A buffer account is a savings account that is a place to collect money “just in case.” Your buffer account is literally your buffer between you and payday cash advances or cash loans in an emergency. When the economy is bad, especially, having savings can help you avoid bankruptcy, foreclosure, and excessive reliance on personal loans.

If you lose your job, your buffer account may replace your income until you find new employment, so it is important to make your buffer account as generous as possible. Try to put 10% of your monthly income into your buffer account. Consider your buffer account as a type of insurance. You pay into it now so you are protected in the future. Try to have at least six months of income in your buffer account. If you have plenty of debt, try to have even more in your account. Even if you lose your job, you will still need to make payments on your personal loans, so you will need cash for this as well.