If you have direct deposit set up, have a plan for paying off your debt, and are on your way to saving more money each month, the logical next step is to set up an account buffer. 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. After you’ve got a decent account buffer going, you’ll be well on your way to saving up for an emergency fund.
Create an account buffer for automation protection
From direct deposit and automatic bill pay to Simple Goals, automating your finances has never been easier. If your finances were fully automated, theoretically you could go months without touching your bank account or bills, and everything would continue to run smoothly. Your paycheck would still be deposited into your account, your recurring bills would be paid, and you would continue to save money with save-over-time Goals—all without lifting a finger.
While having all these tools to automate our finances helps us save more, pay our bills on time, and relax, automation can come with the price of overdrafting and bounced payments if you’re not paying attention. To keep your automated finances rolling without fear, create an account buffer to protect you and your bank account.
How to create an account buffer
To save up one to two weeks of income for your account buffer, you have a few options.
Set aside cash influxes for an account buffer
First, you could plan on saving your next tax return for your account buffer. Likewise, if you get any cash from holidays or birthdays, or even get a raise, you could plan on putting that extra money toward your account buffer to get it started.
Save up to create an account buffer
You could also start saving a small amount of money regularly to grow your account buffer. Use Simple’s save-over-time Goals to set up an Account Buffer Goal. Even setting up the Goal to automatically save a dollar a day will bring you closer to having a stabilizing account buffer.
You could also start saving by cutting regular monthly costs, such as lowering your monthly media spend, or negotiating your car insurance and cellphone plan. Rather than wrestling daily with whether or not you should buy something small—like coffee—it’ll save you time and money if you make a few phone calls to lower your monthly bills instead.
Earn more to create an account buffer
If you’d rather earn more money than figure out how to cut costs to create a solid account buffer, more power to you. You could probably make way more money through the sharing economy or freelancing than you would save if you started clipping coupons. 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, 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!).
If you have any hesitations about earning more money, take a moment to listen to them, and think about them from a critical point of view. Maybe you don’t think you have enough time, or maybe you think you’re too old or too inexperienced for a certain side job. The reality is that you could probably find or create a side job that could fit into your schedule—you might have to watch less television, or start working during your commute if you take public transport. You could also likely find a job that utilizes your skills, whether or not they’re the skills you use in your current job. The bottom line is: Think outside the box when it comes to how you could earn money on the side, and don’t let your inner hesitations stop you from earning more money.
Set up your account buffer
How you get money into your account buffer is up to you, but the sooner you set up your account buffer, the better. Set up a Goal in your Simple account today to get started.
If you’re using direct deposit and various automatic bill payments, or if you’ve ever received an overdraft fee, an account buffer can be your suit of armor. Even though Simple doesn’t charge any fees, an account buffer will still help protect you against late or bounced payments and serve as a mini-emergency savings fund. Once you get to $500, you can rejoice that you’re part of the 37% of Americans who have at least $500 to cover an emergency, and you can start bulking up your emergency savings fund.
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