In your life certain events will arrive that will cost a lot of money – buying a new car or a house, getting married, sending your children to college, the list goes on and on. When these events come up, the temptation is to cover the cost with credit – in fact, American credit debt is now over $930 billion! There is an alternative – plan well and stick to a budget so you can cover the cost of a large purchase from your savings. What can you do to start saving today?
What is your goal?
It is easier to save when you have a specific goal in mind – be it a dream vacation, your wedding or a new home. When planning these purchases, take some time to calculate how much you need to get what you want. Work out how many paychecks you will have between now and your savings deadline so you can calculate how much money you need to set aside. Keep yourself on track by having a reminder – a photograph on your desk at work or on the refrigerator at home – to help you to focus on your savings goal.
How many times have you made a purchase on a credit card for an expensive dress that you wore once and is now gathering dust in the back of your closet? Or booked an upgrade on a flight just because you could? Or even just bought a few extra items at the supermarket to make you feel better after a terrible day at work? We’ve all done it. Now is the time to stop – spend a few minutes to look at any larger purchases you’ve made recently. Which of those brought you the most joy? Identify a few activities you enjoy that you can use as a reward for hitting your savings goal each month – this way you don’t have to miss out.
When you have decided to save money, it is advisable to set up a new account to keep the money separate from that used day to day. Pay yourself first – this means moving money as soon as you get paid, before paying all other living expenses instead of waiting to see what is left at the end of the month. It may also be necessary to reduce your outgoings to ensure that you aren’t then dipping into your savings for non-essential purchases. There are many tips for this including switching to cheaper food brands, avoiding prepared meals and reducing the number of occasions you eat out or get take out. You can even look to make few extra dollars – selling some of your unwanted purchases, selling arts and crafts online or even taking in a lodger if you have a spare room.
Whatever it is you are planning, avoid the stress of debt by saving in advance before making a large purchase. This will help you appreciate the experience more in the moment as you will be safe in the knowledge that there will be no big bills waiting for you later.