Buffer FI

Creating a buffer between you and your future expenses

Buffer FI
Photo by Robert L. / Unsplash

Creating a buffer between you and your future expenses

How much do you need to create a buffer?

If you’ve made it to this step where you are starting to track your expenses and you have a gap between your income and expenses congratulations! That’s a huge step. If you are still figuring that out you can find out more here.

Now that you’ve got your system set up we need to start creating a buffer. There are many ways you can do this but I will share what I use to help create a buffer. And full disclaimer I stole some of this from YNAB and other financial gurus but it’s how I think about it.

6 steps to creating a buffer

  1. Rule 1 from YNAB — budget with the cash you have and give every dollar a job. Instead of forecasting your income just budget (or allocate money) with the cash you have in your bank account. We get in trouble when we forecast income because we don’t have that money yet and we are planning to pay bills with money we don’t have.
  2. Rule 2 from YNAB — Put money towards your non-monthly expenses. This could be those pesky yearly, bimonthly, quarterly, or semi-annual expenses that seem to come out of nowhere. Your budget for those each month with the cash you have on hand. Also, create savings builders for things that will come up like car maintenance even though you can’t predict when. Counterintuitively this creates a margin in your cash. That you can move around if something happens. Then use Rule 3 from YNABwhich is to Roll with punches when the unexpected happens.
  3. Allocate money towards an emergency fund for $1000.00 this will help for true emergencies and things we forgot about in the first two steps
  4. Fund next month’s budget with cash on hand. Start funding your entire next month’s budget with the cash you get this month. This will give you a whole month’s cushion (at least)
  5. Pay off expensive debt. Anything over 5% I would pay off. It will reduce what you need a month to month and will help create more of a gap and margin.
  6. Max your emergency fund to 6 months to 12 months of base expenses. I know most folks say 3–6 months and that’s okay. I’m more conservative and want to be okay if the next pandemic happens.


Doing these steps will help weather any storm that can come and will build a strong foundation so you can be building your wealth through investing.

  1. Know Your Financial Score FI — Telling and tracking where your money goes
  2. Buffer FI — Having an emergency fund of at least three months
  3. Barista FI — You could live off of a part-time job like at a coffee shop, or if you are dual income, you could live off one person’s income.
  4. Retirement FI — You can, with your investments, live off social security when you retire.
  5. Peace Out FI — Your side hustle plus your investments can pay for your expenses
  6. Lean FI — Your investments can pay your expenses
  7. Fat FI — Your investments can pay for your quality of life well above your expenses.


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This article is informational; it should not be considered Health, Financial, or Legal Advice. Not all information will be accurate. Consult health, financial, or legal professional before making any significant decisions

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Updated on 11/1/23