Short Term vs Long Term Savings

Other than your emergency fund, you should also set aside short-term and long-term savings. Money in your short-term savings is meant primarily for financial goals in the near future. This consists of things you want to do for fun that require spending a large sum of money. For instance, if you have a concert in 6 months and you would like to buy concert tickets for 600 dollars, you should save 100 dollars a month into this short-term savings account. Your short-term savings ensure that you can be financially responsible while also doing things you enjoy and splurging from time to time. There is a common misconception that having savings takes away from your wants, but instead, it does the opposite; it allows you to prioritize your wants.  

Your long-term savings, on the other hand, are the backbone of a successful financial future. This is the money that you hold for any future investments. It is very important to deposit money, preferably 10% of your income, into this account every month BEFORE you buy any of your wants. This may seem daunting, but the more you save, the easier it gets and the sooner you can achieve financial independence. Over time, you should be increasing the amount of money you allocate to this account. One helpful strategy is to set up an automatic transfer from your checking account to your long-term savings after your bills are paid but before any everyday spending occurs.