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What exactly do you mean when you say “savings”?
The percentage of one’s income that is not spent on current expenses is referred to as savings. In other words, it is money that is stored aside for future use rather than being spent right away.
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Long-term savings
Long and short are relative terms, but short-term savings are often funds that will be spent within six months to three years, whilst long-term savings are funds that will not be touched for longer than three years.
“I know what I want; all I have to do now is pay for it” fund
This kind of savings is done towards a goal. In his, you set a goal that is achievable and you save money towards it. Say, you want to buy a bicycle in the next five months, you look at the amount it will cost you, then you start saving in bits towards achieving the said set goal.
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Don’t touch it fund
There are some moneys you keep aside that you vow not to touch or spend no matter what happens. These funds are usually used for projects that come up unplanned. before you go in for this fund, make sure you are sure on any project you want to use this fund for.
The Emergency Fund
The word “emergency fund” refers to money set aside for use in times of financial crisis. An emergency fund is intended to promote financial stability by providing a safety net that may be used to cover unexpected expenses such as illness or substantial house repairs.
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