What’s in your financial future? A new car?…
how to save up for your next big purchase
Do you have a wish list of things that might be considered “big” purchases? You know, maybe more than what you have on hand right now? Take a few moments to think about them or write them down. They could include a new TV, a family vacation or making over a room in your home. Now, what would be number 1 on your list? Why are we asking? Because we want to show you a budget-friendly way to get it.
So, the title of this article probably gave it away, but a smart way to make a big purchase is by saving up for it. We even put together a quick-and-easy plan to help you. Answer 2 questions, do some simple math, and you’ll know exactly how much to save each month to turn your number 1 wish list item into reality.
question 1 – how much money will you need?
The answer to this will give you a target you can work toward. Plus, having a specific amount will make the goal feel real. Lastly, knowing your target amount can also give a helpful way to track your progress.
If the number one thing on your wish list is a physical item like a TV, start with the price, then add taxes, shipping or delivery, and any installation fees to get the total cost.
For a vacation, estimate how much transportation (bus or plane tickets, gas for the car, taxis, etc.) and lodging will be, plus what you’ll need for meals, entertainment, souvenirs and other expenses, and add it all together.
For a home project, figure out how much your materials will cost, plus any tools or supplies you may have to purchase and add them together. If you want to hire a pro to do the work or will need a permit, add that too.
question 2 – how long will it take you to save the money?
Once you know how much you’ll need to save, you’ll want to give yourself a deadline. Choosing a specific date is so much better than something general like “this winter” or “next year.”
We’re not exactly sure why, but there’s just something about circling a date on the calendar to help keep you motivated. Or writing it on a piece of paper to stick on the refrigerator or the bathroom mirror.
A deadline will also help you figure out how many months you’re giving yourself to reach your money goal. You’ll need that number to do the simple math we mentioned earlier. Ready?
Divide your answer to question 1 by the number of months from question 2. That’ll tell you exactly how much you’ll need to save each month.
You can break it down even further by dividing the monthly amount by 4 to get a weekly amount. Do what works best with how often you get paid.
Oh, and once you cross the number 1 item off your wish list, it’s time to start working on the next one. You already have a quick-and-easy plan.
1. add your monthly or weekly savings amount to your budget
Savings should be a priority just like your other expenses.
2. use a separate savings account
Look for one that doesn’t have a minimum balance requirement or dumb fees.
3. set up an automatic transfer
You can do this from your paycheck or checking account.
4. look for ways to save on regular expenses
Shop around for insurance, look for cable TV alternatives, carpool, etc.