Why a “Cash Buffer” Isn't Just Smart, It's Sanity
Liquidity might be the most underrated form of wealth today
I’ve noticed something strange happening recently, at least from my perspective as the Chief Research Officer of a financial firm for over a decade.
After years of "YOLO spending," a lot of people are swinging the other way and hoarding cash.
They're calling it "revenge saving."
This is coming from high earners who are slamming the brakes on spending and stockpiling cash like bunker supplies.
Not because they're suddenly frugal. But because they feel exposed.
Some got burned in the bad investment, like a private placement that looked juicy but was doomed to fail (and did).
Some watched friends over-leverage and get stuck. Others realized the freedom they thought they had was an illusion, because they couldn't walk away from their current life even if they wanted to, at least not with having it all crash down if they didn’t show up.
So now they're piling up cash, and some are even proud of how much they've stopped doing. They boast in private and post on their socials that they’ve stopped traveling, stopped upgrading, even stopped enjoying the little pleasures that made the grind worthwhile.
The instinct is understandable.
But the (over) reaction can be dangerous.
Because without a clear wealth plan, what starts as protection becomes paralysis.
And saving from fear (instead of strategy) almost always backfires.
But before we go any further, let me be clear...
Having liquidity isn't the problem.
Not having it is.
But, as I’ll show, there’s also a hidden trap that most people are unaware of when building liquidity.
The Million-Dollar Trap
I've worked with seven-figure earners who couldn't sleep at night.
I’ve witnessed business owners with booming revenue living paycheck to paycheck.
I’ve watched high-earners trapped in lifestyles they didn't want anymore, but couldn't afford to leave.
In almost every case, they weren't short on income, they were short on breathing room.
And that's exactly what liquidity is. Cash is oxygen for your business and your life.
Most of the time, you don't even think about it. It's just there, keeping everything running smoothly.
But the moment it's not there?
You start to panic. Your chest tightens. Every decision becomes about survival instead of strategy.
Go too long without cash (like oxygen), and your business, and maybe even your sanity, starts to die.
It reminds me of Serena, a hard working woman who owns a consulting firm that brings in $2 million annually. On paper, she's crushing it. But in her own words, she's dying inside.
All her money is "working." It’s locked up in real estate, tied up in long-term (private memorandum) investments, parked in retirement accounts with penalties and tax traps.
When a client decided to delay a project, she panicked.
When her daughter wanted to switch to a private school her best friend was attending, Serena said no, not because she can't afford it, but because she couldn’t access the money to pay for tuition.
Sarah has a million-dollar life and a hundred-dollar buffer.
That's the trap of "dry powder poverty." It’s what happens when you’re rich on paper but broke in practice.
That’s why cash margin (liquidity)is so important.
What Liquidity Actually Buys You
It's easy to think of cash as boring. It doesn't earn double-digit returns. It just sits there.
But if you've ever had true liquidity, you know what it really gives you isn't boring at all.
It gives you agency.
Think about it:
The business owner who is able to say no to a toxic client, not because she's fearless, but because she has a cushion.
Or the father who makes time for his boys on evenings and weekends, not because he's retired, but because he's got the cash flow to turn down the project that would having him working evenings and weekends.
Or the investor who doesn't chase the next shiny object because he has the flexibility and cash to wait for the right opportunity for him.
When you have liquidity, you stop asking "Can I afford this?" and start asking "Is this worth it?"
That shift is subtle. But its power is massive.
The Hidden Superpower
Here's what most people miss about liquidity...
It's not just about defense. It super-powers your offense.
When everyone else is stuck waiting, worrying, hoping, you're ready, because you're liquid.
A downturn comes? You move fast while others scramble.
An opportunity appears? You write the check while competitors are still figuring out how to free up cash.
Remember 2008?
While most (over-leveraged) investors were paralyzed, the ones with dry powder bought everything at fire-sale prices. Not because they were smarter, but because they were liquid.
Warren Buffett calls “bloodbaths” like 2008 or 2020 his favorite time to invest.
Why? Because he always keeps cash ready for when everyone else runs out.
When Saving Becomes Hoarding
But there's the flip side to being prepared. If you do it based on fear instead of strategy, it will likely backfire, because fear-based saving can quietly turn into hoarding.
After a few rough years, you start stashing money everywhere — checking, savings, brokerage accounts. Not because it's strategic, but because it feels safer.
You tell yourself you're being conservative, but in reality, you're just stuck in survival mode, mistaking piles of cash as “wealth.”
The sweet spot? You want enough liquidity to be strategic. Not so much that it becomes your strategy.
Because money sitting still doesn't build wealth.
Money that's ready, free, flexible, and waiting for the right opportunity — that’s what gives you power without pressure.
The Simple Test
Here's how to know if you've got it right:
Can you handle a $50,000 surprise without selling something you don't want to sell?
Can you say no to income that doesn't fit your goals or values?
Can you sleep through market volatility without checking your portfolio?
If “yes,” you've got liquidity working for you.
If “no,” you're probably working for your money instead of the other way around.
That’s why one of the first things I focus on with my Beyond Wealth private consulting clients is liquidity.
Because if you can’t breathe, you’re life isn’t going to feel very fun.
The little question that changes everything:
Do you have enough liquidity to feel free, but not so much that it's keeping you stuck?
Your answer reveals whether you're building wealth or just building walls.
Live for more,
Tom