Pay yourself first – build up a savings buffer

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Pay Yourself First: Build Your Savings Buffer Slowly.

Building a savings buffer starts with one simple habit: putting money aside before spending on anything else. This method is called "pay yourself first." Here you'll find out how the method works, why saving is often harder than it sounds, and the concrete steps you can take to get started today. Welcome, Lifestyle Habits Explorer. Time to bring your financial peace a little closer.

Figures from the AFM show that about 1 in 5 Dutch households has less than €1,000 in savings. That means a broken washing machine or an unexpected bill can immediately cause stress for many people. A savings buffer can change that. Not because it takes away all your money worries, but because it gives you more control over your financial situation.

Why a savings buffer gives peace of mind

A buffer is your financial safety net. Think of a broken phone, an expensive dentist bill, or a month with less income. Without a buffer, you might end up relying on a credit card, a loan, or expensive installments. With a buffer, you solve the problem without putting other plans at risk.

According to Nibud, a basic buffer of at least a few months' income is a good rule of thumb. If you’re starting from scratch, €1,000 is already a good starting point. That amount covers most small setbacks and already gives you peace of mind.

Practical tip: open a separate savings account, apart from your current account. Money you don’t see every day is less likely to be spent.

Pay yourself first: how it works

The name says it all. As soon as your salary comes in, you first transfer an amount to your savings account. Only after that do you pay your bills and groceries. So you’re not saving with whatever happens to be left at the end of the month, which is usually little or nothing.

This works well because you’re taking a conscious first step, instead of hoping there’s something left at the end.

Practical tip: set up an automatic transfer with your bank on the day your salary arrives. That way, you don’t have to think about it yourself.

Why saving is sometimes harder than it sounds

Saving doesn’t just happen with discipline. If your budget is already tight, there’s simply not much room left. Stress about money also makes it harder to think about the long term. If you’re constantly focused on making ends meet, you don’t have much attention left for savings goals.

Sound familiar? Then it helps to get an overview first before setting a savings amount. In the blog Save faster with the 33-33-33 budget rule, you’ll read how to easily divide your income between saving, fixed expenses, and discretionary spending. If that division doesn’t work for your situation, take a look at the 50-30-20 budget rule, another setup that suits many people a bit better.

Saving also has a big mental side. Why does it come naturally to some people, while for others it never goes beyond good intentions? The blog The Psychology of Money: why saving is a strategy dives deeper into that question.

Practical tip: start small. A few tens of euros per month is better than nothing, and you can always increase the amount later.

Automatic saving: why this should be the default 

With most checking accounts, you only start saving if you take action yourself. So not saving is actually the default setting. 

You can set up an automatic transfer with your bank. It's all about the principle: saving without having to think about it every month. 

Practical tip: increase your automatic savings a little bit whenever your salary goes up or a regular expense disappears. You probably won't even notice the difference in your spending habits.

Five steps to start saving

1. Decide on a realistic starting amount to save, even if it's just €25 a month.
2. Open a separate savings account, separate from your everyday checking account.
3. Set up an automatic transfer on payday.
4. Pick a budgeting rule that fits your situation, like 33-33-33 or 50-30-20.
5. Check your emergency fund every quarter and increase the amount whenever you can.

A savings buffer won’t prevent setbacks, but it will help you handle them better. Start small, make saving automatic, and build up gradually. Every euro you set aside brings you closer to more financial peace. 

Want to get more control over your money? 

• Discover the ebook Practical Money Tips: financial overview & saving tips for a complete step-by-step plan. 
• Prefer to browse first? The money management webshop category is full of practical tools to get started today.

Frequently Asked Questions about Building a Savings Buffer

How much money do you need for a basic buffer?

A starting amount of €1,000 covers most small setbacks, like a broken appliance or an unexpected bill. In the long term, the Nibud advises working towards a buffer that equals at least a few months' income.

What if there’s nothing left at the end of the month?

Then it’s smart to first map out your budget, for example using the 33-33-33 or 50-30-20 rule. Often, there’s more room in your spending than you think once you have everything clearly laid out and take action.

How long does it take to build a savings buffer?

That depends on your income, fixed costs, and the amount you can set aside each month. A small, fixed amount that you consistently save will gradually bring you closer to your goal, even if it’s slow at first.

Lifestyle Habits

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This article is based on AFM blog about savings buffers and financial resilience. It was written by the founder of Lifestyle Habits, who holds university degrees (BSc in Business Economics and MSc in Strategic Management) and has 20+ years of work experience in the financial sector, including at a publicly listed international financial company. Lifestyle Habits works with reliable sources, complemented by years of practical experience and knowledge of finance – from budgeting and saving to investing, retirement, and creating a financial overview. Lifestyle Habits is an online platform for your personal finances to help you manage money smartly. Curious about who is behind Lifestyle Habits and what the brand stands for? Check out the webpage About Lifestyle Habits.

The content from Lifestyle Habits is only meant for general, educational, and informational purposes and is intended as inspiration. It doesn't provide personal financial advice or recommendations. Investing carries risks, including the loss of (part of) your investment. Past performance is no guarantee of future results. No rights can be derived from the content. If you have questions about your personal financial situation, it's always a good idea to consult a certified financial advisor. Always do your own research before making financial decisions.