How much savings should you have? The most common rule of thumb is a buffer of at least 3 months of your monthly expenses. Usually you add a bit on top: count one extra month if you own your home, two extra months if you have a variable or freelance income, and one more month if you have children living at home. For most households that works out to a buffer of between three and six months.
Why do you need a savings buffer?
A financial buffer is there for the things you don’t see coming: a broken washing machine, a car that fails its inspection, a dentist’s bill, or a spell without work. Without a buffer you have to cover setbacks like these with an overdraft or a loan, and that costs you needless interest.
With a buffer you handle those moments calmly, out of your own money. You don’t have to borrow, you pay no interest, and you sleep better for it. It isn’t a luxury - it’s the foundation under the rest of your finances.
How big should my buffer be?
Start with your fixed expenses and add your regular variable spending on top, such as groceries and transport. That’s your monthly figure. Multiply it by the number of months that fits your situation:
- Base: 3 months for everyone.
- Owned home: +1 month, because maintenance and repairs are yours to pay.
- Variable or freelance income: +2 months, because your income can swing a lot.
- Children living at home: +1 month for the extra unexpected costs.
A worked example: say your monthly expenses are € 2,000 and your situation comes out at five months. Then your target amount is € 2,000 × 5 = € 10,000. These are indicative figures, not a standard - focus on what gives you enough peace of mind.
Where do you keep your savings buffer?
A buffer is something you have to be able to use at any moment. So keep it in an ordinary instant-access savings account, separate from your current account so you don’t spend the money by accident.
What you don’t do with your buffer:
- Fixed-term deposits: your money is locked up for months or years. Fine for longer-term saving, not for an emergency fund.
- Investing: prices may be down at exactly the moment you need the money. Only invest with money you can do without for years.
A slightly higher interest rate doesn’t outweigh the risk of not being able to reach your money when it matters.
How do you build a buffer?
The easiest way is to pay yourself first. Set up an automatic transfer that sends a fixed amount to your savings account right after payday. What you don’t see, you don’t spend.
- Start small if you have to - € 25 or € 50 a month is already a start.
- Raise the amount as soon as you notice it isn’t pinching.
- Move windfalls, such as holiday pay or a tax refund, straight over.
That way your buffer grows on its own, without you having to make a decision about it every month. Want to know exactly how much to set aside? Use the savings buffer calculator. It works out your target amount based on your spending and situation. And with the VasteLast calculator you map out your monthly costs in a few minutes - the basis on which you calculate your buffer. Free, no account and no ads.