Financial Freedom Quick Tip #30: Your Freedom Buffer
Your freedom buffer is a bit of money you save up. You keep this money somewhere where you can easily get your hands on it, e.g. a savings account.
The amount of money in your freedom buffer should be enough to allow you and your family to survive for about six months, without you having to change your living standard and without you having to earn any income during that time.
It’s more than Money
A freedom buffer is more than just a bit of money. At first it may be difficult to see the other good things that come with having a freedom buffer, but those are the things that make it worthwhile.
Your freedom buffer is also your:
- Chill Pill
Your freedom buffer allows you to live with less stress, because you don’t have to worry about things like loosing your job, paying for a medical emergency, or Murphy pulling a fast one on your finances. - Health Saver
Your freedom buffer lowers your risk of stress-related diseases like heart disease, chronic fatigue, anxiety attacks, mood swings, psychological distress, depression, insomnia, high blood pressure, eating disorders, peptic ulcers, poor immune function, chronic pain, colds, flu, headaches, migraines and alcoholism. - Truth-based Confidence
Can you say: I don’t need this job, and really mean it? Anybody with a freedom buffer can. Your freedom buffer allows you to negotiate better deals, because you’re negotiating from a position of strength. - Integrity Backup
Your freedom buffer allows you to say no. No to unreasonable expectations from your employer, no to working overtime at the cost of spending time with your family, no to doing things at work that goes against your religion or beliefs. - Marriage Rescuer
How many relationships crash and burn because of financial problems, or the stress caused by financial problems? If you and your spouse agree and work together to have a freedom buffer, it may just save your marriage. - Money Saver
Apart from the money your freedom buffer can save you in medical expenses caused by stress-related diseases, your freedom buffer will also allow you to save in other ways. If you have a freedom buffer and an unexpected expense pops up (Murphy strikes), you won’t have to make debt and pay interest, or cash in on your investments at inopportune times, to pay for this expense. - Money Maker
I’ve already pointed out that a freedom buffer will allow you to negotiate better deals, but there are also other ways it can help you make more money. Many times a great opportunity hops our way and then hops right past us. We cannot pursue it, because we can’t afford to take the time to do so. If a real opportunity comes your way, your freedom buffer will give you the freedom to quit your job and pursue it.
Ready to start saving for your Freedom Buffer?
A freedom buffer is a great thing and I encourage anyone to save up for one! However, my advice is that you first pay off all your short-term debts (store accounts, credit cards, personal loans, etc.), before you save up a freedom buffer.
Living without debt is a HUGE stress-relief and source of freedom in it’s own right. It will also help you to save up quicker for your freedom buffer, because you won’t need to unnecessarily spend money on interest anymore.
So there you have a few more ways in which financial freedom is good for you. Make the choice. Take up the challenge and start working to become financially free.
This tip is part of the Financial Freedom Quick Tips series. If you want to receive a notice every time a new quick tip is published, you can subscribe to Liberta.
September 15th, 2008 at 03:18 pm
A freedom buffer is the next step for me–after paying off credit cards. Hopefully I’ll be ready to start on it in March. I can’t wait!
September 18th, 2008 at 07:03 pm
that’s our next step once the debt is gone. that’s a really good way to look at it–i never thought of all those different ways it helps and relieves pressure in other areas of your life
July 12th, 2009 at 12:32 am
And I can’t wait until I am debt Free. This is great advice. I think It is very important to have a Freedom Buffer.
And it is true that having one does allow you to negotiate better deals. You rid of that desperation factor.