Whether you're new to the financial markets or a seasoned investor, it's essential to maintain a savings buffer.
But what exactly is a buffer and what size should it be?
What is a savings buffer?
Savings buffer, savings reserve and financial buffer are just some of the terms used to mean a sum of money you can access quickly in the case of an emergency.
Should your car break down or your boiler suddenly give up the ghost, having a savings buffer will help you cover an unexpected expense like this.
How big should your savings buffer be?
That depends on your personal situation. Living alone or with someone else, having children, renting where you live or owning your own home are just some of the factors that determine the size of your savings buffer.
Fortunately, a good rule of thumb is to:
Keep the equivalent of three to six months' (joint) net salary in reserve.
At KBC Brussels, we always recommend having a buffer of at least 5 000 euros.
What if my savings buffer is higher?
Here, too, your personal situation is key. However, having too high a savings buffer also has its disadvantages in that it's money you don't invest and, therefore, earns you hardly anything at present.
The trick is to keep a safe and comfortable financial reserve, without losing sight of your investments.
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