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June 21, 2021 5 min read


The Money Bag Newsletter by Financial Footwork


A guide to short term, long term, and retirement savings and when to use each type of account.

 Money! We all want it. But how do we get it? Building wealth is easier than the majority may realize. There are many strategies to making your money grow, and it eventually works in your highest figures/favor. At Financial Footwork, we believe building wealth starts with your budget first.

Financial Footwork Savings buckets

In this article we’ll start with the basics, by looking at three different types of savings accounts: Emergency Fund, Short-Term Savings, and\ Long-Term Savings. Each of these accounts have a purpose and you can have more than one savings account in each bucket. (This helps you organize your expenses, within your expenses.)



First up? Emergency Funds. This is a bigger category, so we’ve got a full seperate article to walk you through it step by step. For more details on Emergency Funds, take a deep dive into setting up and calculating your emergency fund with our video tutorial.




Next up? Short-term and long-term savings accounts! These are great accounts to get you on the right track to those savings buckets. But before you can dive into the purpose of your accounts, first you need goals! Goals are a key component of making your money work for you. If you are not writing and setting goals for yourself, you cannot track and gauge your progress.

For a comprehensive article on writing financial goals, check our our S.M.A.R.T. Goals article

Thinking about your goals allows you to figure out how long you need to hit them. (How big do you need to make your buckets.) What are you aiming to do? Go on a vacation? Get a new computer? Buy a house? Save for a new pair of shoes? 

No matter the dollar figure, big or small, you should be budgeting and saving for what you want to buy. Let’s jump into each savings bucket in more detail and how you can implement good habits for using them. 

 Financially Fit with Coach Hill Podcast 

Short-Term Savings Accounts

This is your bucket for items you would like to buy in the next 3-24 months. Shorter term goals typically have smaller budgets. I.e. saving $10,000 in 12 months might be unrealistic and either the goal or the amount saved might need to be approached differently.

For example: If you want to save $3,500 for a down payment on a car in the next 6-12 months or you’d like to buy a new iPhone next year for $800. These would be good short-term goals for short-term savings in your savings account bucket.

 Having multiple short-term savings accounts can be a good thing if you need to see each bucket of money and your progress for each goal. Open multiple accounts.Savings accounts at most banking institutions are free!If you are like me, you want to keep your buckets separate and track every dollar. SO JUST DO IT! Opening up a savings account is simple and can be done online with most banks. (Check your bank for details.)

As you save for each of your respective goals, transfer money into the account of your choice and watch that balance grow. Do what works for you when it comes to tracking and saving money. If one bucket of money for all your short-term savings goals works, then one account is all you need. 

If you need a bit more help tracking and watching your progress, open a new account for your goal once that goal has been reached. Set your next goal, rename that account, andkeep going. 


Financial Footwork Beginner Budgeting Guide


Long-Term Savings Accounts

This is the financial long game,and be some of your most important long-term goals that begin to grow in this bucket. We have to plant seeds to see our fruition, so start now. 

This is for saving money for things that might be two years out to fifty years out.

 Think about it as if it is your end game account.

What do you want out of your money, and how much do you need to save to get there?

For example, if you are 22 years old and want to buy a home at the time you are 30. You’d use a long term savings account and S.M.A.R.T. Goal to get you there. 

Let’s break down how we’d use this account along with our budget to save for a home purchase. 

You have 8 years to hit this goal based on your current age and when you want to buy a home.  You’ve decided you want to have $65,000 saved by the time you are ready to buy. 

$65,000 / 8 years = $8,125 / year

If the goal is to save $8,125/year, let’s break that down on our budget monthly.

$8,125 / 12 months = $677.09 /month.

We need to save $677.09/month for the next 8 years to hit our goal. 

Long-term savings goals take discipline. Use your budget, track your progress, and hold yourself accountable. With that being said, life does happen. There might be a month you cannot continue to go for the full amount, and that is okay! Keep pushing, and add a little extra’ next month.

Long-term savings accounts can also be used to save for your personal 10-30 year goals, whether that is a 3-6 month sabbatical from work, a property purchase, or buying another piece of real estate. It is all about your plans and what you do to hit those goals.

Lastly, savings can be and should be used for retirement. We all look forward to the day when we get to stop working and retire, or so that is the goal. To set yourself up for retirement, you need to save money even if it is just a little at a time every month. The more money you can save at a younger age, the longer it has to grow, and the more you can build your retirement buckets.

Savings Buckets Financial Footwork

When we refer to “saving for retirement” in a long-term savings account, we are not referring to your 401(k) or pension with your employer. You should also be using those account types! This long-term savings account should be in addition to what you’ve been saving with employer retirement plans. 

Your retirement accounts are additional funds you are setting aside for later in life. Giving yourself more than one retirement account and more than one stream of income in retirement. 

That is a breakdown of Emergency Funds, Short-Term, & Long-Term savings accounts, and how you can start saving for working through your goals. 

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