The importance of building a financial buffer
Day: 06/08/2019 lúc 15:52PM
Heading to financial stability, it is good to have a crash mat in the form of a cash buffer. How deep that buffer needs to be will vary from person to person, but an amount that equates to three months income should work for most people.
Decision of how much money we will need to cover our personal outgoings for any three months, then put that money away somewhere safe. We should then feel secure that if your phone does not ring or your inbox stays empty, we will be able to live for three months then more.
Especially, a financial buffer is extremely important while we drum up new business. For the first few months, work hard and spend only on the essentials we need to operate. Therefore, it is recommended to increase our buffer to a minimum of six months if you do a start-up.
Having a buffer does several things. It obviously gives us the confidence that if things do not go exactly as planned, we will have a period of time to put things right, but there’s more to it than that.
Having a financial buffer not only gives us the confidence to say “yes” to projects that are a good fit for us and our clients, it also allows us to spend time between projects working on developing ourselves, our skills and the business itself.