Welcome to today’s assignment. Today, you’ll start by identifying approximately how much cushion you’d like to build. Then, you’ll figure out how you’d like to boost your savings: either by increasing income, cutting back on spending, or both. Finally, you’ll get practical by spending time figuring out the logistics of your plan.
What exactly is a cushion?
You can think of your cushion as a cash buffer that you can draw from to pay bills or to Fill your Envelopes to full. When you have a cushion, you’re able to do those kinds of things before your new income arrives, rather than having to wait until after you get paid.
What that means is that this buffer isn’t stagnant. It goes up and down throughout the month. When you Fill your Envelopes in Goodbudget, your buffer goes down (and might even go to zero), but then it goes back up when you replenish it with money from your paychecks.
It’s the security you need that enables you to buy groceries or pay your rent even if your current paycheck arrives late or your gas bill is high this month.
Now that you know what a cushion is, you can start to figure out how much you’d like to build.
Step 1: Figure out how much cushion you’ll need
There’s a lot of debate by financial experts about how much the average person needs as a cash buffer (i.e. cushion). But a general rule of thumb says you should create a cushion equal to $3,000, or about one month’s worth of expenses.
Now, you might be thinking, “Whoa, that’s a lot.” And it is! But $3,000 makes sense for the average American making about $56,000 a year (the median US income). This is because a cushion of $3,000 is about equal to one month of take home pay, or one month’s worth of expenses.
But that $3,000 number is just an average suggestion; the exact cushion you’ll seek to build will depend on your situation, your goals, and what you’re comfortable with. What’s important here is to get started building a reasonable cushion to help you break the paycheck to paycheck cycle ASAP — don’t get hung up on exact numbers.
Using one month of expenses as a starting point, here are some things to consider to help you get an estimate of a cushion you can work towards:
Increase your cushion from one month’s worth of expenses if:
- Your expenses fluctuate significantly from month to month
- Your income fluctuates significantly from month to month
- You expect your expenses will increase in the near future (from buying a house, getting married, having kids, etc)
Decrease your cushion from one month’s worth of expenses if:
- Your income is fairly stable and consistent
- Your expenses are fairly predictable
At the end of the day, this estimate is just a starting point. Once you’ve grown your cushion and have lived with it for a while, you’ll have a better feel for whether or not it’s actually going to work for you in the long run. At that point, you’ll be able to make an even better estimate of how much cushion you’d like to have, and can adjust it accordingly.
Step 2: Find your strategy for boosting savings
This is where things get fun! This step is all about helping you find your strategy for how you’ll boost your savings to build your cushion.
Below, you’ll find a list of ideas for boosting savings. You can choose one that you like, or do a mix of them! And if none of these make sense for your situation, no worries! This isn’t meant to be an exhaustive list, and it might mean you’ll just have to spend a little extra time coming up with one or more options that do work. The goal is to find a strategy that you think you could live with for a period of time while you’re building your cushion.
Potential strategies:
- Sell valuables you no longer need: We all have things lying around the house that we don’t need. We might even have some large appliances that need to be sold. Websites like Craigslist or Facebook Marketplace are great for this.
- Take on more hours at your existing job: If your current job could use more of your time, this could be a great option.
- Cut back on your current spending: This is great for folks that have a few luxuries or other things that they could do without for a bit. For example, try making your morning coffee at home rather than buying out, or temporarily cut a few streaming service subscriptions.
- Pick up a gig, like as a delivery driver: Services like DoorDash and Instacart are thriving in many areas. Plus, schedules can be adapted to fit your current situation.
- Freelance your existing talents or skills: Have a desirable skill? Use an app like Fiverr to find people who will pay you for your skills.
- Rent out an asset, like a bedroom or vehicle: Got an empty spare room? Renting that out a few nights a week on Airbnb could bring in some extra cash.
Step 3: Get practical
Once you’ve identified how you plan to boost your savings, now’s the time to get practical about how you’ll make that plan fit in your life for the next 30 days.
Here are some tips to get you started.
Freelancing or selling valuables? Consider your rate
If you’re freelancing or helping with yard work, then you’ll be able to set your rate for your clients. Your rate can inform how much time you’ll need to spend doing these things.
If you’ve freelanced a particular skill before, then you might have an idea of what your new rate might be. If not, try researching locals who are in the same field to see what their rates are. Be sure to adjust your rate so that it matches your experience level.
The same is true if you’re planning on selling some valuables around your house. Find comparable items nearby and see how much they’re selling for. Consider the condition of your items and how old they are.
Consider your schedule
To some extent, your rate will help you choose your schedule. Generally speaking, the more you charge, the fewer hours you’ll need to dedicate to your gig (or other strategy you’re using to boost savings). Conversely, the less you charge, the more hours you’ll spend. But you’ll also have to set time aside to actually find clients before you can start charging, so putting time on the calendar now will help you stay accountable to those goals.
If you’re opting to pick up extra hours at your existing job, then you might not have a say in when you’ll work those hours or what the rate will be. But if you’re selling things on the side, or picking up a gig with a popular delivery app (like Doordash), then you’ll probably have some flexibility in choosing your hours. In that case, put that time on the calendar now.
If you’re cutting back on spending…
You might need a budget to help you track your spending, if you don’t have one already. We’ll cover how to make a budget in more detail in the next assignment, but you can get started now!
Try making a budget based on your previous spending, and then adjust as needed to make sure that your expenses are less than your income.
If you’ve already been tracking your budget and spending, try looking at your past spending to see if there are areas you can cut back on.
Step 4: Set your 30-day cushion goal
Remember when we said you’d make a goal for where you’d like your cushion to be at the end of this course? Now’s when you’ll actually do it.
Think of how you’ve decided to boost your savings, and think about how much work you can put towards that in these 30 days. If you’ve got a lot of extra time on your hands, and you feel really motivated to build a cushion quickly, then maybe aim to have one week’s worth of expenses saved up in 30 days.
If you’d like to be a little more conservative, maybe shoot for saving about a week’s worth of your grocery budget in 30 days.
Whatever works for you is awesome! Just make sure that it’s doable in 30 days. By having a goal you can actually achieve, you’ll feel even more motivated to keep going to build your full cushion after these 30 days are over.
Step 5: Decide when you’d like to have your cushion built
Considering everything you’ve learned so far, you can now decide when you’d like to have your entire cushion built. And that’s the goal you’ll be aiming for after this budget challenge ends.
To help get you going, think about how much you’ll save each month with your strategy. Then, think about how many hours you’ll realistically be able to spend on working more, how many valuables you have to sell, or what you’ll stop buying for the foreseeable future. The answers to those questions will help inform when you’ll be able to have that cushion built.
Or, you could work backwards and think of when you’d like to have your cushion built, then figure out how many hours or months you’ll need to spend in order to reach that goal. You can then adjust from there if the timeline doesn’t seem practical.
Once you’ve got your target due date, mark your calendar so you don’t forget!
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That’s it for today! Now that you have your savings strategy in place and you know when you’re going to work on it, now’s the time to get started and actually do it! It’s definitely going to be tough, but remember your goal and why it’s important to you to stop living paycheck to paycheck. Putting in the work now means that you’ll have a little more peace of mind later on.
See you in the next assignment, where you’ll learn how to track your savings cushion in Goodbudget.
Homework
Leave a comment and let us know:
- Which savings boosting strategy are you going to use?
- What’s your 30-day savings goal? And your total cushion goal?
102 thoughts on “Boost Your Savings to Create Your Cushion”
cushion $3000, spend less on groceries by meal planning and cut down on eating out and impulse spending. 30 day goal is 300 (10% of my wage)
I am going to try a mix of strategies to help me both earn more and spend less. My 30 day goal is . $150 and my total cushion goal is 1,600.00.
Cut out cable tv, meal planning, wait 48 hours before purchasing anything, eating home move often.
Saving strategy: I plan to sell some things we don’t use anymore, work a side gig project, and find items in the budget that can be cancelled or not needed.
Saving Goal: $3000
My Saving boosting strategy is a $50 spending Budget a week that said my cushion goal is $500 First month , then $1500 is my goal
I’m going to work a second job. My 30 day goal is $200/ and total goal is $2400
My savings goal is nebulous because my health is not as good as it could be. I’m awaiting shoulder replacement so side hustle is out. I’m in so much pain that I barely function for my job right now.
When I get a grip on the budget and get from underwater to afloat, I’ll begin to build the cushion by setting aside some each month and see about selling unused items such as extra vacuums, microwaves, and camping gear.
I am sorry; I just realized that I have been posting all wrong. I will use a mix of strategies to help create cushion. My 30 day goal is 160.00
My cushion goal is 1 months expenses $6000. Working 2 jobs.
With aggressive debt paydown I can only save #300/mo=20 mo so Feb 2025. If I double that somehow with my sidegig it will be Apr 2024.
Cut spending. Overall goal is $1,500, $250/mo.
20% of wage and les impuls buying
1.) I am going to try to pick up more hours at my jobs, sell valuables I do not need and possibly try being a delivery driver for Door Dash
2.) My First Goal is $1,092 which for the start of this challenge would be $91 per month to have it saved up by this time next year
I have canceled most subscriptions. I will not order anymore door dash or fast food. I will stop the energy drinks everyday. I’m also going to start preparing for a garage sale. My cushion goal is 3000
My goal is to pay off travel trailer which is 400 a month. It will be paid off the first of October. That 400 dollars will be added to savings. The next 30 days I will adjust my budget, like reduce groceries and my future goal is to save 10,000 in emergency. My current goal is 250 this month
My husband and I are retired and on a fixed income. Due to health issues neither of us can work. I know I have items I can sell
But my husband is a pack rack. We will have a garage sale within a few months and hoping to clear out items
We’re cutting back on streaming services, fast food, and visits to the coffee stand.
Due to upcoming medical expenses, the first 30 day goal will be $25. Starting October 2023, the monthly goal will increase to 50. We’ll have to reevaluate when I begin receiving disability pay & when they (hopefully) get this new job!
Long-term goal will be 3500.
I’m going to go through all of my subscriptions and cancel what I don’t need. I’m also going to cut back on impulse spending by planning meals 7 days in advance. Also freelancing bartending in my spare time. Cushion goal is 3500$, this month I’d like 350$ which is roughly 10% of my income.
Cut down expenses. And eliminate impulse buying. My cushion goal is $1500
My 30 day goal is 1500
I’m a LPN . I’ll pick up through clipboard Health and use that money for my cushion
I’m going to try to cut back on my spending. What groceries do I actually need, clothing, ect.
And I am shooting for the 3k cushion.
I’m going to cut back on groceries, my yummy morning coffee and walk to work not drive, so cutting back on fuel
Forgot to add, 30 day goal is $300. Cushion is $4000 hopefully this won’t take too long with the cutbacks im making
My goal is 2500.00 but I’m going to start with 150.00 for November
Use extra money from mileage on my checks to go towards savings and debt paydown. Cut down on impulse spending and ordering out!
Goal: $1000 for November… more if possible.
The saving boosting strategy I am going to use is working extra hours at my current jobs, cur back on certain spending and do some freelance work. I want to use the next 30 days to get in the habit of saving for a cushion, so any money I save is a success, but I would like up to $500 and my cushion goal is $4000.
30 day goal is $1000. Cushion goal is $7000 by July 2024. Plan to sell items, reduce spending, and earning extra money.
Cushion goal is 2000. 30 day goal is $100. I will cut back on groceries and impulse spending. I’m currently working with a debt relief company so most of my money is going to them right now.
Cushion Goal is $10,000 by December 2024. So that’s $900 to save starting this month, January. Can cut back on spending, particularly travel.
I have set my realistic cushion goal at $300 a month. I plan on doing this by cutting back on my spending and saving $75 a week.
My total cushion goal is set at $3000. And my cushion goal is $300 a month. I plan on doing this by cutting back on my spending and saving $75 a week.
Cushion goal $9,000 by September 2024. Saving $250 per week. I will be cutting expenses, specially groceries shopping and impulse expending.
Every month i try to save money, i reduced a lot of spens, of course i could reduce more. I can not work more hours. My big issue is the debt to my parents and the ongoing bills from lawyer (due to a divorce). So i am saving money but from time to time comes an unexpected bill from the lawyer and my saved money is gone, or i have to grow up the debt to my parents.
Which savings boosting strategy are you going to use? I plan to cut down on spending and overall cost
What’s your 30-day savings goal? 500 And your total cushion goal? 2000
I’m going to cut back on entertainment. My 30 day savings goal is $200. My total cushion goal is $3,000.
$3,000 cushion goal
Cut down on spending (groceries and eating out) sell baked goods. Goal $100 week
I want to reach 3K € on the BackUP Account. I cleaning up my Subscriptions and helping much less out my “Friends” in Financial needs. The Saving Goal for the next 30 Days: 500 €.
I have a small goal of $42 a month and 500 for a year. Hoping to add to my income and cut my expenses.
My cushion goal is 3000. I want to have this saved by June 2025, 12 months from now. I will save 250$ per month. I’ll do this by automatically transferring 250$ per month to my savings account. I’ll create room for 250$ by selling things around the house, cutting back on monthly technology expenses, eating in and taking coffee to work.
I noticed I do a lot of impulse buying, so I plan to cut that out.
I have part time jobs during the summer, so will ask for and work extra hours. My 30-day goal is $150 and total cushion is $2000.
My income isn’t stable.
Sell things that I no longer use/need
Buy only essentials – no impulse buying
Get a cheaper home internet plan
Cut out tv subscriptions
Sell things, review subscriptions. consider side freelance. aim to have 1000 by December.
I will be downsizing and cutting my spending. Wait 24 hours before making a purchase. I want to save $150.00 a month. I can do that by not buying for pleasure but rather buy for needs.
My cushion goal is $3000. My 30 day goal is $150. I will cut down on spending by limiting eating out and making more meals at home.
My cushion goal is $1,000. My 30 day goal is $150 but hope to increase it. I will cut out Instacart grocery shopping, cancel subscriptions I don’t need, cut back on handyman expenses.
Strategy is cut off some of spendings, and getting additional job.
The goal for 1 month $1000 cushion
Step one is to cut back on coffee and soda. Maybe buy a 6-pack of soda at Walmart rather than the vending machines. I only get paid bi-weekly so it’s going to take more than a month to build. I’m hoping maybe $500 within 6 months and $3500 as my overall goal. It will take time to get there. I am also looking for part-time work proofreading/editing. I signed up for Fiverr and hopefully will get going there.
I plan to cut back on impulse spending. My 1 month savings goal is $300. My total cushion goal is $5000 as a minimum. I really want to create healthy spending habits and work towards financial freedom.
I need about ksh 300000,( about $ 2500) for a cushion. I want to reduce spending, so i save money from my income and inerest payments.
I need about 2.5K. I need to sell stuff, consider an extra income stream and reduce spending by monitoring my spending better.
I’ve always sold unwanted items for extra cash. Now I’ve signed up as a delivery driver.
My savings goal is to save $1K. I currently have $5K in my cushion and my goal is to save $10K to feel more secure.
Save $1000. Eat more at home
I Will Be taking freelance writing jobs as well as cut our expenses. My total cushion should be around 4000-5000$.