Short-term savings accounts come by many names and can have many purposes. The money in a short-term savings account is likely to be used within one or two years and therefore should be kept in cash-equivalents like savings or money market accounts.
Emergency funds are a type of short-term account that are set aside for use in emergencies only.
You can save regularly into a system of sinking funds or targeted savings accounts to help smooth out large, irregular expenses. An example is to save a certain amount every month for travel expenses, though you only travel a few times per year. That way, the cost of a flight or lodging does not overwhelm your cash flow in a given month.
Goal-based savings are straightforward to set up. You set a goal to make a certain kind of purchase at a certain time and estimate the cost. Just divide the cost by the number of months you have to save up for it and set your monthly savings rate accordingly.
An opportunity fund or general savings account is another stash of money that can have a more flexible purpose than an emergency fund or the other short-term types of accounts. This money could be used for unexpected opportunities or expenses that don’t qualify as emergencies or as a slush fund for when your cash flow is short in a given month.