5 saving fund ideas to explore

5 types of savings you should have

There’s so much energy going on in our lives, the good - the bad and it is easy to fall unaware of certain callings by the Universe. But to me, this year is a year full of financial awareness. The Covid-19 pandemic has accelerated our senses towards our financial cognizance— with people losing jobs, losing assets, losing businesses etc. 2020 has been a year of loss, financially.

I am lucky to still hold onto my job + to have a roof over my head. How many people can afford to sustain themselves during a global and economic crisis, I wonder? And how many of us have made a large dent in our diminutive savings?

It got me thinking about my own situation, I may have been lucky now but I have to be wary about unforeseen ill fortunes. The future holds so many unpredictable happenings, something unlucky could have happened to us without notice. Though not wishing it to happen on anyone, we can never be too careful in planning and saving financially.

We are rarely prepared for big misfortunes, so let this time teach us a lesson on saving money. 

How to save money is one of the search terms I have been googling the past week— to learn, adapt and do. How to save your money is something we have to decide ourselves, some save 30% of their disposable income, some a little more or a little less.

Today’s post is about the types of savings we should all have. To live a smooth and sustainable lifestyle, we must have different types of savings. The main idea is knowing when to use them and what each saving is for. Here are a few fun saving fund ideas to explore. Let’s take a look.

What kind of savings should I have?

1. Slush funds

Let’s not associate slush funds with black funds in this post, but think of it as petty cash. I’m talking about money put aside for small little inconveniences. What constitutes small little inconveniences, you ask? Perhaps something like a sudden need to get some stationeries, or to fix a broken lamp in your room. Instead of dipping into my regular savings account, these slush funds are small amounts of cash (~RM300) put aside in my room that I can take out at any moment. 

2. Regular savings 

I’m sure everyone has their own regular savings. I have a regular saving account that I monitor daily. What money comes in and what money goes out (to my other accounts/expenditures). This regular savings account holds much more cash in it than my slush fund. All my income comes into this account before I rearrange + re-allocate to different funds. My regular savings account is usually used to cover more expensive or fixed commitments. From groceries, shopping, spa treats to bills. This baby does all the tough work.

3. Cash cushion / Emergency Fund

Oh, everyone has heard of this as well. Emergency fund is basically cash that you can access when you really need money. As my 2nd line of defense (the first being my “slush fund”) I do not tap into this fund at all unless it is truly needed. 

This fund is used when you meet an unexpected emergency, such as in the events of job loss, medical emergencies, etc. How much should I be saving for my emergency fund? A good measure of amount in an emergency fund is a 3-6 months worth of expenditure, but if you can afford more then definitely put in more! My emergency fund is a solid 3 month expenditure and it is growing slowly (you know, it's tough saving money). This fund must be very liquid and not used for investments because you must be able to use it immediately when needed.

4. Gift funds

Something I picked up from Jessi Fearon in her post, I think a gift fund is such a brilliant idea! We’re always gifting something to someone on special occasions— birthdays, weddings, Christmas, just because, etc. When the festive season comes around, we’re often spending more than we planned on gifts. It makes me salty having to dip into my regular savings to pay for gifts, truthfully. Having a gift fund not only helps you to budget, it also makes you feel better not having to dip into your other savings. Debt-free and worry-free gifting season!

I allocate a fixed amount of RM600 into my gift fund in the beginning of the year and budget my gifts according to the fund. If there are leftovers after the year’s gift-giving, the amount will rollover to the next year.

5. Retirement fund

I’m 26, why am I talking about retirement funds already? You see, I’m a worrywart especially when it comes to my future retirement. Think 30 years into the future— would I have sufficient funds to stay alive? I am a firm believer in hustling hard while you can, generating as much money and saving as much while you can. Because when age and time catches up with you, you’ll have lesser means to earn. This is when your retirement fund steps in to keep you afloat.

My retirement funds are in the form of FD (fixed deposit). And I have a good reason for it. This fund is something I don't want to use to invest, but I want to keep it safe— and I mean, very safe. A small amount of interest is sufficient. I pump in additional cash every month to keep it growing but the central objective is to keep it safe.

Do you think you have the right savings all set up? That was the 5 types of saving everyone should have and I believe having these funds can help to be more money-savvy as well as prepared for any unexpected financial issues. Before you prep your other funds, always make sure you have the first 3 down, the “slush fund” + emergency fund + regular savings.

Life is always unexpected, always prepare an umbrella before it rains.

Darling, saving your way up to creating a worry-free and financially-free life starts early. I hope my post today gave you some insightful lessons and perhaps inspire some of you to start caring more about the fruits of your labor.

On the way towards financial independence,

Melody