Before we even get into this topic, we need to get some clarity on what ‘Savings’ are. The Wikipedia definition of savings is ‘the money a person has left over when they subtract their consumer spending from their disposable income over a given time period’. In layman’s terms we can say that savings are for the future, it can be tomorrow or it can even be for years to come. It’s your contingency.

People save up for education, retirements, to buy something they cannot afford just yet etcetera. Your savings are an integral part of your financial budget, which you draw out for yourself. Experts have suggested that the most practical way to split up your income is by splitting it into 50-30-20. Which can be broken down into 50% for your needs, 30% for your wants and 20% of your income directly goes for saving. 

Why Do You Need To Save?

The intent and need for saving is subjective. It is up to you to do whatever you want with your savings. If your intent to save was to future proof yourself, in that case using your long term savings for short term goals would not be advisable. When you talk about savings as a concept itself there is no room for the word ‘usually’, this means that we cannot generalize the use of savings and in fact the need for savings in the first place.

In todays’ day and age we cannot for sure say if we will have a constant source of income in the years to come. The Covid-19 situation has set a clear example for situations like these. Emergencies pop out of nowhere. In that case, future-proofing becomes utmost important.  If your short term goal consists of a certain need that you cannot oversee, it is not a sin to use funds saved up for the future. Even if the case is to invest or buy something which could be categorized as a ‘want’, you will have to set a percentage of funds that you will be taking from your long term savings. 

However, in no situation exhausting your complete saving for your ‘wants’ is advisable. If you’re planning on taking the course of investment to get maximum gains experts advise to go in long term. The values of stocks tend to fluctuate in really odd intervals and if you need your money you may be forced to sell your investments when markets are really low. Trying to predict and profit from short-term movements is a risky strategy even the experts struggle to get right.

Consider The Long Term vs. Short Term Benefits

Having a long term monthly saving strategy financially strongholds your future. Be it buying a house, higher education or even retirement, the key is to start early and be consistent. Breaking your retirement funds to menial satisfaction can have drastic repercussions for your well defined future. The smart thing to do here will be to create a personal budget where you earmark your savings for short and long term goals. You can customize it by making it proportionate with a percentage suitable and affordable by you. By this way you will have a clear cut idea where exactly your hard earned money is going. 

Another unstated benefit of not exhausting your monthly savings is that you are ready to face any change in your life. The change in circumstance need not always mean an emergency; it could also be having a baby, a sudden increase in rent, change in job responsibility etcetera. These might not be your priority number one now but with time priorities also change. 

To conclude, although it is subjective to figure out how you use or rather spend your monthly savings it is also up to you to make a decision keeping your longevity in mind. When you are planning for a better tomorrow, spending your monthly savings on short term goals would just create strain in re-gathering and equalizing how much you spend on them.