6 Simple Tips to Save for a Large Purchase
June 19, 2012
By Lori Johnson, V.P. Marketing & Business Development, TelComm Credit Union
Follow them on Facebook
So you have developed a much closer relationship with your auto mechanic that you would prefer, because your vehicle is heading toward a slow, miserable death. Or, maybe your roommate has eaten the last of your Cocoa Puffs and you have finally had enough and gone berserk. Whatever your motivation may be – a newer vehicle, a home purchase, or a washer and dryer so you don’t have to run to the Laundromat anymore – saving for a large purchase can sometimes feel difficult and overwhelming.
Here are a few tips to help you tame the tiger:
1) Determine how much you need to save for the purchase. Research a vehicle and determine what amount of money you will need to have to put down toward the purchase to have a bi-weekly or monthly car payment and term you can afford. Without a realistic cost/goal, you cannot reasonably expect to hit the target.
2) Figure out your timeframe before you buy. If a home is what you really want, then is it practical for you to squirrel away your pennies aggressively for one year, 2 years or 5 years so you can buy your dream house? The timeframe and other extenuating circumstances like your roommate’s career plans or impending marriage should be factored in to your plan for success.
3) Decide on the amount you are going to contribute per paycheck, or a percentage per month – whatever makes sense for your situation. When in doubt, bump it up a little. If you think you can handle $30 per month, plan on $35 per month. Challenge yourself and stretch just a little farther than you think you can.
4) Automatically depositing to an account you cannot regularly access is FANTASTIC! This is a trick I have used for years. I have my primary account for my regular savings and checking as well as a second account at a different institution completely, which is not convenient to my work/home commute. I do not have an ATM card for this account, no checkbook or debit card either. I have $25 per paycheck ($50 per month) direct deposited to my 2nd account and in a year I have $600 sitting there earning a smidge of interest and ready to pay for my airfare for my next vacation adventure. Out of sight, out of easy grasp is perfect and it works.
5) Share your goal with your close friends and family. It is not necessary to post on Facebook for 213 buddies you never see that you are trying to save $2000 in 18 months for a car purchase. BUT – it is wise to tell your close associates you are saving for a car, house, washer/dryer – whatever it is, and keep the amount to yourself. Why, you ask? If people know you have a bigger, long-term goal for your funds they will be more supportive and less likely to try and tempt you with concert tickets to a so-so event or not take it personally when you suggest a potluck on the weekend instead of joining them for a fancy dinner out on Saturday night at your favorite restaurant. There also is a good chance your friends and family may be on the verge of trying to save for something significant also, and you could help give them the nudge to be a little smarter about their spending as well.
6) Make a sign you keep on your refrigerator/car visor/bathroom mirror to track your progress. Saving does not provide the immediate gratification that spending does. When you write down the date, deposit amount and goal amount on a piece of paper and start to see progress over a period of weeks and months it is really exciting to see you are making it and taking steps toward your goal. You become proud of your progress and do not want to jeopardize it by pulling out $50 for an impulse purchase. I have found I even try to brainstorm ways to increase my savings more quickly when I am close to hitting $100 or $1000.
May the force be with you my friends. You are just a little planning and a couple mind tricks away from your dreams. Good luck and let me know YOUR tips!
Saving for a large purchase? Here are other articles you may enjoy:
- 3 Tips for Saving for Your Next Ride
- Saving for the Big Things
- New Theme: Saving for a Large Purchase
- Saving for Your Future May Be Easier Than You Think
Are you ready to commit to a savings goal? Join America Saves today.