Big Dreams, Small Bank Account: Simple Ways to Save Up for a Major Purchase
Posted by : Premraj | Posted on : Wednesday, April 19, 2017
We all have dreams of buying a new home, a bigger car, a dream vacation and more. How does a frugal saver manage to handle such large purchases? The first thing many people would think of is charging their credit card or taking out a loan, but it makes much more sense to save money over time rather than going into debt. Why? Well, the simple answer is saving up the money for a purchase means you don’t have to pay interest, which adds on to the bottom line price of whatever you’re buying.
Saving up and paying cash can often mean that you have the ability to negotiate on the price of a big ticket item. “Cash up front” is a tried and tested successful bargaining tool. Saving up for a major purchase may be your only option if your financial situation won’t allow you to take on further debt. Furthermore, putting money into a savings account means that you will have interest coming in rather than going out, which is preferable, even if the interest on your savings is only a small amount. There are some things you can start doing now, that will make it easier for you to save up for those large ticket items faster. Here are some tips to help you.
Set Yourself a Budget
Whether it’s an $800 laptop or $3,000 for a down payment on a new car that you’re saving for, set yourself a budget and stick to it. Setting a budget means looking at your current finances, figuring out how much you can save each month and then working out how long it will take you to reach your goal. Give yourself a deadline, but make sure it’s a reasonable one. Don’t be tempted to put the purchase on your credit card and pay it off over time. There are too many ways that plan can come undone. It’s better to save the money and then charge the purchase to your credit card. That way you can pay it off all at once and enjoy the bonuses.
Open a Targeted Savings Account
Open a savings account solely for this purpose. Choose one that earns a competitive interest rate. This will enable you to keep your savings completely separate from your daily expenditures, but it will still be readily available when you’ve reached your financial goal. Add small but regular amounts to the savings account, for example, $50 per week. That way you will begin to see a steady increase in your savings.
Automate Your Savings
To make your weekly or monthly savings easier and to make sure you don’t forget to add to your fund, automate your savings so that your chosen amount will be deposited directly into your targeted savings account on a regular basis. This will save you a lot of time and will guarantee your savings grow each month.
Leave Yourself Leeway For an Occasional Splurge
Don’t be tempted to make your weekly savings deposit too high. Leave yourself a little extra cash so you can treat yourself now and again without dipping into your savings. That way you won’t feel like you’re depriving yourself and when you do have a small splurge, you won’t have to feel guilty about it. Think of treats like a spa day, a new pair of shoes, dinner at your favorite restaurant, or a night out at the theater.
When You Reach Your Goal
So the day has finally arrived when you’ve reached your financial goal and you have enough money for the down payment on your new car. You’re probably feeling incredibly excited and can’t wait to rush down to the car showroom, but don’t. Don’t go dashing out on impulse and purchasing the first car you see. Take some time to do your research and become an informed buyer. Check out sites like finding a Ford, where you’ll find an abundance of reviews and information about each model of car. Look at the different models, prices and financing data before you even take one step outside the door. That way you can be sure that all your saving has been worthwhile and you’re spending your money wisely.
Saving for something important like a car, wedding or vacation takes time and careful budgeting, so make sure you go about it the right way so you can reap the rewards of your savings as soon as possible.
Jasmine Hamilton is a personal finance consultant who shares her advice around the web with her informative and very useful articles.