RESEARCH How Much Cash Buffer Do You Need?

Data Visualization

Most families experience high income volatility month-to-month and year-to-year. On average, families see large income swings—deviations of over 25 percent from their median monthly income—in five months of the year. To weather the adverse event of both an income dip and spending spike in the same month, an event that happens roughly every five years, how much of a cash buffer does a person with your income and age need?

Read the full report here: Weathering Volatility 2.0: A Monthly Stress Test to Guide Savings  

Families with incomes between $XXXX and $XXXX a primary account holder aged XXX to XXX, should have a minimum liquid cash buffer of XXX weeks to weather a simultaneous income dip and spending spike, which equates to $XXX.

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Chart shows: Chase Buffer Needed: $13,601. Actual Cash Buffer: $13,601. This is a difference of $1,567.

75% of families in this age and income group do not have a sufficient cash buffer.3

Numbers may not sum due to rounding.

  1. Cash buffer needed is calculated as the size of a typical simultaneous income dip and expenditure spike in terms of median dollar amount deviation from baseline income. Baseline income is calculated as a family’s median monthly take-home income that arrives in one’s checking account, meaning after taxes and payroll deductions, during the prior twelve months.
  2. Actual cash buffer, or typical cash buffer level, is calculated as the median balances across Chase checking and savings accounts.
  3. This measure estimates the proportion of households whose liquid assets held at Chase checking and savings accounts are below the cash buffer needed. For more on our data asset and sample, see the Data Asset and Methodology section of Weathering Volatility 2.0.