You’re probably familiar with the idea of long-term savings goals—saving money for retirement or buying a house, for example. But it’s important to put money away for more immediate expenses and your short-term financial goals too.

Jargon Hack

What is short-term savings?

Short-Term Savings

Money set aside for upcoming expenses, such as vacations or holiday gifts, that you keep in an easily accessible account.

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Strategies

  • Whether you follow the 50-30-20 method, the envelope method, or some other way to allocate your monthly cash, dedicate some portion of your budget to short-term savings.
  • Get clear on your short-term savings goals. One goal could be to create an emergency fund. That should cover three to six months of living expenses in order to cover sudden costs like a car repair, medical expense, or layoff.  Short-term savings goals might also include saving money for vacations, dinners out, new clothing, or entertainment.
  • Automate your savings. As soon as you get paid, have money automatically deducted and placed into a dedicated savings account. For many people, if they can’t see the money, they won’t spend it.
  • Save what you can. Even if you’re putting away just a few dollars each month, it will help you develop short-term savings.
  • Keep short-term savings in an easily accessible account, like a savings or checking account, where you can take it out with no financial penalties or fees once you’ve reached your goal.

Note: Psychologically it might be easier to meet a short-term savings goal, because it involves a smaller amount of money than the cost of a long-term savings goal.

Example:

If you put away $20 a week, at the end of one year you will have $1,040.1

Jargon Hack

What is long-term savings?

Long-Term Savings

Savings you let sit in an investment or high-yield savings account for years, often for bigger goals such as retirement, or buying a house.

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Jargon Hack

What is discretionary income?

Discretionary Income

Money left over after you’ve paid your monthly essentials, such as rent or mortgage, student loans, and utilities.

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Make saving and investing a habit.

Go automatic with Auto-Stash.

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Make saving and investing a habit.

Go automatic with Auto-Stash.

Start now

Make saving and investing a habit.

Go automatic with Auto-Stash.

Start now