May 7, 2009
Buffer Fund
From our mom to our school teachers, and to banks and investment gurus, we always hear them preach about saving money. This is vital and important to our financial well being.
But are you aware that we must first have buffer fund before we even think of what to do with our money?
A buffer fund is the money you kept for crisis situations– like you lost your job or your business went bankrupt or you have a family emergency. Your buffer fund is part of your Savings but should be in a separate account. It has a cap and must be accessible in times of emergency.
How much should be our buffer fund?
Experts provide different opinions on the matter, but with the way the crisis is affecting families, 3-6 months worth of household expenses (utilities, food, meds, tuition) should do. Within this period, you should be able to bring new streams of income to replenish your buffer fund.
You must keep in mind, also, that your buffer fund is not meant for risky investments, must not be touched or used for other purposes, should earn interest but accessible when needed. Your savings, technically speaking, should start after you reached the cap of your buffer fund.
By maintaining this fund, your family need is covered while going through a crisis, at least, for a time being.
Do you have some tips to share?
Why not reinvesting money you make with your site with another online business?
yes there is. that site is being marketed separately and differently