All Savings Lead to Consumption

Savings ultimately serve the purpose of future consumption, making it essential to understand the various categories and timelines for saving. Individuals often struggle with classifying their savings intentions, such as saving for a house down payment or a vacation, leading to complexities in their financial planning. It is important to differentiate between short-term savings, which are for immediate use within the year, medium-term savings for goals projected a few years out, and long-term savings, which align with financial independence (FIE). This framework helps individuals better manage their savings based on different timeframes and intended uses.