Who hasn’t just gone ahead and put a vacation or a new TV on a credit card?

I know I have.

But all the good intentions to pay off that credit card immediately often fall by the wayside. And you’re stuck paying high-interest fees and struggling with debt.

Rather than getting stuck in this cycle, try saving up for short-term goals. Here’s how to do it:

Know Your Purpose

Anytime you do anything with your money, whether it’s a long-term goal or a short-term goal, understand your purpose. The way you approach saving depends on your time frame, as well as what you hope to accomplish.

The way you build an emergency fund is different from the way you save for retirement. And figuring out how to pay for a great family vacation next year is a different process than both of those things. Get clear about how you want to proceed so you have an idea of the best approach to your short-term goals.

For example, I have a travel fund. It’s for short-term goals related to travel, but I don’t have a specific dollar amount. I just set aside a set amount each month and then access the fund when I’m ready for a getaway.

When I’m saving for a specific item, like when I saved up for a car down payment, I had a target and my approach was slightly different. In that case, I had an account dedicated to that, and I set aside enough to reach my goal in four months — even though it meant diverting some of my money from other goals for a short period of time.

Open a High-Yield Account

Once you know your purpose, the next step is to open a high-yield savings account. It’s true that you won’t end up with a huge rate, but it’s better than what you’re probably getting with a “regular” savings or checking account.

A good high-yield account can provide you with a way to accumulate money toward your goal a little bit faster, and it can also offer you a dedicated place for your funds.

When looking for an account for your short-term goals, keep in mind the following characteristics:

  • Liquidity
  • Accessibility
  • Fees
  • Minimums
  • APY

You want to make sure you can get your money when you need it, accessing it by transferring the money to another account or even by accessing it with a debit card.

Also, you want to watch out for minimums. Avoid accounts that have high minimums if you know you’ll just empty the account once the goal is met. I have a couple of accounts meant for general short-term goals, so there’s usually enough to meet a minimum and still let me reach my goals.

Finally, because there are so many accounts out there without fees, there’s no reason to pay a monthly maintenance fee. Stay away from accounts that cost you money and take away from your goal.

Consider an interest-bearing checking account

Your first instinct might be to get a high-yield savings account. However, that might not be the best option for you, especially if you know you’re going to need to easily access the money.

If you’re saving for a short-term goal, like a new computer, TV, or if you like your account for recurring “fun” expenses, you know you’ll need the money quickly and easily. A savings account might be harder to access. Plus, there are restrictions on the number of withdrawals you can make each month.

A high-yield checking account, like the Radius Hybrid or Aspiration high-yield checking, can be a good alternative when you think you’ll need to access the money quickly and easily. I have a checking account I use for splurges, including getting my nails done or going out for a special dinner with friends. I have a set amount transferred each week. So, when I go out, I can use a debit card to access the amount. A savings account wouldn’t make sense in this situation.

When a high-yield savings account makes sense

There is a place for a high-yield savings account for short-term goals, though. I use a savings account for my short-term emergency fund. A savings account can also be a good choice for your vacation savings or if you’re saving up for a down payment on a house or a car.

With this setup, you set money aside, and you know you won’t touch it for a few months — or even years. You let the money grow and only access it when you’re ready.

Decide How Much to Set Aside

Now it’s time to decide how much to set aside. My travel fund is an on-going short-term goal, so I just send the same amount each month. That way, it’s always building for the next time I need it.

Other short-term goals, though, come to an end. You know how much you need to save for that great vacation, and you know when you plan to go. All that’s left is to divide how much you need by how many months until your goal and set that amount each month until you reach your target.

This post is part of a sponsored blogger campaign with Radius Bank.

Tom Drake

Tom Drake

Tom Drake writes for Financial Highway and MapleMoney. Whenever he’s not working on his online endeavors, he’s either doing his “real job” as a financial analyst or spending time with his two boys.