Rent leaves on the 1st, payday is the 10th, and for nine days the overdraft carries you. Every month you pay a little interest to borrow your own next paycheck.
In short: a cash buffer is money that sits in your current account so the bills due before payday are already covered. Start with a small target, everything due between the end of the month and payday. Then, if you want, grow it to a full month of spending, so this month is paid from last month's income. It's not an emergency fund: the buffer is used and refilled every month, the emergency fund only when something goes wrong.
- Add up what's due before payday
- That's the starter target
- Put the monthly surplus in until it's there
- Then, optionally, grow it to one month
A worked example
Made-up but realistic, Person B from cash flow 101: €2,400 on the 10th, €2,250 going out each month, so the month ends €150 up, and €200 in the account on the 31st. Between the 1st and the 9th, €1,020 goes out: rent, the car loan and nine days of groceries.
| Target | Still missing | Months | |
|---|---|---|---|
| Starter: what's due before payday | €1,020 | €820 | 6 |
| Full: one month of spending | €2,250 | €2,050 | 14 |
6 months
After six months, the account no longer goes below zero before payday. Nothing else changed: the buffer just means the empty days are paid from money that's already there.
The full buffer takes 14 months and buys something different: every bill this month is paid from last month's paycheck, so a late salary or a bill that moves no longer matters. It's worth it if your pay date shifts or your income varies. If moving due dates already fixes the low point, the starter buffer is enough.
How to build it
1. Find the starter target
Add up everything that goes out between the last day you're sure of your balance and payday: bills plus day-to-day spending. That's what the buffer must cover. Paycheck vs spendable has the same sum in more detail.
2. Keep it in your current account, with a floor
Unlike savings, the buffer needs to be where bills are paid from. Treat it as a floor: the balance doesn't go below it on purpose.
3. Fill it from the monthly surplus
Whatever's left at the end of the month stays in the account instead of being spent or swept to savings, until the starter target is reached. A third paycheck, a tax refund or a bonus can finish it in one go.
4. If it's used, refill it first
A buffer that's used to cover a shortfall should be refilled before anything new is saved.
Buffer, emergency fund or savings step 1?
- The buffer handles normal timing: bills that always arrive before payday. It's used every month.
- The emergency fund handles things going wrong: a job loss, a repair. It stays untouched otherwise.
- Savings step 1, one month of essentials, is the first part of the emergency fund, not the buffer.
A shortcut: if you already have the first month of an emergency fund, you can move the starter amount (€820 here) to your current account once, and refill the emergency fund from the next months' surplus. Same total, the overdraft ends this month instead of in six.
What a buffer doesn't fix
If the month ends in minus, the buffer drains a little every month and never fills. Fix the total first (cash flow 101).
Check how long yours takes
The free emergency fund calculator works for a buffer too: enter your starter target as the monthly amount with 1 month of cover, what you already have, and your monthly surplus.
One thing to do today
Add up what leaves your account between the 1st and your payday. That's your starter target.
In Volora, a low-balance alert on your current-account wallet can watch the buffer for you: set it to the floor and you'll be told when the balance drops below it.