It is no secret that life is full of surprises. Surprises that can cost money. How to Save for a Larger Purchase.
Sometimes a lot of money. They have the potential to throw a wrench into your savings strategy, especially if you have to turn to credit to get through an emergency. In many households, a budget covers everyday spending, including clothing, eating out, groceries, utilities, electronics, online games, and a wide variety of possibilities and purposes that we need.
However, sometimes, you might want to buy something on the horizon (like the all-inclusive trip to Cancun for your second honeymoon) or something you need to buy (like the 10-year-old bathroom remodel).
How do you get there if you have a budget for the everyday things you need, are setting aside money in your emergency fund, and are saving for retirement?
Make a goal
The way to get there is to make a plan. Let’s say you have a teenager who’s going to be driving soon. Maybe you would like to buy a new car (for him) for his 16th birthday. You’ve done the math and decided you can put $ 3,000 on the best vehicle you can find for the price (at least, it’ll get you to work and around town, right?). You have 1 year to save, but planning starts now.
There are 52 weeks in a year, which makes the math simple. As an estimate, you will have to reserve about $ 60 per week. (The actual number is $ 57.69 – $ 3,000 divided by 52). If you get paid weekly, put this amount aside before you buy that $ 6 latte or spend the $ 10 extra lives on that new phone game. The last thing you want to do is create debt with little things that accumulate, while trying to save for something bigger.
Make your savings goal realistic
You might be surprised by how much you can save when you have a goal in mind. Saving is not a magic trick, however, it is based on discipline and mathematics. There may be goals that seem out of reach, at least in the short term, so you may have to adjust your goal. Let’s say you decide you want to spend a little more on the car, maybe $ 4,000, since your child has been working hard and getting good grades. You’ve worked out the numbers, but the only thing you can save is $ 60 per week. You would need to find just another $ 17 per week to make the most expensive car happen. If you don’t want to add to your debt, you may need to cancel that purchase unless you can find a way to raise more money, like having a garage sale or picking up some overtime.
Hide the money from yourself
It may sound silly but it works. Money “saved” in your checking or savings account may be in jeopardy. Unless you are extremely careful, it will almost certainly disappear, but not like what happens in a magic show, where the magician can always bring the volunteer back. Instead, find a safe place for your savings, a place where it cannot be “accidentally” spent, be it a box of cookies or a special savings account that you open specifically to fund your goal.
Pay yourself first
When you receive your payment, first fund your savings account set up for your purchase goal. Once you’ve saved this money, go ahead, pay a few bills, and buy that latte if you really want it, although you may have to make do with a small one rather than an extra-large one.
Saving instead of racking up more credit card debt can be a much less expensive way (avoiding credit card interest) to enjoy the things you want, even if it means you will have to wait a bit.