When you're self-employed, it's important to have a financial buffer or emergency fund. This emergency fund will give you something to fall back on in case of unexpected expenses or income interruptions. But how much buffer should you have? The answer depends on how lumpy or volatile your business is.

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I know, I know… ‘it depends’ is not the answer you wanted to hear.  But we’re all unique and it varies depending on your own circumstances. The amount of money you need to save for a rainy day will depend on your specific financial situation and your level of risk tolerance. Some factors to consider when deciding the size of your emergency fund are:

- your personal and business expenses

- the stability of your income

- any outstanding debts or liabilities you may have

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If you typically make the same amount of money every month you only need enough for a few weeks' worth of expenses. So if you have regular clients or you work on a retainer, or you probably don't have to set as much aside. For example, if you have a stable income from your consulting business, you can save up a few weeks worth of expenses. This will cover you in case you have a slow month, unexpected expenses, or you need to take time off for illness.

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However, with an unpredictable business, like wedding photography or Christmas ornament installation, you'll need months worth of savings to cover your costs until the next busy season. It's important to save up enough money to cover your expenses for several months. You'll be prepared in case you have an income interruption or unexpected expenses come up.

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One way to determine how much buffer you need is to look at your income and your expenses over the past year. Does it looks like a roller coaster month to month? If so, you should save up more money to cover those slow periods of income interruptions. On the other hand, does it look smooth like butter month to month? If so your income and expenses are fairly consistent each month, and you may not need as much of an emergency fund.

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Another factor to consider is your personal financial situation. If you have a lot of debt or other financial obligations, you may need to save up more money. This will help you cover those expenses in case of an emergency. For example, if you’re a parent to a human or a dog, you’re going to need to have more money in your emergency fund. But, if you have very few financial obligations, you may not need as much of a buffer.

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In general, it's a good idea to have at least several weeks all the way up to several months worth of living expenses saved up as a financial buffer. This will help you cover your expenses in case of an emergency. You can stress less when you have slow periods in your business, you get sick, or have an unexpected expense. By having a buffer, you can protect yourself from financial hardship and keep your business running smoothly.

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The amount of buffer you need depends on how unpredictable your business is and your personal financial situation. You can determine how much of a buffer you need to protect yourself and your business in a couple of simple steps. You can do this by looking at your income and expenses over the past year and considering your financial obligations. By having a financial buffer, you can weather the storms and keep your business running smoothly. Now that sounds otterly fantastic!

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