Ok, ok. Maybe not a completely stress-free life. But definitely a life with less stress. We could all use less stress in our lives, couldn’t we? I know I sure could!
By now I think it might be clear how much I enjoyed reading the book Essentialism: The Disciplined Pursuit of Less by Greg McKeown. I’ve written several posts on different themes from the book (I’ll link them at the end of this post), and today I’m coming at you with the last theme I want to relate to money: buffers.
In chapter 15 of Essentialism, McKeown writes about how essentialists (people who do more with less) use built-in buffer systems to prepare and plan for the unexpected, while nonessentialists are overly optimistic that everything will work out just fine, which leaves them scrambling and unprepared when things inevitably go wrong.
The literal definition of a buffer is something that prevents 2 things from coming into contact and harming each other. We often use the phrase “buffer zone” for literal space that acts as a buffer. For example, allowing for extra space between 2 cars on the highway to prevent collisions. Or when restrictions were beginning to be lifted as we emerged from the COVID-19 pandemic, and airlines created buffer zones by blocking off middle seats.
McKeown writes about how we can use the concept of buffers in our daily lives to curb the stress that bubbles up due to unforeseen circumstances that are bound to happen. He tries to get us all to see that the only thing we can expect in life is that the unexpected will happen. So what can we do to help ourselves out? We can prepare and plan for when things don’t go to plan.
Examples from the book include leaving more time than you think you need for questions at the end of a presentation to avoid feeling rushed, and allowing for more time to pack throughout the week leading up to a vacation to prevent the stress that can occur immediately before travel and the possibility of forgetting something.
In addition to specific examples of buffers, McKeown also discusses a few general ways we can implement buffers in our daily lives to tame stress. One of these methods is to be “ultra prepared”. This one really resonated with me. That is me to a T! For example, when I had my dream professor job, I had to teach and lecture to students every day, which was a much different daily routine than what I had been doing previously (graduate research, alone, in a lab). Since I taught anatomy, most of the teaching I did was impromptu. The students would ask questions as they came up during a dissection. I inevitably couldn’t predict all the questions they would ask, and I myself didn’t know everything (especially being in my first couple years of teaching). So instead of preparing exactly what I would say, I would prepare for the unexpected. I did my best to read over all the material for the day’s dissection and have a decent handle on what the students were supposed to be learning, but I would end up having to do a lot of “winging it”/teaching on the spot based on what the students needed. What made a difference was that I was prepared mentally for this, and I wasn’t afraid to use buffers. I would often say, “I’m not sure, let’s look this up together” as a buffer to avoid the stress of not knowing the answers to every question.
Another tip McKeown gives for implementing buffers in order to create better stress environments is to add “50% more time”. This is a strategy that Mr. Dink has effectively used to create significantly less stress in his job (he runs his own carpentry business). When he first started, he found he was always stressed about finishing jobs on time. He would estimate that a job for a client would take a certain amount of time, and then he would find himself crunched to finish everything before his next job. Over time, he learned to factor in a time buffer. He now typically adds 25% to 50% more time than he thinks a job will take. By giving himself this buffer, he increases his chances of success that he will get a job finished by the end of the timeline. It keeps him and his clients happier. (Side note: he’s also notorious for not allowing enough time to cook dinner in the evenings, so I help remind him he can use this time buffer trick in the kitchen too 😉
Naturally, after reading this chapter in Essentialism, I immediately started thinking about how we can apply buffers to our finances to achieve the same goal: lessening our stress when it comes to money.
As a relatively risk averse person, I love the concept of buffers when it comes to finances. After some reflection, I realized that I use a lot of them in my money management strategy. There are so many ways buffers can manifest in our financial lives.
Frugality as a buffer
One way we can think of a financial buffer is as the distance between our savings and our expenses.
For me, my greatest buffer in this regard is my frugality. I would venture a guess that Mrs. Frugalwoods, my favorite frugality blogger, feels this way too. Frugality helps provide a buffer between expenses and savings that makes life a little more comfortable, provides a bit more breathing room. Frugality for me means that I am always spending less than I earn (especially right now while I’m working a 9-5). The buffer is thus the large amount I’m saving every month because my expenses are low and my income is high. This helps with my stress levels because I’m not living paycheck to paycheck (which I know is a very privileged position). I’m not dependent on my job to pay for my lifestyle.
The bigger this financial buffer of savings, the more it helps with stress. Take for example Mr. Dink’s purchase of a ski pass for this past winter season. Skiing brings Mr. Dink so much happiness. He likes buying a season pass to our local ski mountain (a 15 minute drive from our house), even though it’s expensive, because the thought of already having a pass and just being able to hop up to the mountain for 1-2 hours in a day is so much more convenient than planning for a whole day trip (and having to buy an expensive day pass each time). If he buys a pass each time he goes, he feels like he has to really maximize his day to get the biggest bang for his buck, and that stresses him out. He experimented with this last winter: he didn’t buy a season pass (so he’d have to purchase day passes), and he hardly skied at all. It hindered his joy, and it stressed him out to think about going skiing.
This year, he bought a season pass. Sadly, the conditions haven’t been great in our little neck of the Vermont woods this year. He’s hardly gone skiing at all. And you know what? He hasn’t been stressed at all. Instead, I have taken on his stress. Every time I think about the money he spent, the money that he essentially “wasted”, I get all riled up (thank goodness we have separate finances!). He finally sat me down and told me that I shouldn’t be stressed, because he’s not stressed. This is what my buffer is for, he told me. It allowed him to buy the season pass guilt free and not worry about it as a wasted expense. *Mind blown*
Because of his financial buffer, the fact that he spends way less than he earns, tied with the concept that we spend on things that bring us joy, he could be confident in his purchase and not worry that he “wasted” his money. Because he didn’t. He knows he wouldn’t have gone skiing at all either if he hadn’t bought a pass. And instead, he went skiing a handful of times this year (better than nothing). He has no regrets.
Emergency funds as buffers
Since I am slightly risk averse, I like to have more than the recommended 3-6 months of living expenses in my emergency savings account. Considering that I want to downshift to part-time work in the not-so-distant future, I like having a padded emergency fund. Knowing that I have a year’s worth of living expenses should I need to get out of a toxic work situation helps my stress levels immensely.
Note: Another way to do this is to keep your cash buffer separate from your emergency fund. I think many people do this. Whatever works for you! What works for me right now is to have one account with a built-up emergency fund that I also use as my buffer. On the other hand, I could choose to have 2 separate accounts: 1 with 3 months of expenses as my emergency fund, and the other with 9 months of expenses as my buffer. The possibilities of how to keep and manage your money are endless (another thing I love about personal finance)!
Buffers in business acounts
Mr. Dink also likes to use a buffer in his business account. He’ll often need to purchase materials in advance before billing a client, and so he likes knowing he has a healthy buffer of money to use for this purpose.
In fact, he’s almost built his buffer up too much! He’s at a point now where he feels he has more than he needs for this particular buffer. Thanks to this personal finance community and my influence, he’s getting more and more used to the idea that money buys you options. He’s got some great ideas for how else he could use this excess buffer money. One of his ideas is that he could create a separate buffer with the extra money to essentially pay himself to take time off, and then go back to work when he’s ready and build the buffer back up again. It’s amazing what having options can do for the imagination!
Alternative FIRE strategies as buffers
It’s incredible to watch how the FIRE (financial independence, retire early) movement has really taken off. In it’s most simplest form, your FIRE number is 25x your annual expenses saved in investments, and the point at which you could draw ~4% from those investments every year to live on and have it sustain you throughout the rest of your life. A road block for many folks on the path to FIRE is how out of reach that number can feel to most people. Early adopters of the FIRE movement often went to extreme measures to cut expenses (frugality) and increase their income (workaholics) to reach their FIRE number as fast as possible.
As a result, alternative FIRE strategies* are becoming more popular (eg, Coast, Barista, and Flamingo FIRE, to name a few). It is my belief that these alternative strategies resonate with so many people because they are basically financial buffers that are helping us eliminate the stress that often comes with full-blown FIRE strategies, which can feel scary and unattainable to some.
For me, Flamingo FIRE (having half your FIRE number) is my alternative financial buffer of choice. I know that I could technically go down to part-time work now because I’ve already hit Coast FIRE (the point at which you have enough saved in investments that the money will grow to reach your FIRE number by traditional retirement age). But as someone who is a bit risk averse, Coast FIRE still feels a bit scary and stressful. What if the markets don’t perform the way they have historically? Plus, I don’t want to wait until traditional age (65) to retire. So for me, Flamingo FI provides that buffer to help mitigate the stress.
Similarly, since Mr. Dink and I keep our finances separate, we each have our own FIRE numbers. And because we track everything, I also know what our joint FIRE number would be. If I ever feel like only accounting for my own numbers is a bit risky or scary, I can use our joint FIRE number as a buffer.
There are what seems like infinite ways we can use buffers in our financial lives. I have listed a few we use in our household to hopefully get you thinking about the concept. While I might like Flamingo FI as my alternative FIRE buffer of choice, you may prefer Coast FI or Barista FI. Although I have almost a year of cash savings in my emergency account, you may be more comfortable with 3 or 6 months of expenses. Millennial Revolution uses cash cushions and yield shields as their buffers. Whatever your strategy, do what is best for you. Because as we know, personal finance is just that: personal!
What are some of your favorite buffers, financial or otherwise? How do you use them, and how do they help with your stress levels? I’d love to hear from you!
*If you want to hear me talk about alternative FIRE strategies on a fun happy-hour-style podcast, check this out!
Other posts on themes from the book Essentialism by Greg McKeown:
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