major car failure.
Since my missus quit work to look after the kids we don't have much to spare each month so the buffer built up as of now doesn't really change but would cover most things with some to spare.
I'm very considered when it comes to spending any money outside of the usual day to day stuff and even more so with large purchases but there are a few things I like which I think would make a difference to our lives. Not sure how much to erode the buffer zone by!
Was kind of spoilt really when my wife did work, we had loads of disposable income and despite spending some of it saved quite a bit. What we did save we then ploughed back into our house (ground floor extension, loft conversion) so as a result we don't have any significant savings now but I feel this was worth it due to the benefits it brought to us (i.e. having a nice house to bring up a family in) without making significant increases to the mortgage.
If the sh*t truly hit the fan there is other stuff I could access, e.g. company share scheme, but the plan was to keep that for the long term. Obviously I have a pension. It is also sort of temporary as I fully expect my missus will go back to doing a proper job at some point or another and would look for work now if we really needed cash.
Anyway enough rambling, my own buffer is running at around 10% of my gross salary equating to around 2 months take home pay at the moment.
Obviously there are the two extremes of this, those that get paid on the 1st and by the 31st the current account is at or near £0 (or worse overdrawn / indebted to pay day lenders) and of course the powerfully built director types on here who have 2 years salary stashed away.
As I've got older and had more money I've always been quite risk averse in this sense as it's always in the back of my mind that the boiler will pack up or some other household issue will arise that will need a few £k spending on it. That or some major car failure.
Since my missus quit work to look after the kids we don't have much to spare each month so the buffer built up as of now doesn't really change but would cover most things with some to spare.
I'm very considered when it comes to spending any money outside of the usual day to day stuff and even more so with large purchases but there are a few things I like which I think would make a difference to our lives. Not sure how much to erode the buffer zone by!
Was kind of spoilt really when my wife did work, we had loads of disposable income and despite spending some of it saved quite a bit. What we did save we then ploughed back into our house (ground floor extension, loft conversion) so as a result we don't have any significant savings now but I feel this was worth it due to the benefits it brought to us (i.e. having a nice house to bring up a family in) without making significant increases to the mortgage.
If the sh*t truly hit the fan there is other stuff I could access, e.g. company share scheme, but the plan was to keep that for the long term. Obviously I have a pension. It is also sort of temporary as I fully expect my missus will go back to doing a proper job at some point or another and would look for work now if we really needed cash.
Anyway enough rambling, my own buffer is running at around 10% of my gross salary equating to around 2 months take home pay at the moment.
As little as possible. With modern online banking it takes seconds on my phone to transfer money from my cash ISA to my current account if required.
Of course you could argue that having money in a cash ISA is me holding money back from a longer term investment, and hence it all comes under your definition of buffer money.
Of course you could argue that having money in a cash ISA is me holding money back from a longer term investment, and hence it all comes under your definition of buffer money.
At the moment I have 8 months of my share of the mortgage and bills or 4 months for us both (if we both had to stop work for whatever reason) in a cash ISA.
Now that we have a decent buffer built up I plan to keep paying into it each month, probably go with 5-10% of my monthly salary.
Now that we have a decent buffer built up I plan to keep paying into it each month, probably go with 5-10% of my monthly salary.
I was discussing this with friends the other month, who live very much hand to mouth.
When younger and single, I did very much the same, was lucky to have £100 in the account the day before payday, not wise.
However, the last 4 years have been a huge change. Married my wife, with two existing children, and we added another. Purchased a house, and therefore the finances were more of a concern to me. I am commission based at work with a paltry salary, so I have a basis of 4 months salary tucked away. With this, we could manage 12 months living very carefully, without running out of funds to cover the basics. No toys, or days out burning fuel however.
I think this should cover me enough, however now its built up, I tend to only put away circa 1k a month into a separate saving pot. I really should do more, but we like to enjoy life, I work to live, rather than live to work.
When younger and single, I did very much the same, was lucky to have £100 in the account the day before payday, not wise.
However, the last 4 years have been a huge change. Married my wife, with two existing children, and we added another. Purchased a house, and therefore the finances were more of a concern to me. I am commission based at work with a paltry salary, so I have a basis of 4 months salary tucked away. With this, we could manage 12 months living very carefully, without running out of funds to cover the basics. No toys, or days out burning fuel however.
I think this should cover me enough, however now its built up, I tend to only put away circa 1k a month into a separate saving pot. I really should do more, but we like to enjoy life, I work to live, rather than live to work.
alock said:
As little as possible. With modern online banking it takes seconds on my phone to transfer money from my cash ISA to my current account if required.
Certainly if the OP is talking about literally having a buffer in his current account, it's advised to keep as little as possible there in case it gets hacked / scammed etc.I am just about on the border between saving and hording money. Saving money is a fantastic idea, but I am at the point where I will avoid spending money as I don't like to see my savings reduce.
I currently have 9 months take home in a Marcus account which if I lost my job tomorrow I could stretch out for 18 months.
For me it is a combination of security and giving me options in the future.
I used to live month to month and have car finance and credit card debt and not give it a second thought. Now even the thought of a mobile phone contract would keep me awake at night.
I currently have 9 months take home in a Marcus account which if I lost my job tomorrow I could stretch out for 18 months.
For me it is a combination of security and giving me options in the future.
I used to live month to month and have car finance and credit card debt and not give it a second thought. Now even the thought of a mobile phone contract would keep me awake at night.
Between us, we aim to save around £400 per month which goes into cash savings. This represents just under 10% of our combined take-home pay.
Over the course of a given year we dip in and out of this, whether it's to buy something big (new sofas recently) or when something breaks (leaky roof) or any other planned large expense (car insurance).
Currently, there's £5k in the pot. While we don't have any real target for the amount in there, we generally stick to the rule that if it wipes out more than half of the current balance, we can't afford it yet.
Over the course of a given year we dip in and out of this, whether it's to buy something big (new sofas recently) or when something breaks (leaky roof) or any other planned large expense (car insurance).
Currently, there's £5k in the pot. While we don't have any real target for the amount in there, we generally stick to the rule that if it wipes out more than half of the current balance, we can't afford it yet.
My mortgage is pretty modest, I have enough tucked away that I could pay the mortgage for the best part of 3 years. The bulk of it will be being used on a deposit for a bigger house soon though, if I have the balls to 'pull the trigger' with all the uncertainty around at the moment.
If I lost my job tomorrow, I could live for 12 months when you factor in all other bills and expenses I reckon.
If I lost my job tomorrow, I could live for 12 months when you factor in all other bills and expenses I reckon.
that's what credit cards are for, right? 
We have an empty (zero balance) credit card with a £7k limit for emergencies.
we also have savings but these are generally savings project which already have a project in mind.. ie, savings account 1 has £8,000 in which is earmarked for the ensuite and master bathroom (once it gets to £10k ish)
Savings for projects, Credit card for emergencies - that's how we've run for the last 10 years or so. We both have life insurance which covers health related loss of earnings and i would hope that if it was a case of just being made redundant we wouldn't be out of work for too long
We have an empty (zero balance) credit card with a £7k limit for emergencies.
we also have savings but these are generally savings project which already have a project in mind.. ie, savings account 1 has £8,000 in which is earmarked for the ensuite and master bathroom (once it gets to £10k ish)
Savings for projects, Credit card for emergencies - that's how we've run for the last 10 years or so. We both have life insurance which covers health related loss of earnings and i would hope that if it was a case of just being made redundant we wouldn't be out of work for too long
Very little in comparison to income. It's something I'm working on improving, but any money in savings feels like money which should be put into a SIPP (with the tax benefit).
Normally I'll also be putting money away for tax payments (self employed) so could dip into this for cash and make use of credit cards for daily spending.
Normally I'll also be putting money away for tax payments (self employed) so could dip into this for cash and make use of credit cards for daily spending.
Sheepshanks said:
alock said:
As little as possible. With modern online banking it takes seconds on my phone to transfer money from my cash ISA to my current account if required.
Certainly if the OP is talking about literally having a buffer in his current account, it's advised to keep as little as possible there in case it gets hacked / scammed etc.C0ffin D0dger said:
That's somewhat paranoid is it not? I'm sure if someone wanted to scam you out of your money and you were stupid enough to let them they'd be able to do from whatever account you're holding it in.
Typically they'd get your debit card details, so they can only get what's in the current account. Happened to my father-in-law and he's someone you'd never think would fall for something like that (call from "BT" at a time when he was having internet problems). He realised straightaway but they'd already tried to take £9000 which failed as he didn't have that much in the account, then £5000 which the bank blocked.CaptainSensib1e said:
If you're retired, then this should be more like 6 to 12 months.
If you're retired, with a steady and sufficient income, why would you need a buffer?We helped the old guy next door with some tax issues he was having and during the course of that were surprised to find he was overdrawn. He'd just paid for a cruise holiday - "it'll catch up over the next few months" he said.
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