Create a “Fun” Fund
In some cases, you might want to save up for an undefined short-term goal. Perhaps you want to have money available for a last-minute trip with your friends, or the ready cash available to take advantage of a great deal on laptop. In these cases, you can still make short-term savings goals work on your behalf. One way to do this is to create a “fun” fund.
The “fun” fund is an emergency fund for spontaneous, non-necessary activities. Figure out how much you can set aside each month for your “fun” fund. Each month, put this money aside, while budgeting as normal for your other categories, like entertainment. This fund is different from the monthly amount you set aside for going to the movies or eating out.
Once you have this fund established, you’ll start earning interest on the money you keep in the fund. Keep building it up, separately from your other planned expenses and short-term goals. When something unexpected, but fun, comes up you can use this fund to cover the cost, rather than running up credit card bills or declining to participate.
With a little planning and a high-interest savings account, it’s possible for you to save effectively for short-term goals, avoiding debt while still enjoying life.