Short Term Savings Accounts

A short term savings account can really be any account you want it to be, because one of the best things about savings accounts is they are flexible. You can deposit as little or as much money as you like, as often as you like, and earn a high interest rate every day of the month until your return is paid and you see your savings increase…to begin earning more interest the following month.

Reasons to open a short term savings account include:

• You want to save up for a holiday and you want to make sure you have enough money to go somewhere special, with spending money and a little extra for nice meals and souvenirs.
• You’ve been asked to be a bridesmaid and you want to make sure you can buy your own dress for your friend’s modern wedding, as well as throw her a great hen’s night!
• You’re planning a puppy as your child’s birthday present and you want to teach them about all the responsibilities which come with owning a pet and so you open a short term savings account so you and they can contribute to the ‚ÄòPuppy Fund’ for shots, leads, toys, food and treats.
• If you have any sort of savings goal in mind, an online high interest savings account will often let you name the account so you can really visualise your dreams, so what would your account be called?

How to Choose the Best Short Term Savings Account

While you can use any savings account for long term or short term savings goals, the needs of your short term savings are quite different to those of someone with longer term goals. Therefore, how do you know which features you need in a short term savings account, and which you can do without?

The best short term savings account:

• Has a high interest rate right now. A short term savings goal like a bridesmaid dress or a puppy will not take you long to save up for, especially when you set up regular transfers to your savings account. Therefore you will be able to take advantage of those promotional rates the banks offer for just a few months, which are sometimes almost 2% higher than the standard rates, by the time the promotional rate expires you will be well on your way to your savings goal, if you’re not there already.
• Is flexible. It is important your savings account is flexible because you are saving for something in the near future, not setting up a long term financial plan and so your contributions may not always be consistent and you don’t want to be penalised for making extra contributions in one month and none in the next. It is also important your savings account is flexible because it will let you leave when you choose too, this means even if you haven’t reached your short term savings goal before the promotional high interest rate ends, you can switch your savings to another promotional rate with another bank without penalty.
• Clearly shows you your savings path and target. Opening a short term savings account you have a very specific goal in mind and therefore a very specific deadline for your funds to have reached their goal. Therefore, you need to be able to clearly see where your savings are now and how far they have to go to get to your target, many online savings accounts will ask you to nominate a savings target when you open the account and they then track your progress to your goal, others will chart your progress on a graph offering you a projected outcome, and showing you how much you need to contribute in the time remaining to meet your savings goal.
• Will reward you along the way. We all like something for nothing and when you have worked hard to reach your goal you want to feel like you’ve achieved more than a holiday or a new dress. This is why many online savings accounts will reward you for your savings habits along the way, and will give you bonus interest if you make a certain number of deposits in a month, or if you deposit a certain amount each month. Others will offer you retail rewards when you reach your savings target.

How to Reach Your Short Term Savings Goal

It is all very well to have the right tools to allow you to save for a short term financial goal, but you also need to know the best way to use those tools too.

Advice on short term savings:

• Be clear about your goals and honest about how much you need to save. If you are saving for your role as bridesmaid, don’t just set yourself the target of the cost of a dress, just because you think that is all you’re going to be able to save. Add up everything you want to be able to do when the big day comes around and this may include shoes, jewellery, hair, nails, tanning…and of course the hen’s party. There is nothing wrong with having a big short term savings target because once you know the goal, you can work out how to get there.
• Work out how to get there. Now you have your entire savings goal, work out how far away the deadline is, this will allow you to see how much money you will have to put away each week to reach the target. So you can see how a high interest savings account can help, use an online calculator to show you how much interest you will earn on your initial savings investment, at the interest rates offered, and with the contributions you feel comfortable making. Now you have a savings plan, you can stick to it.
• Stick to your savings plan. There is no point in having a savings goal if you’re not willing to work for it, yes a high interest savings account will offer you better returns than the piggy bank under your bed, but you still have to be disciplined. Still not convinced you can do it? Then enforce the savings and set up a direct transfer from your everyday account on pay day so you don’t even notice the money is gone, and you’ll be able to meet your savings goal without any effort.

You can find out more about the savings accounts which would suit your short term goals, or compare the interest rates and features of high interest savings accounts, and then sign up online so you can start saving right away.