The idea of an automated savings buffer isn't new. History is littered with real (and mythical) people who used specific techniques to resist temptation.
The first known practitioner was the legendary Greek king of Ithaca, Odysseus, en route home from the Trojan War. As his ship neared the Sirens, he was determined to hear their enchanting song without going overboard.
Necessity being the mother of invention, he devised a clever plan:
He made a commitment while in full control and then bound himself to it, ensuring he could experience the song without surrendering to it.
"Take me and bind me to the crosspiece half way up the mast; bind me as I stand upright, with a bond so fast that I cannot possibly break away. If I beg and pray you to set me free, then bind me more tightly still."
While it might seem a strange way to decide things now, his skill at manipulating makes Homer's The Odyssey timeless and relevant today.
Let's look at a more modern example:
In a Shark Tank episode, inventors and entrepreneurs David Krippendorf and Ryan Tseng pitched their Kitchen Safe, a time-locking container.
Krippendorf said he was inspired to force self-control on himself and curb his cravings for cookies. The concept is simple: Put whatever you want in the storage container, lock the lid and you can't get at it until the timer expires.
Behavioural scientists call these techniques commitment devices.
Anytime you do something that reduces your freedoms in service of a greater goal, you use a commitment device. They are a proven way to make meaningful progress towards your savings goals.
One great strategy is setting up automatic, recurring contributions to a specific account. When you combine automated contributions with locked accounts, you're doubling down on your savings commitment.
If you're like most of us, it's easy to find something you want but don't necessarily need, which is where a splurge or 'buffer' fund can come in handy.
Having a small pool of money to spend can prevent you from going overboard.
Consider setting up a designated splurge fund if you tend to be analytical about your money and have trouble spending for pure enjoyment.
This way, there's no need to fret about wrecking your other financial goals because that money is baked into your budget.
If you work full-time and have guaranteed income, that's a bonus.
But if your work is less regular or you work casually, you might be vulnerable to gaps in cash flow. Creating a small buffer fund you gradually add to can help tide you over during lulls in work.
We like the idea of keeping a few hundred dollars in your buffer fund and using the RentPay app to auto-save a few dollars towards your rent payments.
RentPay allows you to set how much you can reasonably afford to tuck away, automatically pulling out those amounts from your bank account.
Those funds will sit in your RentPay wallet until you need them - you can even let them build up to a full rent payment.
You shouldn't feel bad about tapping into that buffer fund during an income lull. Extra points if you have a separate emergency fund for 'true' emergencies.
Your RentPay buffer is more of a fluid account that you can top off regularly.
If you don't have a little buffer fund set up, whether for fun purchases or something more concrete, like rent payments, it could slow your progress on other money goals.
Having a pool of money set aside is a great way to keep you on track with your other goals, such as stashing away $10,000 for a down payment on a car or $5,000 for your emergency fund.
No more need to feel guilty when you make a separate purchase!
Whether saving a little extra is already part of your routine or still a work in progress, RentPay can help you build a buffer.
You choose how much to set aside each funding period, for example $20 per week, and we’ll take care of the rest.
Your buffer sits in your RentPay wallet, ready when you need it. You can let it grow to cover a full rent payment if you like. When it does, RentPay will give you the option to skip a direct debit. It's that simple.
Or if you’re short one week, you can use your buffer to cover part of your rent and top up the rest.
Building a buffer with RentPay helps you avoid missed payments, keep your rental ledger in good shape and stay in control of your cash flow.
There's no way around it: you need an emergency fund. But not every unexpected expense is a true emergency.
That’s where a savings buffer comes in.
A buffer helps you stay on track and keep moving toward your financial goals without constantly dipping into your emergency fund.
Keep your emergency fund and your buffer separate so your safety net stays intact. Then use RentPay to make building your buffer easy and automatic.
You might also like:
> Smart budgeting tips for renters living solo
> How can I build an emergency fund on a tight budget?
> 10 ways to save money at Woolies or Coles
