Four Tips For Saving For A Big Purchase

We all need to buy expensive things at one point in our lives. It could be something really expensive like a new house or a new car, or it could be a big ticket item like a complete home entertainment system. If you find it too difficult to save for something big, simply follow our suggestions below. These tips will definitely help you make that purchase in no time at all.

1. Know the estimated amount you need and create a saving plan.

Saving for an amount that is higher than the actual value of the item is ideal due to the different factors that could affect market pricing. A higher estimate will also give you ample leg room. So even if the price of the item increases, you won’t have to wait longer than expected before making the purchase.

Then plan how much money you have to save regularly. Let’s suppose you need $3,000 to upgrade your kitchen. If you can save $25 a week, you’ll have the money in 30 months. If you want your kitchen upgraded sooner than that, you have to double your savings. To achieve that, try to compound your savings. Increase your savings by $5 a week until you get to your goal. So if in the first week you’ll keep $25, make it $30 the following week, then $35 on the next, and so forth.

2. Look for other sources of income and minimize your daily expenses.

Explore new ways to earn money on top of your regular salary. For one, you can take on a part time job. You may also sell something off the internet. Organizing a garage sale to dispose of your old items and make money out of them is also a good idea. Be creative. Who knows, you may just make money using a talent you never knew you had.

Also, remember that you will get to your goals much faster if you cut back a little on your food, entertainment, and other living expense budgets. The cut back will just be temporary, so don’t think that you are depriving yourself of the good life. Instead, keep reminding yourself that you will enjoy the fruits of being frugal soon enough.

3. Keep your savings in a high-interest savings account and try not to use your credit card.

Saving money in the bank is the only way to go. And be sure that it’s a separate bank account, so you won’t spend the money accidentally on something else. Combining it with grocery money or your weekly allowance puts your savings at risk.

On the other hand, not everybody realizes how much interest they are paying their credit card companies. For the entire length that you are trying to save up for something, ditch the card and pay in cash. But since you are saving a good part of your salary, you are forced to spend only for life’s necessities and not the wants. It’s a win-win situation.

4. Live within your means and focus on one financial goal at a time.

If you can change your lifestyle up until you can make that big purchase, do so. If moving to a smaller apartment and walking instead of driving to work aren’t too much of a hassle for you, take that route. Just imagine the amount of money you can save if you make these big sacrifices.

Now, it is going to be very difficult for you if you are saving for a large item while paying a mortgage or if you are in the middle of a house renovation project. It is important that you prioritize what you really need at the moment. Remember that you can only earn as much and save just enough money. Having a lot of finances to juggle around could only lead to frustration.

Follow these tips and you will make that big purchase sooner than you expected. While some of these tips are easier said than done, they are very helpful in getting you one step closer to your goal. It will definitely take a lot of sacrifice on your part. But if you keep your eyes on the prize, things will be so much easier than you thought it would.

Photo: 401(K) 2012 / CC 2.0