5 tips for building up a 3-month savings buffer
Life’s full of twists and turns, so as well as saving for something specific – like clothes, a holiday or a special birthday for example – it could pay to save for the unexpected too. That’s where a savings buffer could help. Whether it’s a big opportunity or little emergency, with a saving buffer behind you, you could be prepared for what’s ahead. Here’s some quick tips to get you started.
1. Set your buffer amount
As a general rule of thumb, a good sized savings buffer will cover normal expenses for 3 months.
Of course, what ‘normal expenses’ are depends on your lifestyle. So doing a budget will help give you a clearer view of what you earn and spend so you know how much to save. This might include reviewing your expenses. Are there things on your list that you need versus want? Can you get a better deal?
When you are adding it all up, online budget calculator like the one here could make it easier.
2. Make a realistic savings plan
Once you work out how big your 3-month buffer should be, you could consider to start saving. Which is where having a plan to save a regular amount – and sticking to it – could really add up.
Think about it: put away just $20 a week and that could be over $1,000 in 12 short months. Bump it up to $50 a week and that’s a $2,600 buffer in a year, and that’s without earning any interest.
To see out how your savings can grow with regular monthly deposits, check out this savings calculator.
3. Automate it so it saves itself
Set, but don’t forget! Saving is much easier when you don’t have to think about it, which is where recurring payments and other tools help.
If it works for you, one way is to ask your employer to deposit part of your salary straight into your savings account each payday so you don’t even see it or have to remember to move it. Another tactic is to set up a recurring transfer for an amount you choose from your regular account into your savings account. You could do this weekly, monthly, or time it when your pay is deposited.
Rounding up is also an option. For instance, ING Everyday Round Up can automatically round up eligible Orange Everyday purchases to the nearest $1 or $5 and deposit the difference into your nominated Savings Maximiser. That way you can save while you spend.
4. Check in from time to time
Times change and so do your finances, so it also pays to review your earnings and expenses now and then to ensure you still have enough in your savings for a 3-month buffer.
If you need to trim down to save up, some good places to start include:
- gym membership – if you don’t use it, lose it!
- phone bill – are you paying more for your loyalty?
- monthly subscriptions – you’ve got how many!?
5. Top up after you dip in
The best thing about having a savings buffer is that you’ll be prepared when an unexpected opportunity or emergency comes your way.
So don’t feel guilty if you need to dip into it because that’s what it’s there for.
Just remember to start topping it up again after you do so you can get back to having a 3-month savings buffer and live life on your terms.
To calculate the payments required to achieve a savings goal within a specific timeframe check out this savings goal calculator.
Looking for more information?
Everyday Round Up
Everyday Round Up applies to card purchases using your Orange Everyday bank account. You must opt in to Everyday Round Up and select the round up amount (nearest $1 or $5). When you spend with your Orange Everyday card, we’ll transfer the extra amount from your Orange Everyday to your eligible home loan (e.g. Mortgage Simplifier or Orange Advantage) or Savings Maximiser account. A round up will not be debited if doing so would reduce your Orange Everyday balance below $20. Full details at ing.com.au.
Any results generated by a savings calculator are an indicator only and do not guarantee an outcome.
The information is current as at publication. Any advice on this website does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. Deposit products, savings products, credit card and home loan products are issued by ING, a business name of ING Bank (Australia) Limited ABN 24 000 893 292, AFSL and Australian Credit Licence 229823. Living Super, a sub-plan of OneSuper ABN 43 905 581 638 is issued by Diversa Trustees Limited ABN 49 006 421 638, AFSL 235153 RSE L0000635. The insurance cover offered by Living Super is provided by Metlife Insurance Limited ABN 75 004 274 882, AFSL 238096. ING Insurance is issued by Auto & General Insurance Company Limited (AGIC) ABN 42 111 586 353 AFSL Licence No 285571 as insurer. It is distributed by Auto & General Services Pty Ltd (AGS) ABN 61 003 617 909 AFSL 241411 and by ING as an Authorised Representative AR 1247634 of AGS. All applications for credit are subject to ING's credit approval criteria, and fees and charges apply. You should consider the relevant Product Disclosure Statement, Terms and Conditions, Fees and Limits Schedule, Financial Services Guide, Key Facts Sheet and Credit Guide available at ing.com.au when deciding whether to acquire, or to continue to hold, a product. Before interacting with us via our social media platforms, please take a minute to familiarise yourself with our Social Media User Terms https://www.ing.com.au/pdf/Social_Media_User_Terms.pdf.