What are you saving up for? Most college graduates have heard that they need to sock away 3 months or so of expenses in an emergency fund, but is that all you need? If you’re like most people, having that isn’t enough. Depending on the time frame, how and where you save can be a big advantage or disadvantage.

We have our money in different accounts to take advantage of interest rates and have ease of access when we need it. I’ll share a few of our goals and how we’re saving for them.

Short Term Savings (1 year or less)

The main purpose for these savings is to provide money as soon as possible should something come up. We keep a portion at a brick and mortar bank for same day access and the rest is at ING Direct where it’s earning a higher interest rate, but still accessible in a day or two through transfers.

Right now these saving goals include:

  • Emergency Fund: We have six months of expenses covered in this account. We orginally had 3 months, but when our baby girl arrived las year we built it up a bit more.
  • Vacation Fund: We try to plan out trip a few months ahead, so we build this up little by little so we can buy airline tickets and make hotel reservations when they’re on sale.
  • Car Fund: We’re planning on buying a family vehicle this year so we have this in a high interest savings account for when we’re ready to buy. Once we make this purchase we’ll occasionally contribute this fund for when its time to replace my husband’s car.
If you’re looking to get started, find an FDIC bank or CUNA credit union in your neighborhood that offer high interest rates for savings and watch it grow faster. Don’t get hung up on the interest rate – for short term savings you want to make sure it’s accessible. If you lose a few dollars on interest it’s not a big deal.

Medium Term Savings (2-4 years)

Right now our mid term savings goal is having a freedom fund ready to go. Our goal is for both of us to have location independent (and possibly mobile) jobs. My husband enjoys what he does, but he’d still like having the option of working from home if possible.

For this goal we utilize the higher interest rates online. We don’t need the money immediately.

Long Term Savings (5+ years)

For our long term goals we’d like to retire early and that means making our savings become capital. We’re not looking at interest rates now; we’re looking at investment returns. We don’t plan on using this money for a while so investments that offer a bigger potential or returns (including dividend investing) are the focus.

If you’re looking for more ideas on early retirement you may want to check out Your Life or Your Money. It’s a fantastic resource on finances, particularly building up capital. You may also want to check out some of the following posts:

Thoughts on Savings and Goals

I’d really like your feedback on what to save up for. What are planning for in the next 5-10 years? What savings do you already have? What do you plan on starting?