Start with your essential monthly costs
A cash buffer is money set aside for costs you still need to pay if your income stops: housing, food, essential transport, insurance, utilities and minimum debt repayments. Start by adding up those monthly costs. This may give you a more useful target than multiplying your whole salary, especially if you usually spend part of it on optional purchases.
Write those essentials down. If rent, utilities, groceries, transport, insurance and minimum repayments total R18,000 per month, a one-month buffer is R18,000. Three months represents R54,000 before considering irregular bills or changes in prices. These are examples, not a universal recommendation.
Begin with a manageable target
A first target of R2,000 or R5,000 may feel more manageable than several months of expenses. Even a small reserve can help with a repair or an unexpected bill. From there, you can work towards one month of essential costs and consider whether your income stability and household responsibilities call for more.
Expect the irregular bills
Some costs come around less often than monthly bills: insurance renewals, car services, school expenses and planned repairs. Set money aside for these separately where you can. If they add up to R12,000 a year, saving R1,000 a month helps cover them without using your emergency reserve.
Check how quickly you can access the money
You may need emergency savings at short notice. Check withdrawal times, access restrictions, penalties and any applicable deposit protection before choosing where to keep the money. A higher expected return may come with risks or delays. This guide does not recommend a particular product.
Make room for saving in your budget
In our Payday Compass, put your essential commitments in one field and your intended savings in another. That gives you a quick picture of what's left for day-to-day spending. If the result is negative, review your income and planned spending before committing to that savings amount.
Review your target when your housing costs, dependants, insurance or employment change. The amount you need may change with them.
Try the numbers yourself: Start with your rand amount or see how we calculate. These examples use assumed rates. Check the prices and terms that apply to you.