Establishing Habits: Short Term Savings


From None to Good — From Good to Great

[NOTE: This is the second of a four-part series in The Biscuit cultivated by local nonprofit, Common Wealth Charlotte, for April’s financial literacy month. This installment features insight from Catherine Etemad, vice president and first-time homebuyer specialist with HomeTrust Bank.]

“$500 – Due upon receipt.”

For some in Charlotte, this is just another bill to pay. Just another day. For others, these four words can be catastrophic.

“$500 – Due upon receipt” could be the bill you receive for an insurance deductible or major car repair or an unfortunate veterinary bill. It could be a nasty surprise that forces you to make very difficult life choices. For many Charlotteans, including members of the creative community, it could be the difference between paying rent, buying groceries or being able to purchase the materials you need to create.

Are you ready if one of these emergencies finds its way into your life?

Finding the right plan and understanding your savings personality helps you anticipate the unexpected and meet your financial goals.

“Creating and maintaining an effective short-term savings strategy is an important personal finance lesson a person can achieve at any time, regardless of age or income,” says Catherine Etemad, VP at HomeTrust Bank and member of the Board of Directors of Common Wealth Charlotte.

“Good money habits take effort and time to form, but the rewards literally pay for themselves.”

Good Financial Decision Making

Establishing short-term savings habits and maintaining your goals keeps you from potentially making financial decisions that aren’t in your best long-term interest.

When you use a credit card, or even a personal loan to cover an unexpected expense, you end up paying additional interest that adds up until you pay off the entire balance.

It’s a common practice. And, it can be disastrous in the long run.

De-Stress Your Financial Life

No one likes feeling concerned about financial emergencies. Creating good saving habits helps you stay financially organized. Asking yourself, “Where do I want to go?” and “What do I need to do to get there?” can make a world of difference.

“By setting realistic and tailored goals, you break down the process of saving to make it easier, more convenient, and you give yourself time to save more money,” Etemad said.

“By defining wants and needs, you determine how to save for the things you want and still be able to afford the things you need.”

Goals don’t have to be big. But, they must be real to you so you can keep them in focus.

Etemad counsels that embracing small habits and financial strategies – like using a short-term savings plan to cover things like biannual insurance premiums or other recurring payments – can have a significant impact on your cash flow and budget throughout the year.

Cut Down on Impulse Buys and Save for What you Really Want!

A short-term account can fund your European adventure if you let it

Financial challenges and financial solutions don’t have to be monumental. The best are often incremental. The secret is having a goal and chipping away at it – making a habit of it.

Adding a small recurring transfer from checking to your savings account every other week or automating small deposits from your paycheck to your savings ensures a consistent payment schedule toward your determined financial goal.

Find a local bank or financial institution that allows low minimum balance requirements for checking and/or savings and open more than one account. This establishes savings “buckets” you can assign to each of your goals.

Your short-term savings should be easy to access in a pinch, but it can be good to create some form of distance between you and the account by keeping it separate from your day-to-day cash.

“Think of it as paying yourself a maintenance fee every so often, an investment in the future. You’re worth it.” says Etemad.

You Can Do It!

Financial goals are often a subject that can seem intimidating or feel out of reach.

With talk of rising inflation – meaning your dollar doesn’t go as far as it used to – and a volatile interest rate environment, it’s good to know there are small, specific steps you can take to shape your financial picture.

Your whole life doesn’t have to change. But, to get to your goals, you do need to commit to some change and stick to it. And, the habits you create will be with you for the rest of your life.

“By using a short-term savings strategy to fill in the gap for things you cannot budget or predict,” said Etemad, “you create a smooth financial journey with habits that benefit for a lifetime.”


Common Wealth Charlotte

HomeTrust Bank