Russian Financial Experts Calculated ‘Safety Cushion’ Optimal Size

By conventional standards, the safety cushion should be between three and six-monthly household expenses. It is this amount that will be needed to maintain a habitual lifestyle after dismissal and while looking for a new job, Prime reports. 

The founder and CEO of the “Dengi Vpered” (“Money First”) fintech company, Pavel Guzhikov, considers it reasonable to create a financial “safety cushion” in the amount of six to nine monthly family expenses. In turn, the international financial consultant FCP Financial Management Ltd, Isaac Becker, recommends saving even more. In his opinion, the best family savings should allow surviving for 6-12 months in unforeseen circumstances.

The founder of the “Bogatstvo” (“Wealth”) consulting company, Vladimir Vereshchak, recommends creating the “cushion” in different currencies. For example, 4 months in rubles, 4 months in US dollars, and 4 months in euros. As for the place of keeping savings, Becker recommends keeping them partly at home in a safe and partly in a bank, with prompt card access.

Experts named two main strategies for safety cushion formation. The first is to save a fixed amount of money in a personal reserve fund on the day of income, until the first purchases. It is specified that the standard recommendation is to reserve at least 10 per cent of a regular income. The second strategy is to keep a regular record of income and expenses, intending to set aside a certain amount after all the planned spendings. Then you can save money not every month but according to the situation.

Ru-Main, 22.02.2021 

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