5 Circumstances When You Should Save for the Short Term

Save for Short Term

If you have trouble saving money, it is possible that you view saving as a humdrum duty instead of something you could actually enjoy.  I have a hunch that you aren’t alone.  Many of us, as we were growing up, lumped saving money with washing behind our ears, cleaning our bedrooms and doing our homework.  Admirable habits, but hardly inspirational.

But here is the thing: If you will clearly identify your goals, saving money can become a joy instead of a burden.  In this post, I would like to identify five great reasons to save for the short term.

1. To buy something.

Whether you want to buy a new winter coat, next year’s vacation or a car, you should clearly define what you are saving for and how much you need to save.  When you purchase the item (debt free, I might add), you will feel very gratified.  Fun?  You bet!

Jan and I maintain a savings account for our next car and we store cash in an envelope each month for next year’s vacation.  We love the satisfaction of knowing that the money will be there when we need it.

2. For an emergency fund.

If you struggle with the discipline required to save regularly, you should have a designated amount automatically deposited into your emergency fund account every time you get paid.  Eventually your emergency fund will take on a life of its own, growing consistently with no effort on your part.  Sound fun?  It is!

3. For a hill and valley fund.

A hill and valley account, intended for those who have irregular incomes, is a way to save every extra penny in the good months in order to carry you through the lean months.  Depending on how much your income fluctuates, you should save enough to last through several (two to six) of those lean months.

If you have lots of good months and the account continues to grow (what a nice dilemma!), you should consider earmarking some of those savings for another purpose, such as your next car. Why?  To prevent impulse spending from your hill and valley fund.

4. For taxes and insurance.

Because most mortgage holders require the borrower to pay their property taxes and homeowner’s insurance into an escrow account, there is a good chance you are already saving for these items.  However, if you are self employed, you need to be setting aside a percentage of your earnings (25% is a good rule of thumb) to make your quarterly income tax payments.  In addition, if you have employees, you should be saving for unemployment compensation payments, workman’s compensation insurance payments and the employer share of social security payments.

True confession:  I admit that saving for taxes and insurance isn’t all that enjoyable, but it sure beats the alternative: having the IRS on your tail!

5. For blessing others.

This is my favorite short term savings category.  My wife and I keep it simple: We place cash in an envelope every month to be used for spontaneously blessing others.  This envelope may grow for several months before we find a use for it, but there are times when we deplete it nearly as soon as we save it.  Either way, we love having cash ready, available and earmarked for spontaneous giving.

Everyone needs to have some short term savings.  If you define that savings, put it in a designated account, and set clear goals for accomplishing it, you will not only achieve those goals, but will enjoy the process.

How good are you at saving money?  Does the thought of saving money depress you or does it excite you?  What would make you a better saver?  Leave a comment!

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  1. Julie

    When my husband was self-employed and we started saving using the Envelope system I assure you it WAS fun when tax time came around and we could pay in full and on time. In the past it was very stressful so we could appreciate the difference.

    • Joe Plemon

      I am glad to hear that the Envelope system helped you and your husband when he was self employed. As you can tell, I am a huge fan of using envelopes. Just curious: Do you still use them as a way of managing your spending for items (such as groceries and eating out) which are difficult to track?

    • Joolie

      To be honest, once we got out of debt we stopped being as vigilant about day-to-day expenses, but I still use envelopes (in the form of Savings Accounts) for bigger ticket items like tithing (which we submit online every $500), car repairs, emergency fund, vacation, savings, etc. I keep our spending money in his & hers chequing accounts and try to leave us only the minimum we’ll need until the next pay day.

    • Marie at FamilyMoneyValues

      Just a question…. you submit your tithe online? Your church takes online money?

    • Julie

      Yes, it’s great. They do a bank transfer straight from our Savings account. I treat it like a bill and we have become much more regular givers since we started giving this way.

    • Marilyn

      Wow, did I read that correctly? In answer to Marie’s query below you wrote on Oct/4th “They do a bank transfer straight from our savings account” … you mean your church “takes” the tithe from you? No more “bring ye all the tithes”? No more giving anonymously so that “your left hand does not know what your right hand does”? Sounds real cute-sy, hip & hi-tech, but it also sounds very Laodicean.

    • JoolieH

      To say we sound indifferent and casual about our giving shows you don’t know our hearts for God. Each time we pray for His guidance to those who distribute the tithe we are returning for His work.
      We could be like the Amish or Mennonites and live as though modern methods are somehow against His will, but we don’t believe that. When I say they “take” the money, I mean I authorize a transfer of money directly from our account to theirs, minimizing labour and transaction fees and being good stewards of that which is entrusted to us. Finally, I don’t know anyone who tithes anonymously and forfeits the tax break that allows us to give even more.

  2. Joe Plemon

    Shawn–You make my point five perfectly. My wife and I have experienced many times (someone’s house burns, a fund raiser for a cancer victim, a friend who needs gasoline money, etc.) when having that cash handy made the difference in blessing someone or not blessing them.