If you think of your financial life as a house, your savings would be the foundation on which every other thing stands upon.
Without savings, we can’t think of investing. The goal is to save to invest. You wouldn’t want to invest your money in long-term commitments and not have accessible cash to fall back on in the case of an emergency.
Additionally, you need to know what to save for and when. What type of savings account should you have? How can you create savings goals, and where should you save to grow your money with realistic and highly competitive returns?
If you asked all these questions, then you are in the right place. This guide will highlight the five types of savings you should consider having in 2024, providing you with the knowledge to secure your financial future.
TABLE OF CONTENTS
- Emergency Funds
- FU Funds
- Sinking Funds
- Opportunity Funds
- Retirement Savings
- Emergency Funds
“By failing to prepare, you are preparing to fail.” – Benjamin Franklin
This is the most important fund that you need to save for in 2024. An Emergency Fund is money set aside for cases of emergency, such as a sudden loss of a job, illness or car or home repairs. The rule of thumb is to save at least 6–8 months of your living expenses. If you didn’t have a steady income coming in, how much would you need to survive daily and monthly? Put this into consideration when planning your emergency fund budget.
Creating an Emergency Savings Fund starts with understanding your monthly expenses and calculating how much you need to cover them for several months. Automating your savings by setting up automatic transfers from your bank account to your Emergency Savings Plan on HerVest can help you stay consistent in your savings efforts. By doing so, you’ll have peace of mind knowing that you have a financial safety net to rely on when life throws unexpected challenges your way.
2. FU Funds
“Money Stops Nonsense!”– Anonymous
An FU fund is a saving that allows you to walk away from any toxic situation that doesn’t serve you without considering the financial cost.
If a work environment or relationship becomes so toxic, your FU money gives you the opportunity to keep your sanity and walk away because you can financially meet your needs over a time period. You’re not bothered about the financial consequences because you have it under control. Apart from leaving toxic situations, your FU fund allows you to explore alternatives such as a new career, going back to school, travelling, and spending time with family.
Saving for your FU fund is not any different from other types of saving. The difference is the intention behind saving- in this case, “Your why?”
3. Sinking Funds
“Have a plan for your money. When you buy without a plan, you let emotions dictate your spending”– Dave Ramsey.
A sinking fund is money you set aside for short-term projects or specific upcoming expenses like a friend’s wedding, birthday, social events or a new school bag for your child. Unlike emergency funds, a sinking fund has a clear purpose attached to it. Think of it as money you need for things that aren’t regular bills. Read more on Sinking Funds HERE.
4. Opportunity Funds
Success is when financial preparation meets opportunities.
An opportunity fund allows you to save for opportunities that enrich your life, such as starting a business, Japa funds, a dream vacation, a down payment on a home or some other opportunity that will improve your life. An opportunity fund prepares you to seize the lucky moments that come your way. You don’t want to be stranded or stuck when an opportunity arises. So, create an Opportunity Fund today.
5. Retirement savings
“The future depends on what you do today.” – Mahatma Gandhi.
Though retirement may seem far off, saving for it as early as possible will ensure you have enough money when you are no longer actively working. Our active days are finite and planning towards retirement can help us settle comfortably and live a life we deserve and desire. Additionally, saving for the long term allows you to accumulate compounded interest. In other words, today’s interest will generate greater interest tomorrow. Research has shown that women often live longer than men. This means we need to plan early so we are not dependent on anyone in the later stages of our lives.
Whatever your goals are, save towards them with HerVest. With up to 14% interest rate PA, your savings are on the pathway to success. Download the HerVest app today and start saving towards your life goals.
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