There Are Four Types of Savings. Can You Name Them All?

Saving money is not always as much fun as spending money. You should try to get as excited about saving money as you do about payday. Beginning with the end in mind will allow you to happily grow your savings and become better prepared for your future. When things like college, retirement, losing your job, or even a vacation come into play, extra money may be needed. Life is unpredictable, but your savings should be ready for any curve ball life throws at you. Being frugal and budgeting are two additional ways to help you save. Below are four ways to save, from long-term to short-term, for you to consider. One or two may fit your lifestyle better than the others.

Emergency Savings

The emergency fund is a savings account that once opened, you should not touch. It’s called emergency savings because it is just that… only for emergencies. Unexpected costs can pop up in your life, and this fund is preparation for those such as the sudden need for a car repair, home repair, or a medical emergency. Adding to this account monthly or depositing a percentage into it from your weekly or bi-weekly paycheck is helpful and easy to do.

Long-Term Savings

Your long-term fund is just as important as your emergency fund. However, this fund helps you with stability in the future. This could be for your child’s college fund, a down payment on a new home, or your retirement. For future situations like the ones previously described, you might want to consider investing your money rather than maintaining a traditional savings account.

Spending Savings

The spending fund is more for short-term saving. You may want to put money aside for a concert, hair appointment, or a gift for a friend. This fund is for events that you know are coming up, and you need to save for. After you have analyzed your monthly budget, you may find you can give yourself more room to do some additional things there are pleasurable for you. You do not have to have an account for this type of saving. Placing cash aside in an envelope would suffice.

Goal Savings

This is for a specific purchase. Whether you’re planning to take a cruise,   purchase a new car, or see a pair of expensive shoes you’d like to have, this is where you add money over time to reward yourself.