Chapter 1 of 8 · 4 checks · 2 min
Build a money buffer while you are employed
Time is the most valuable thing in a job search, and savings are what buy it. Start before you need it.
Work out your essential monthly costsMust
Why it matters and how to check
You cannot size a buffer without knowing what a month costs you. List rent or mortgage, utilities, food, transport, insurance, loan repayments, family support and school fees. Leave out things you would cut immediately if your income stopped.
Use your bank statements from the last three months rather than guesses. Most people underestimate.
Check it: you have a single number for essential monthly costs, based on real statements.
Do
- Use three months of bank statements
- Include money you send to family
Avoid
- Guessing from memory
Set an emergency fund target in months of essentials and build towards itMust
Why it matters and how to check
Decide how many months of essential costs you want saved. Think about your notice period, how long job searches have taken people with your experience in your market, whether you have dependants, and whether anyone else in your household earns.
Then automate a fixed transfer on payday into a separate account you do not touch. A small amount every month beats a large plan you never start.
Check it: you have a written target, an automatic monthly transfer, and you know how many months you are covered today.
Do
- Automate the transfer on payday
Avoid
- Keeping the buffer in the same account you spend from
Keep the buffer somewhere safe and quick to reachShould
Why it matters and how to check
An emergency fund is only useful if you can get to it within days without losing value. Keep it in a low-risk account you can withdraw from quickly, not in investments you might have to sell at a bad time or in money lent to friends.
If you hold savings in a foreign currency or abroad, check how fast you can move it and what it costs.
Check it: you could withdraw your full buffer within a few days without a penalty or a loss.
Do
- Test a withdrawal once so you know how long it takes
Avoid
- Holding your only buffer in volatile assets
Avoid new long fixed commitments when your job looks shakyNice to have
Why it matters and how to check
If your company is cutting costs, missing targets or freezing hiring, it is a poor moment to sign a long lease, take a large car loan or commit to expensive instalments.
That does not mean panicking. It means keeping your fixed costs low enough that a gap in income is survivable.
Check it: you have not taken on a large new fixed monthly commitment during a period of company uncertainty without a plan for paying it from savings.
Do
- Delay big purchases until things are clearer
Avoid
- Taking on debt based on a bonus that may not come