Dave Ramsey Said This Account Is the ‘Buffer Between You and All the Craziness Life Throws.’ Do You Have a Good Buffer?

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The size of your buffer could make a big impact on your finances. 

Life is full of unexpected surprises. In some cases, that’s a good thing — like when a friend you haven’t seen in a while visits out of the blue or you win a raffle unexpectedly and get some extra cash. In other circumstances, though, these surprises can be unwelcome — and sometimes costly.

Sadly, you can’t control when an expensive emergency happens to you. What you can do, though, is follow financial expert Dave Ramsey’s advice and make sure you’re prepared for this type of situation.

This is the one account Dave Ramsey says will serve as your buffer

Ramsey has made it very clear that he believes there’s a specific type of financial account you need to have open in order to be prepared for surprise events that will inevitably come your way.

“Having an emergency fund gives you that buffer between you and all the craziness life throws your way, like losing your job or having your A/C go on the fritz in the middle of July,” Ramsey said.

An emergency fund can be kept in a high-yield savings account so you can access the money easily if and when you need it. If your air conditioner breaks or your income goes down, or any other surprises occur, you can take money out of this account to cover your costs.

An emergency fund can serve as a buffer between you and these types of unexpected events because you won’t have to worry about going into credit card debt or otherwise struggling to pay essential bills. You’ll just be able to take money out of the account you’ve set aside for these purposes so your financial goals won’t be derailed and you won’t have a lot of stress. What could be a disaster will be reduced to a mere inconvenience because you’re able to pay for it.

Is your buffer big enough?

If you want to follow Ramsey’s advice, you’ll want to make sure your buffer truly is big enough to protect you from all that life could send your way. Ultimately, this means carefully considering how much money should be in your emergency fund.

READ MORE: Emergency Fund Calculator

Ramsey has traditionally recommended saving three to six months of living expenses within that account, while other finance experts such as Suze Orman have suggested larger amounts (Orman, specifically, says you should have about 8 to 12 months of living expenses set aside).

You should consider personal factors that could affect the level of craziness life could throw at you when you decide how much is best. For example, if your job isn’t very secure or if you have health issues or an old house or car that’s prone to breaking, a larger emergency fund would be necessary. But if you have tons of job security, an affordable rented apartment, and limited other commitments, a smaller emergency fund may suffice.

The important thing is that you feel comfortable with the size of the buffer you’ve created for yourself and that you make sure you’re being realistic about your readiness to cope with unexpected expenses. Doing that can help you avoid financial disaster.

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