The portion of your paycheck designated for saving typically encompasses several categories:
- Emergency Fund: Money saved to cover unexpected expenses such as car repairs, medical bills, or loss of income.
- Retirement Savings: Contributions to retirement accounts like 401(k)s or IRAs aimed at securing financial stability in retirement.
- Short-term Savings: Funds for specific upcoming expenses or goals such as vacations, large purchases, or education costs.
- Long-term Savings/Investments: Money set aside for long-term goals such as buying a home, family planning, or investing in stocks and bonds.
These categories help organize savings to address immediate safety nets, future financial security, and planned expenditures.
