Saving for a big purchase can be exciting and daunting. It can be a difficult process for those who do not have any experience saving money. Big purchases tend to include cars and homes, especially homes. If you are looking to save money for a big purchase, here are several ways below.
Struggling to create a game plan to save for your major purchase? Check out Angenett Curry’s, “How To Create Your Financial Gameplan Book and Workbook!”
- Set a savings goal. Determine the amount you want to save and the timeframe you would like to save it. Break down your savings goal into smaller pieces. Track your monthly spending. Shift your budget to put aside the required cash. If the goal seems impossible, you may need to adjust to a more realistic goal.
- Set up a separate account. Keep the funds you need for your big purchase separate from your daily accounts. This may help reduce the temptation to spend frivolously. If the time period of savings is significant enough, you may want to consider opening a high-yield savings account or getting a certificate of deposit. A separate savings account is also considered a “sinking fund”.
- Automate your savings. Set up automatic deposits, preferably directly from your paycheck. Financial analysts suggest that this method helps people keep their hands off their savings by never directly having them.
- Do not ignore other financial goals. It is important to build a strong financial foundation before saving for a big discretionary purchase. Start an emergency fund. Contribute to your retirement fund. There are tax benefits and long-term growth.
- Avoid going into your savings, 401k, or IRA. There are costs associated when withdrawing from a 401k early.
- Money. Create a 50/30/20 budget. NerdWallet recommends the 50/30/20 budget. This budget suggests devoting 50% of after-tax income to necessities, 30% to wants, and 20% to savings and debt payments.
- Food. Food is a daily necessary expense. It is important to create a food budget. Understanding how much you and your household consumes on a monthly basis will give you a starting point for creating a food budget. Look for areas where you can cut costs. Consider reducing the times that you eat out. Keep note of the food that you may be wasting. Minimize restaurant spending. Eating at home helps to save a ton of money. Look for discounts. Grocery stores and restaurants often offer coupons and discounts to coerce patrons to their establishments. Take advantage of those savings. Use water bottles. Take everything you can save month to month and contribute to your big savings fund.
- Travel. There are many people who still must commute to work. Gas seems to always be at a premium, especially when political issues are occurring. Try and reduce gas costs. If you can work from home, do it. If you cannot work from home, consider carpooling or public transportation as options. Shop online for your necessities, including groceries, and have the items delivered. Reduce travel costs as much as possible. Do not do unnecessary travel. If you must travel, try and book flights on Sundays. Reports show that Sundays lowers airfare.
- Communication. Cell phone costs can vary drastically. Research the market to see if there are cheaper equally efficient services available. Typically, contract services like Verizon and At&t are more expensive, especially if you buy a new, smartphone, with accident insurance protection. There are no-contract cell phone services that offer unlimited usage, you will just need to see if they provide good service in your area.
- Buy second-hand. Thrifting and online marketplace shopping is becoming more common. Buying second-hand is becoming somewhat trendy. If you love to shop, but still need to save money, consider thrifting and buying secondhand.
- Always look for discounts. It never hurts to look for and ask for a discount. Many establishments use discounts and coupons to get patrons to shop with them over the competition.
- Take advantage of free entertainment. There are free days at museums, art galleries, and national parks. For those who need to get the family out of the house, these are cheap options that everyone can enjoy.
- Get creative with gifts. Gifts can be expensive. When saving for a big purchase, you may not be able to buy those you care about exactly what they want. Take advantage of free event days, cook meals, or even make a gift basket.
- Cancel unnecessary subscriptions. Always check for subscriptions you are not using anymore. Services tend to offer a week to a month for free. Then, they will automatically charge you when it is time to renew. To avoid this, do not sign up for auto-renew and pay attention to any subscription emails.
Need a helping hand with your savings plan? Contact us for help!
Saving money requires a lot of planning and discipline, but it can be done. It is always wise to talk to a financial expert when looking to make a big purchase and create a plan to get it done. Hopefully, these suggestions get you on your way to your savings goals.