Like a mini emergency fund, an account buffer is one to two weeks of your income that hangs out in your bank account to protect you against overdrafting, bounced payments, and declined transactions. Read on to learn why you should set up a bank account buffer, and how to get started with Simple!
Cover higher-than-usual expenses
If you’re living paycheck-to-paycheck, small fluctuations in your monthly expenses can seriously mess up your budget. But you might not realize you went over your budget until the end of the month when your bills are due.
Maybe you caught the flu and had to pay for medicine, cough drops, and a trip to urgent care—or you had a pipe leaking in your bathroom, which caused your water bill to skyrocket.
Maybe your grocery budget was a little higher than usual because of that impromptu Super Bowl party you decided to host—or that movie you rented made you go over your streaming services budget. Maybe your quick trip to Target to buy cleaning supplies turned into a few new throw pillows (it happens!).
If you don’t have any emergency savings, these types of inflated expenses can rattle your financial plans. It’s a good idea to work to build up some emergency savings (learn why here). But in the meantime, an account buffer can give you the cash flow to cover these types of higher-than-usual bills, to help you stay afloat no matter what life throws your way.
Protect yourself from automation hiccups
With banking and budgeting tools like direct deposit, Goals, and Expenses, automating your finances has never been easier. But it’s important to not completely ‘set and forget’ your financial life—because from time to time, your automated moves might not happen as planned.
Other financial entities might charge fees. An account buffer can protect you and your bank account from any hiccups, which can come in the form of late fees and bounced payments.
For example, there might be a delay in your direct deposit due to a holiday, which then causes you to not be able to make a full rent payment. Your landlord then charges a hefty $50 fee. Even if you are able to pay the full balance the next day, you’ll still see the fee come out of your account balance. Bummer!
Tip: Turn on push notifications for your Simple app
Keeping an eye on your account activity is a good way to make sure everything works as planned. If you bank with Simple, we also recommend turning on push notifications. If you have push notifications enabled, we’ll send you one every time you make a transaction. That way, if there are any unexpected transactions on your account, you’ll know right away.
Tip: Ask for a little leniency.
In these situations, whether it’s a credit card company or an individual who charged the fee, it never hurts to ask for some leniency when these sorts of things happen. Reach out to see if they’d be willing to refund the fee this time (especially if you usually pay your bills on time).
If you reach out to the payee and they aren’t willing to refund the fee, you can use the extra cash from your checking account buffer to cover it.
Have peace of mind
Although you might bounce back from unexpected fees and higher-than-usual bills, they are an extremely frustrating way to spend money that you’ve worked hard to earn. When you’re trying to build up your savings, it can be disheartening to have to withdraw from it to cover what are basically cash flow issues.
That’s why having an account buffer is helpful, for your mental and emotional health. Whenever you do get hit by an unexpected expense, there’s a peace of mind that comes from knowing you planned ahead for precisely this type of situation.
How to fund your Account Buffer Goal!
Once you set up your Account Buffer Goal in your Simple Account, it’s time to find ways to fund it! You’ll want to save up about two weeks of your income into an account buffer—enough to cover anything from medicine when you’re sick to screen repair for your phone when you accidentally drop it (oops).
If you set up an automatic Funding Schedule, we’ll move a little bit into your Account Buffer Goal until it’s fully funded! Here are some tips for funding your account buffer even faster.
Find ways to save on monthly bills
You might be able to fund your account buffer by saving money on some of your daily or monthly expenses. Maybe you can get a better rate on your car insurance, or cut ties with some of your streaming services to save $30-$50 a month. Those kinds of savings can add up quickly, and usually don’t take up too much time to uncover.
Think big, then small: Rather than wrestling daily with whether or not you should buy something small—like coffee—you’ll probably save more money if you make a few phone calls or shop around online to lower your monthly bills instead.
Commit to saving your tax refund
One money move we’re all about is committing to saving your tax refund! Although it can be tempting to think of your tax refund as ‘free money’, it’s really money that you earned, that the government has been borrowing from you. Treat it as you would any other income and save a portion, or all of it!
One tip we recommend to anyone planning on getting a tax refund: Before you even file your taxes, commit to putting your refund into savings—then transfer some of that into your Account Buffer Goal!
Start a side hustle or part-time gig
Another way to fund your account buffer faster? See if there are ways you can earn some extra cash! From writing to food delivery to dog walking, there’s a slew of part-time positions out there, whether you get them from an employer or create them yourself.
While it does take some effort to get started on a side gig, and you might not make money immediately, it will likely be well worth it down the road. You’ll get used to the rhythm of earning more through your side job, and you’ll have more money for things like your account buffer (and more!).
Set up your account buffer with Simple
If you’re just getting started with saving, an account buffer can help keep you on track toward your savings goals. If you have an unplanned expense, rather than dipping into your emergency fund, you can use the money you have set aside in your account buffer.
Set up an ‘Account Buffer’ Goal in your Simple account today to get started!
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