Saving Money – Mid-term

Everyone needs to have access to a supply of money for unexpected emergencies.  This is your short-term savings plan.  But, what about planning for specific financial needs?

A mid-term savings strategy can help you get through other events that can crowd you for money.

Temporary Income Replacement. Through our employers, most have a health plan.  But, these plans have deductibles.  And, whether you are on an HMO, a PPO or a health savings plan, you need money to fill in the gaps if you have an issue that interrupts your primary income flow.  Even if you have a short-term and long-term disability policy, most do not offer a 100% option.

A good rule of thumb is to have three to six months of income put away into an appropriate account.  A money market account would be good for this purpose.  Or, you can choose a standard savings account.  But it would be wise to go with an account that has a higher interest rate, but does not hit you will fees if you have to take out money in the event of an emergency.

Pay Cash. Every now and again we need to by cars.  Ours break down and fall apart.  It would be great to walk into a showroom and pay cash for a vehicle.  Depending on how much you have, you can do this.  Even a large downpayment would help you avoid high payments and possibly owing more on the vehicle than it is worth down the road.

Our houses need work sometimes.  A roof, carpeting, siding, windows and doors, bathroom remodeling all could benefit from this fund.  If your house needs it, this would be the savings account for you to use.  Again, the goal would be to pay cash, but if not, pay a significant portion with this money.

Save Up, Build Up. You begin this process by making sure you have your small bills like credit cards paid off.  Then, use that money to begin throwing into this account.  You will see it grow faster than you realize.  Along with the interest, you will have a significant amount.  If you have to use the money, be sure to jump right back into throwing money into the account in order to build it back up for future use.

Make it a priority to start this type of account soon.  You will be glad you did!