Financial cushion security- this is a reserve of money in case of a financial crisis, if you lose all your income or some emergency arises that requires money. The purpose of a financial cushion is to help you get through difficult times of lack of money while maintaining your usual lifestyle. What will you do if you lose your job and you have no other sources of income? It's good if you can quickly find new job. What if not? People without a financial cushion in this case find themselves in a very difficult financial situation, some even have to sell their property.
In what cases might you need a financial cushion?
- Job Loss – Anyone can lose their job or lose their business. Income will disappear, but expenses will remain; you always have to pay for housing, food, loans;
- illness and expensive treatment - if you do not have good health insurance that will cover the costs of treatment, then a financial airbag will help you;
- emergency home repairs after a fire or flood are the same; if the home is not insured, then a financial cushion will allow you to quickly begin repairs and restore your home.
What should you not spend your financial cushion on?
Remember that this is an emergency supply. You should only spend it when necessary. That is, this money cannot be spent on a vacation, on a car, on a new phone, and so on. If you want to go on vacation, save for it separately.
What size should the financial cushion be?
A financial cushion should help you maintain your previous lifestyle in the absence of income. Most often, it becomes in demand in the event of a job loss. Therefore, the size of the financial cushion should provide you with unemployment during unemployment. How quickly you can find a job depends only on you; it could be a week, or it could be several months. The standard minimum is three of your monthly expenses, optimally - 6. If your financial cushion is planned for emergencies, then its size should be increased at your discretion. As for me, my financial cushion is greater than my annual income.
How to store your financial cushion?
First, let's think about what requirements should be met for a financial cushion? The main requirement is that it must be easily accessible. Under no circumstances should you store your financial cushion in real estate or securities. You can’t sell real estate quickly in one day, securities may fall in price, and gold, although considered a protective asset, may also decline. Therefore, only money is suitable for storing a financial cushion.
Since the beginning of the year, the ruble has devalued against the dollar by 40%. A rising dollar causes prices to rise not only for imported goods, but also to domestic ones, whose manufacturers use foreign raw materials and materials. That is, prices are rising for most goods and you need to protect your money from devaluation and rising prices. Therefore, the financial cushion must be stored not only in rubles, but also in other currencies - the dollar and the euro. The optimal ratio would be 1:1:1 or 1:0.5:0.5.
Where to store money?
Money can be kept at home or in a bank. But there may be a fire at home or the house may be robbed. Therefore, it is not safe to keep all your money at home. It is optimal to keep most of the money on deposit in a reliable bank, and a small part, for example, monthly income, if you need money very urgently - at home. The bank will not only store your money, but also charge interest on it. Since money depreciates over time, in order to maintain the purchasing power of the financial cushion, choose a deposit whose interest rate is at least not less than the predicted inflation. Now the Bank of Russia's inflation forecast by the end of 2014 is 8%, for 2015 - 6.2-6.4% (my personal - 7%). But you don’t need to chase the return on your deposit; remember that the bank must be reliable. If your bank's license is revoked, it will freeze your money until insurance payments begin. Typically, payments to bank depositors begin two weeks after the license is revoked. To be more reliable, you can distribute your money across several banks, for example, keep rubles in one bank, dollars in another, euros in a third.
Since money may be needed at any time, it is better to choose the option of partial withdrawal or preferential termination in order to maintain interest on the deposit. If you are just building your financial cushion, the deposit should be replenished.
How to create a financial cushion.
- Decide on the size of the pillow. By maintaining, you will know the size of your monthly expenses. If the monthly expenses are 20,000 and the cushion is for 6 months, then its size is 20,000 * 6 = 120,000.
- Calculate the amount you can save monthly. The money that you have left after all expenses can be used to form a financial cushion. If there are 10,000 left, it will take 12 months to form the cushion.
- Choose and replenish. Open a deposit and deposit money into it.
A financial cushion will not only help you in a difficult financial situation. Knowing that you have a reliable cash reserve will help you feel more confident and sleep better at night.
I read your magazine and Robert Kiyosaki’s books and for the first time thought about a financial “cushion” for 6-8 months. But I can’t decide how best to store this money. Where should I invest it so that I can quickly withdraw cash if something happens? And it is also necessary that the money is not “eaten up” by inflation - and in general it would be better without risks.
My options are:
- invest in OFZ, but there is a possibility that the price of the bond may decline. Will the accumulated coupon income cover the losses? Otherwise, I remember 2008 well;
- buy Eurobonds or US Treasuries. But Eurobonds of large issuers are terribly overbought, and I’m not sure that they can be quickly sold if something happens;
- invest in ETF. But which one? They've been growing for the last few years;
- buy shares of a large issuer, and not overbought ones.
Robert Kiyosaki writes in his books: “An investment in which nothing depends on you is a bad investment.” In all of the above options, nothing depends on me.
So how to store this money?
Why do you need a financial cushion?
Financial reserve(pillow, airbag) - this is money in case of financial difficulties. A reserve is created not for increase money, and for safety: in case of sudden dismissal, illness, or other difficult situations.
An important criterion for such a safety net is the ability to quickly get cash if it is urgently needed. You also correctly write that protection from inflation and the absence of risks are important for a reserve.
Investments same - this is an investment of money to increase capital or create a source passive income. Anything you list is suitable for this: stocks, bonds, ETFs and other instruments. Investors choose instruments based on their goals, investment terms, acceptable risks, and so on.
Forming a financial cushion from securities is not best idea. Mixing investments and emergency reserves is too risky.
Why reserves should not be kept in securities
If money is invested in securities, it is more difficult to use it quickly. In addition, the value of securities can not only rise, but also fall - which means your reserve is at risk.
On deposit in a bank. Here you definitely need a deposit with the ability to withdraw and replenish without losing interest. Pros: there is protection against inflation, there is no risk of theft, the bank will not reduce the rate until the end of the deposit. Cons: If the bank is closed on weekends or the office location is inconvenient, it may take time to withdraw money. The recommended limit is the same - 1.4 million rubles per bank.
You can combine these options: keep part of the “financial cushion” in cash at home, part on a card with interest on the balance, or on a deposit with the ability to withdraw without losing interest. Even if the bank’s license is revoked, you will not be left without money while waiting for compensation thanks to the cash portion of the reserve.
If you have a personal finance question, expensive purchases or family budget, write: [email protected]. We will answer the most interesting questions in the magazine.
Imagine a soft pillow on which you lay your head before going to sleep so that you can comfortably spend the whole night on it. It creates comfort in your home and helps you relax. You lie on it, and everything is fine... This is exactly the state of peace and confidence in the future that you will have if you create a financial airbag for yourself.
What is this?
Financial airbag- this is the accumulated amount of savings on which you can live certain time, unexpectedly losing their main source of income. In other words, this is a “nest egg” or money for a “rainy day”.
Why is it needed?
When you mention “airbag,” one of the first associations is the airbag in a car, which is designed to soften the impact of the driver and passengers in a car accident. A “cash cushion” will also save you from a possible crisis, dismissal and any “accident” in life.
Having an untouchable financial reserve, you will even psychologically feel more protected and confident, and you will not be unsettled by a sudden car breakdown or flooding of your neighbors.
How to create an airbag?
1) Determine how much you spend per month.
You will need to track your expenses and income. If you have done it before, then you will only need to calculate your monthly expenses. If not, then you will either have to write down all your expenses for a couple of months or simply “estimate” how much money you have enough to live without problems for a month. Read how to properly keep track of your personal finances.
2) Select the term of your “insurance”.
The optimal period for which you should create a financial safety net is 3 and 6 months.
3) Calculate the required amount.
The size of the financial airbag is determined by the following formula: the amount of monthly expenses multiplied by the number of months. For example, if you spend 30,000 rubles a month and want to create an emergency reserve for 3 months, then you will need to save 90,000 rubles.
4) Start saving.
Think about what percentage of your wages you are ready to save per month. The larger it is, the faster you will achieve what you want. For example, 10% or 20% from each salary.
There are two main options: earn more or spend less.
Wallet. Place a 5,000 ruble bill in it. Let it be a symbol that brings good luck and additional motivation for you. However, of course, you cannot carry your entire emergency supply in your wallet.
"Stash" at home. Hide some of your savings at home. Yes, even in the same pillow! Let him not lie in the apartment large sum cash in different currencies: dollars, euros and rubles.
Bank deposit. This perfect option, as it provides the best protection against inflation. Choose a deposit with the ability to replenish and withdraw money at any time.
Gold. Precious metals will always be in price, so feel free to buy them. You can sell them to the bank quite quickly even in times of crisis.
Basic requirements for creating an airbag:
- Immunity. It is strictly forbidden to spend saved money. Write down for yourself exactly in which emergency situations this can be done.
Possibility to quickly receive funds. If an emergency occurs, you will need money urgently; you will not have time to sell, for example, real estate.
Inflation protection. It is best to keep your savings in a bank, in a deposit account in different currencies.
If for some reason you are not yet ready to create an emergency reserve for the future, then you can always use our service. In essence, Platiza is a financial safety net for those who did not take care of creating their own cash reserves in advance.
However, remember that you will have to pay interest for using borrowed funds. You can resort to a microloan when you know that you can repay it on time.
Don’t put things off until later; we advise you to start creating your financial safety net as early as possible. Yes, first you have to force yourself to save money. It will be difficult, but you need to realize that this is for the good of your family. Soon you will develop a very good habit and life will become easier, you will breathe more freely and more confidently. Write in the comments about your successes and ask questions, we will be happy to help you.
The first step towards material well-being– creating a certain cash reserve “for a rainy day.” Such a day may never come, but everyone must have a financial safety net. Successful businessmen know how to quickly accumulate and wisely manage insurance capital. How can we create a financial safety net for those who live from paycheck to paycheck or make odd jobs as freelancers?
A financial airbag is designed to save its owner during a difficult period of life, when funds are urgently needed for treatment, to cover damage from an accident or fire, in case of loss of the main source of income and in other unforeseen situations. But set aside money can also help out in positive moments. and start new life A financial airbag will help.
Savings also have a psychological aspect. A person who has a financial cushion feels more confident, is not afraid of life’s troubles, is not obsessed with money, and is ready for change. His calmness and positivity are conveyed to loved ones and have a positive effect on his work. It has been noticed that for people who have money for a rainy day, this very day comes much less often.
How much money should be in the financial cushion?
In order to determine optimal size financial cushion, you need to calculate your expenses for the month. As a rule, they include utility bills, expenses for food and household goods, payment for travel or fuel and lubricants for personal transport, payment for communication services and the Internet, other monthly payments, for example, payment for kindergarten or pet food. Loan payments, if any, are also summed up here. Depending on the number of family members and the relationship between them, the financial airbag can be shared or calculated separately for each one.
It is better to make two estimates: economical option one of the most necessary expenses and the amount for a comfortable existence. Each amount received is multiplied by 6 months. These will be the limits of the financial airbag. In the first case, her minimum size, which will help you survive without debt even with a complete loss of income. It is not recommended to go beyond a larger amount. Money should work and make a profit, and not lie as a dead weight. A financial cushion is not an investment portfolio, but an insurance policy.
Rules for creating and maintaining a financial cushion:
- Save at least 10% of each income received;
- First, set aside the amount in the FPB, and then distribute monthly expenses;
- Do not store funds in a place where they can be easily taken and spent;
- Deposit money into the FPB in any case, even if you have debts;
- Spend savings only when absolutely necessary;
- Try not to completely deplete your financial cushion;
- Start restoring the FPB at the first financial opportunity.
Where to store a financial airbag?
Of all existing options Storing cash as a financial cushion is not suitable for everyone. The insurance reserve is created for a specific purpose; accordingly, the place and form of storage must meet certain requirements: not be in too close access, not depreciate over time, and be able to be quickly withdrawn.
Home storage in the form of cash can be immediately excluded. No financial cushion can withstand constant raids, and the desire to lend to yourself will certainly arise with such availability of money. Cash stored in your own home can be found by someone in the household and accidentally spent, or intentionally stolen by strangers. Banknotes may be lost in the event of a move, fire or flood, including for the sake of which they were put aside. A home safe will solve a number of problems, but even with it, money is not immune from inflation.
Transfer of deferred money to gold, antiques and others material values - Not the best choice for a financial cushion. In this form cash will not lose their value, but will most likely increase it over the years, but if necessary, urgently converting them back into cash will be problematic. To store valuables, you will have to rent a safe deposit box, which is an additional expense.
Money for bank card are more suitable option, but not ideal. Inflation for such storage is just as merciless, and the temptation to make a purchase on the Internet or pay with a card in a store, although a little less than with cash, is still too great. The bank card service is minor, but it is there. One of the advantages is the protection of money from theft and other troubles beyond the control of the owner.
Bank deposit is considered the optimal way to store a financial airbag. On the one hand, the money is insured even if the bank goes bankrupt or the license is revoked, on the other hand, the interest on the deposit compensates for inflation. Spending funds from a deposit on a momentary impulse is not so easy, which ensures their additional safety. The only thing you should pay attention to is the choice of deposit conditions; it must be replenished and have the possibility of early closure without loss of interest. When accumulating a large financial cushion, it is better to divide the amount into several bank deposits.
There is a lot of controversy about the currency in which a financial safety net should be kept. Some people recommend domestic rubles, and there are quite a few supporters of dollars or euros. There is no clear answer to this question. Each option has its pros and cons. The situation with the exchange rate in our country is quite unstable, so you will have to make a decision at your own peril and risk. It is more logical to rely on the currency in which the main earnings are received.
Do you need a financial airbag? Subconsciously you understand that yes. Everyone talks, advises and recommends having some kind of safety margin for yourself (in the form Nth amount money). In practice, most people don't have this.
Things were the same for me a few years ago. Then I realized (or rather, life made me understand) the undeniable advantage of such a nest egg for unforeseen circumstances. And from that moment on, no matter what happens, I always have financial reserves for any day.
From the article you will learn the main points about the formation of an airbag.
And my humble experience. A short story about how I started forming my reserve capital. And some nuances of accumulation, storage and use of a pillow.
What is a pillow for or protection from?
In the classical definition, a financial airbag helps to avoid temporary financial difficulties. Occurs in any person (and more than once) throughout his life. Or mitigate their consequences.
We lost our jobs, received temporary disability, and urgently needed money for important unforeseen expenses. What to do?
And a timely accumulated nest egg will come to the rescue.
Key points to use the pillow - important unexpected. And precisely in the aggregate, and not individually.
How much money should you have?
Financial advisors and smart books on financial literacy advise keeping a reserve equivalent to 6-12 months of your expenses.
Your family spends 80 thousand monthly. You need to save 480 - 960 thousand rubles.
This will allow you to safely survive the black streak. Without thinking about money. At least know that there is some capital behind your back. And it’s trivial not to die of hunger.
How to form and how much should you save?
Three main sequential questions immediately arise.
How to form capital? Naturally, set aside part of your salary every month.
This leads to the second question. How much should you save?
And the most interesting thing. How long will all this take?
By saving 10%, in 10 months we will save up for only 1 month of safe life. Accordingly, you need to spend 5 or 10 years on a reserve of 6 or 12 months!
But this is already an impressive period. Just to create a full-fledged airbag for yourself can take a whole decade!!!
You can, of course, try to save more - 15-20%. But then you will have to squeeze in other expenses. Eat less, rest more modestly, dress cheaper.))))))
Not a very bright prospect for the next few years.
In reality, you will save even more. For a period of 10 years, in any case, you will use what you have accumulated. Periodically reducing financial reserves.
Therefore, you can safely increase the estimated accumulation time by one and a half times. This will be a more realistic figure.
Where to store money?
By forming a financial reserve for the future, a larger and larger amount of funds will gradually accumulate.
And a logical question arises - where to store all this money?
At home? Or maybe invest it somewhere? For money to work and generate income.
Before you answer, you need to understand why we are saving money. For what purpose?
For important, including sudden, unforeseen expenses.
Therefore, the main rule is liquidity. That is, the opportunity to quickly withdraw money if necessary.
Second important point- it must be a reliable source of investment.
Bank deposits are ideal for these parameters. Money can be withdrawn at any time. The bank accrues income, albeit small. Which at least protects money from depreciation. And the deposits are insured by the DIA - 1.4 million are guaranteed by the state.
You can keep a small portion of your funds at home. Just in case. Weekend, holidays banks may not work, but money is needed here and now.
My story of airbag formation
It all started when I had to quit my job a few years ago. They began to delay wages, and very significantly. The delay was about 3 months. And it increased every month.
At the beginning of autumn we received money for the beginning of summer, and by the new year we were paid for September-October.
I just took out my first mortgage. And every month you need to make a loan payment. And here there is such confusion. In general, no stability. You don’t know whether they will give you the money by the date of the next payment or not.
I wrote a letter of resignation. And started looking for a new one Good work. I thought I could do it quickly - in a couple of weeks.
And then an unpleasant surprise awaited me. It was the crisis year of 2010, and work and especially wages were not very good.
If they offered me more or less normal money, they demanded that I work 8 days a week, 25 hours a day. Well, maybe a little less. ((((
With a normal schedule (5 days a week for 8 hours), they offered some crumbs.
And so I was stuck in an uncertain state for 4 months. No money left. I have no income. Small child. Only my wife works. Plus monthly mortgage payments.
In general, four people began to live on one salary. Family of three + bank. Moreover, 50% of all income immediately began to go towards the mortgage.
And no savings for a rainy day.
The most interesting thing is that before this period, when some extra money appeared, if possible, they made early payments on the loan. Trying to pay off as early as possible.
The logic was simple. Why save money? It's better to pay off your loan faster. Saving on overpayments in the future. So I saved.
Having lost one family source of income, I had to tighten my belts. Reducing all costs to the maximum.
And you know. Nothing catastrophic happened. We have reconsidered our needs. We began to shop more thoughtfully. Although we began to spend less on food, it became more healthy. And so on for each expense category.
The only thing I had to completely give up entertainment. Cinema, children's parks, restaurants, cafes.
Otherwise everything was more or less tolerable. Additionally, they temporarily stopped paying for utilities.
And in principle there would be enough money. If it weren't for the mortgage. Taking half of our income.
I had to go into debt. Borrowed something from friends. I spent some of the money using a credit card.
Later, when everything stabilized, I had to repay debts and repay loans for almost a whole year. And no one was going to forgive us for the accumulated payments for housing and communal services. They lived in Spartan conditions. In general, the year was “fun”.
After that, I firmly decided to always have a reserve that would be enough for 3-4 monthly mortgage payments.
As practice has shown, if you really want to, you can live on one source of income.
About a year later the goal was achieved. A small cushion against credit dependence has been accumulated.
But the habit of saving for a rainy day remained. And every month it was possible to send a small amount. Once upon a time more. Once upon a time less.
As such, there was no strict goal to save 10, 15 or 20% every month. The main thing is to use at least some money (of course, not 50 or 100 rubles) to create financial protection in the future.
And you know how cool it is! Know that you have a certain financial reserve behind you. Don't be afraid of tomorrow.
You feel much more confident and free. Although the pillow is financial, it allows you to sleep better.
To form a financial cushion, it is not necessary to have a reserve of 6-12 months of average expenses. Should be enough for at least 6 months to meet minimum needs. And they can be 30-50% less than the current ones.
In total, you need to create a reserve for 3-4 months of average expenses.
Naturally, it's stupid when you have financial difficulties continue to live and spend money at the same pace. You don't know when this will end.
And the main goal is to stretch it out as much as possible long term available financial reserves.
I took the accumulated money to the bank. I opened a time deposit with interest. And I tried to choose the maximum interest rate. But usually the highest interest on deposits is given only for 2 and 3 year periods.
And a couple of times I had to withdraw some of the funds. Naturally losing all accrued interest.
Then I began to combine short, medium and long deposits. Then I started using the deposit ladder.
For those who don't know what it is - in brief.
You open several deposits with different terms. For example, for 3, 6, 9 months and 1 year. Naturally, the most profitable is 1 year. And the 3-month deposit has the lowest interest rates.
After 3 months, the first deposit expires. An annual deposit is opened with this money.
For the rest, the current period is shifted by 3 months. And for 6 months there are 3 months left until the end. For 9 months - six months. Annually - 9 months.
We repeat the scheme every 3 months and after 3 approaches you can open the most profitable deposit for 1 year each time.
Additionally, part of the money is stored on a bank card. For quick access in case of urgent need.
Required with interest on the balance. Ideally, interest should be calculated on the daily balance. This is many times more profitable than the offer of many banks to charge interest on the minimum balance during the month.
The main thing for maintaining a financial safety net is liquidity and reliability.
Even in the formation of a pillow, credit cards can be good helpers.
But here you need to act carefully. And remember that some part of your own funds must already be accumulated.
The meaning of credit cards. Sometimes you need money urgently. A small part. And there’s no real desire to get them out of the deposit. You'll lose interest on the balance.
Another option is borrowed funds.
Now it’s just a paradise for this. There are many offers of credit cards with an interest-free period and (or) no service fees.
I used to have plastic from Alpha ““. I paid a little over a thousand a year. But he could use the money for free. This is a small price to pay for peace of mind.
Now I have switched to installment cards. , and Hamster. I have them all. I don't really use them often. But the main thing is that they completely free. And they give you the opportunity to buy in installments without overpayments.
My principle is the following.
Why withdraw your own money, which brings little income. When you can use other people's for free. The main thing is to have something to pay off the debt at the end of the term.
The refrigerator broke down. You need to buy a new one. Costs 40 thousand rubles. In principle, there is money. You can print the reserve. And then gradually close the gap in the financial cushion. Saving 5-6 thousand every month.
What for? We buy goods in installments for 6 months. And we deposit the same money onto the card every month. But my 40 thousand continue to lie untouched and interest is still falling on it.
After deposits and cards with interest on the balance, I discovered bonds for myself.
What do you know about bonds?
If nothing else, here are 3 of their main advantages over bank deposits.
- Profitability is 20-30% higher.
- Possibility to sell them at any time (NKD).
- Government bonds (OFZ) are more reliable than deposits.
And this pleasure costs only 1 thousand rubles apiece. How do you like this?
Naturally, I now keep the money accumulated for a financial safety net in short government bonds.
Some remains in bank deposits. And also a share on cards with interest on the balance.
The downside to bonds is that withdrawals are only available on weekdays. And it takes on average 1 business day. And it stretches to 2-3 days if it falls on a weekend.
Money must work and generate income.
Now my funds accumulated on the airbag allow me to live in peace for a year for sure. If modestly, then one and a half to two years.
But even having such a solid (in my opinion) margin of safety, I try, if possible, not to get into it. When necessary, I use only current income.
Money is spent very quickly. And then it takes several months to fill the gap in the pillow.
Only in extreme cases. When you can't do without a pillow.
And you know what I noticed. I practically stopped using the reserve. He is. Lying down. Brings in some money. But for now it’s possible to get around temporary difficulties (if they arise) on your own. But there is always a parachute, just in case.
In custody
What conclusions can be drawn?
- Every family should definitely have a financial cushion.
- It's better to have something than to have nothing. The main thing is to start saving a little. Later it becomes a habit. And it is done completely automatically. Gradually increasing financial reserves.
- Use the money you set aside only when absolutely necessary. Better try to get by on our own. Without bringing in reserves.
- You need to keep your money in a safe, liquid place. Always have the opportunity to as soon as possible withdraw the required amount.
- Money must work. And if there is an opportunity to increase income from investments, you should always take advantage of it.
The result may be a kind of symbiosis of financial savings and investments. Using the example of a bundle of bank deposits or money on a card with interest on the balance (as more liquid) + bonds (with more high level income).