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Welcome to the Pocket Change Investments Podcast. I’m your host, Basheer. Today, we’re diving into strategic short-term savings. We’ll explore the difference between short-term and long-term savings, touch on setting savings goals, and offer some money-saving tips. Stick around for valuable insights in this episode.

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Welcome to the Pocket Change Investments Podcast with your host, Basheer Abdul-Malik. You can follow Bashir and Pocket Change Investments on their website, www.pocketchange.investments, as well as on Facebook and Twitter.

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Before we get started, let’s set some ground rules. I’m not here to tell you not to enjoy a Starbucks coffee or indulge in avocado toast. It’s your money, and your priorities are your own. My aim is to inspire you to save from a place of empowerment rather than fear. You have your entire life to save, spend, and invest your money. These are the three main things you’ll do with your finances. The key is to start saving now, making it a natural part of your life. However, it’s essential not to let savings impede spending on things that truly matter to you. This point is crucial because many start saving but then become overly frugal or hesitant to spend. Saving should be a seamless, convenient process that complements your lifestyle, not a hindrance.

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Now, let’s rewind a bit. Today’s episode focuses on strategic savings, a short-term approach where you set specific parameters and goals. The difference between strategic and regular savings lies in the details. You’ve likely heard advice to save money for a rainy day or generic saving tips. However, without clear savings goals or timelines, this advice often falls flat. Strategic savings means defining the when, what, and why of your savings. It’s closely tied to setting goals, where specificity is key. To establish a genuine goal, you must answer the questions: who, what, when, where, and how. Sharing your goal with someone adds accountability. When you have a specific, time-bound goal, it becomes more tangible. This goal-driven approach makes saving much more effective than vague intentions to save more money.

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For instance, I enjoy international vacations, and I need to save for those trips. While I’m not wealthy, if I had to choose between an overseas vacation and staying home, I’d make the trip happen. Goals make it easier to attain what you desire. Whether it’s saving for a dream vacation, losing weight, or achieving a career milestone, setting clear goals enhances your chances of success.

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With that said, let’s revisit the notion of short-term savings. Strategic savings involves setting specific parameters and goals, typically for a week, a month, or a year. Unlike vague saving advice that lacks a purpose, strategic savings revolves around goals. Your goal could be to save $500 by February 15, 2021. Adding a timeline makes it more tangible and achievable. Remember that when you set a specific goal, you create a challenge for yourself. Plus, it’s easy to adjust or set new goals if you fall short.

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As you start building your savings, you might wonder whether to keep your money in a savings account for the long term. I’d advise against it. After all, with certain savings goals in mind, a year’s worth of pay in your account can be excessive. There’s no need to keep thousands of dollars in your savings account. Instead, diversify your savings by looking into options like certificates of deposit (CDs) or money market funds. These accounts offer stability and liquidity, two crucial elements to consider.

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Certificates of deposit (CDs) come in various terms, from one month to five years. They offer a higher interest rate than savings accounts but lack liquidity, meaning you can’t access your funds without penalties before the agreed-upon term ends. Therefore, I recommend waiting until you’ve built up a significant savings cushion before considering CDs. Money market funds, on the other hand, offer both stability and better returns compared to regular savings accounts. Though they’re less liquid than a savings account, you can still access your money within a few days.

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To wrap up, remember that short-term savings are meant to be an investment in the now. You don’t need thousands of dollars in your account for this strategy to work. A simple start with $250 or $500 can make a significant difference. As you begin to save, you’ll find that savings become easier, especially when integrated into your budget. With a little preparation and foresight, you can make saving a seamless part of your life, allowing you to focus on more important financial decisions. This strategy doesn’t require you to be a financial guru; it’s about making small, positive changes that can lead to a more financially secure future.

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Thank you for tuning in. Have a fantastic day. Remember, these insights are shared to help make your life easier, but always consider them in the context of your unique financial situation. I’m not a financial guru, just someone sharing what has worked for me.

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Subscribe to the Pocket Change Investments Podcast on platforms like Apple Podcasts, Spotify, or your preferred podcast app. It’s essential to note that the opinions expressed in this podcast are solely the host Basheer Abdul-Malik’s and are for informational and entertainment purposes. This podcast is not intended as investment advice. Listeners should not construe Basheer’s opinions as recommendations to buy or sell any securities or as an offer for the sale of a security. The Pocket Change Investments Podcast is not a research report and should not be used for making financial decisions.