Saving for big purchases is best done over a long period of time in a proactive way. In other words, long before you have a need you’re already preparing for the day it happens. But sometimes, for one reason or another, that’s not an option. Or maybe the big purchase isn’t a necessary one and just something that you would like to have or do. Let’s look at some ways to save for a big purchase that will make it easier and less stress.
Try These Ways to Save for a Big Purchase
Window Shop Around
Before you can start saving, you need to know how much you need to save. Speaking of saving, if it were me, I would be searching all over for the best price before I settle on a number to save. I’m also not above purchasing most things gently used to save some money (if the thing you’re saving for is an item and not an experience or something like that). No matter what you’re saving for, you need that goal number. So do your research.
You can pretty much count on the internet to not only give you all the options, but also to give you the best prices. It’s very often cheaper to purchase something online than in stores (often but not always so check everywhere). If it’s something you would like to try out before you buy it, let’s say a couch, find one locally and go give it a try. Then, if you like it, go find it online for the best possible price. Here are a few things you should look for to get a good deal:
- Price matching
- Seasonal or holiday sales
- Overstock clearances
- Preowned options
- Discounted display items
Now that you have your goal number, it’s time to decide where you’ll stash the dollars until you’re ready to make that big purchase. In my experience, it’s important to separate savings for different things. That way you always have a clear goal of what you have saved for what. You’ll also be less tempted to dip into one savings to lend to the other.
We used to open a separate savings account at our bank when we had something new to save for. Most recently though, we have started trying to use Dave Ramsey’s envelope system. You can check that out here if you don’t know what it is so I can stay on track here (I get distracted easily). So anyway, this means we are using the bank less and spending only cash (other than bills or purchases that have to be paid online). So if we have something to save for we’ll just write it on an envelope and add cash to it. I think it’s actually fun to see the cash growing. It’s more exciting to me than just seeing the number on my online banking app.
However you decide to save, make sure you keep it separate and keeps your hands off of it unless you’re adding to it.
Set a Deadline
In some cases, setting a deadline depends on how much you are able to save per month. In this case, you’re not a in a huge hurry to make the purchase, so you don’t stretch yourself too much financially or change your budget much to allow for this extra savings. Decide how much you can spare for extra savings, then calculate how many months you’ll need.
Goal Amount ÷ Amount you can save per month = Number of months you need to reach your goal
Sometimes though, your deadline is determined by a need that can’t wait and you might have to dramatically change your budget to account for the savings. In this case, you might need to stop putting into other savings (our savings should always have a job and never been taken for a different job unless it is absolutely necessary) temporarily to meet this need or make some other adjustment to your budget to make it happen. In this case the calculation will be a little different because we don’t get to determine the deadline. So we just need to calculate how much to save a month to reach it in time.
Goal amount ÷ Number of months until deadline = How much you need to save monthly
Either way, now you have our deadline and the number you need to save monthly. Now to the final step.
Create a Schedule for Savings
What’s your cash flow? Meaning, when do you have money coming in? Let’s say you need to save $400 a month. If you get paid every week, you could save $100 each paycheck. If you get paid every two weeks, $200 every paycheck. For me, it always works out best if I save a little every single time I have money coming in, instead of one big chunk out of one paycheck. If you’re looking for ways to save for a big purchase you probably want ways that make it easier. Breaking it down like that makes it feel a lot less painful (for me).
Saving for big purchases can be a daunting task, but just like with any other goal, having a plan and sticking to it is the best way to succeed. Follow these steps and stick to saving, you’ll have that big purchase taken care of in no time.