Founder finances: a savings account to split personal and company cash
Spain's financial education portal says an emergency fund usually covers three to twelve months of basic expenses. For founders with irregular pay, a separate savings account can keep it apart.
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giftdetect· the right gift in minutesAn emergency fund typically covers between three and twelve months of basic expenses, according to Finanzas para Todos, the financial education portal run by the Banco de España and the CNMV. The guide itself notes that the figure can differ for people with variable income or the self-employed, two situations common among entrepreneurs. It suggests keeping the money in a sight or savings account.
In a startup's early years, a founder's salary can be low, irregular or nonexistent. Companies track their cash closely to know how long they can last and when they need funding. The same calculation works at home: how many months of basic expenses would personal savings cover if pay stops?
Without a personal reserve, the cost only shows up in a bad month. If a funding round slips or a large client pays at 90 days, a founder has few options: cut household spending abruptly or put the rent money into the company. Personal and business risk also move together, since the founder's pay is one of the first items to be trimmed when the company needs liquidity most.
What the account should offer
Finanzas para Todos stresses that an emergency fund is not money to invest, because shares may be worth less exactly when the cash is needed. The account should offer:
- Availability: withdrawals at any time, in full or in part, without penalties. A term deposit locks the money up.
- Separation from daily spending: an account with no card or direct debits keeps the reserve within reach but out of temptation.
- Interest: a remunerated account earns interest, usually at a variable rate, while the money stays available.
- No fees: on €8,000 at a hypothetical 0.5% a year, interest is about €40 gross, which a maintenance fee could wipe out.
Deposits in current accounts, savings accounts and term deposits are guaranteed up to €100,000 per depositor and bank. For the Spanish branch of an EU bank, the home country's scheme applies; ING BANK NV, Sucursal en España, falls under the Dutch Deposit Guarantee Scheme.
How much to save
The calculation starts from expenses that cannot be deferred: housing, utilities, food, transport and loan payments. With €1,800 a month in basic costs, the range runs from €5,400 to €10,800. Where a founder lands depends on income volatility, dependants, debts and how long it would take to earn again.
The cushion can be built gradually with a fixed transfer on payday, however small. If it is used, the next goal is to replenish it. The figure should be revisited after changes such as a raise following a funding round, a new mortgage or a child.
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