While many people will say that it is very important to have a savings account, not all will be able to answer the question as to why. A savings account, in some ways, seems to promote some sense of financial security. But while people continue to strive to put money away, few have a clear understanding of what the money in the savings account truly represents.

One of the important parts of dealing with your finances is to set goals for yourself and your money. Stating a savings account with specific goals can help you not only reach your intended financial goals by motivating your for all of the right reasons, it will also help you manage your money better. There are several goals you can set in conjunction with your savings account and here we will discuss some of those goals.

Emergency Funds
Collecting money towards any unexpected emergencies is a great idea to prevent having to use credit cards or suffer unneeded stress to take care of the emergency. Unexpected expenses can sometimes break you financially and having an emergency fund from which to draw needed funds is important to financial stability. This money should remain untouched and gather interest until needed. This money can add up nicely over time if no such emergencies arise and will provide comfort in the event something does spring up.

Short Term Savings
If your family is planning a vacation or a major purchase, you can add money into your savings account to save for these plans. You can save for one or more goals at the same time by dividing available funds and tracking the amounts on paper if you only have one account. By proper pre-planning and consistent deposits into your savings account, no financial goal is unattainable and will prevent you from having to bring in debt worries or credit card concerns to get what you want.

Long Term Savings
Many people are saving with bigger goals. If you want a down payment for a home or a car, you can plan to save more long term in order to reach your goals. This too takes pre-planning and consistency to accomplish but having the cash outright to make your dreams a reality is a sign of financial success.

Annual Expenses
There are several expenses that families will incur on an annual basis that can really cause havoc to your budget. For instance, car insurance and homeowner’s insurance premiums can be cheaper if you pay in one lump sum. Start saving some smaller amounts each month to tackle these bills in full and benefit from the added savings. Take the amount of your bills and divide them by the 12 months of the year. This total will likely be small and much easier to put away than one large amount at a time.

Tags: long term savings, savings goals, savings plan, short term savings

This entry was posted on Saturday, March 28th, 2009 at 6:35 am and is filed under tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

• How To Control Unconcious Spending   I don't think most people intentionally sabotages their finances. It's more likely that they spend and not keep track of income and bills. I had a problem when I was in college. I was estimating what I was spending...
• Guide to Investing Money & Money Management Much of money management focuses on investing money to reach a financial goal. You can get low-cost investment management help and still be your own money manager. Here's your basic guide to investing and money management on a budget. As...
• The Tri-Level Emergency Fund This past Saturday evening I joined radio talk show host Michael Finney of KGO AM 810 San Francisco on his weekly radio show, "Consumer Talk with Michael Finney," to discuss my recent post about safe places to keep cash at...
• Weekly Roundup - Patient Lottery Winner Edition I read an interesting story over the weekend about an Australian lottery winner who decided to hang on to his ticket for six months before cashing in so he would be "psychologically ready." He also wanted his four kids to...
• Money Lessons Learned By Square Foot Gardening #1 - Create a conducive environment for growth. The most important step in gardening is to prepare a bed of fertile soil for your plants to grow. Money lesson: Similarly, investments require an environment where they can thrive. Faithfully contributing...