How to Save for a Large Purchase: Remember the SMART Rule

June 21, 2012

By Kelley Long, is a Chicago-based financial coach and member of the National CPA Financial Literacy Commission
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There are many resources available that discuss how to save for big goals like retirement, a new car, a home, etc. But what about saving for something more immediate like a computer or piece of furniture? The same principles apply, only the end game is much closer.

Having something specific in mind is the first step to achieving any goal. Remember the SMART rule, which says that to increase the chance you'll achieve a goal it must be:


For example, let's say you've finally found the perfect dining room set to replace the hand-me-down one you've tolerated through your children's growing-up years. You've imagined how lovely the holidays will be with this new furniture in place, but you don't have the cash to buy it today. Rather than using a credit card, try this process to get those table and chairs in time for Thanksgiving dinner:

First, you'll need to know the price (that's the measurable part), then decide when it is you would like for the furniture to take its place in your home, making it timely. Divide the total price (don't forget to include sales tax and delivery costs) by the number of months between now and the date of desired your dining set homecoming. That's how much you'd have to save each month to get there.

Does that amount seem possible or do you need to push back your date of purchase a couple months? Perhaps you need to keep shopping to find a less expensive option. In other words, have you set an attainable and realistic goal?

If so, then it's time to find the extra money to save in your budget. There are plenty of money-saving ideas out there, but no matter what it will require discipline. One way to maintain that discipline is to have a numeric reminder to keep you on track should you feel tempted to spend one month instead of save.

To do this, figure out how much you should save every day by dividing the total purchase price by the number of days. The next time you're confronted with a spending decision that might compromise your goal, ask yourself, "Is having this scarf/lamp/extra cocktail at happy hour worth putting off buying my new table one more day?" You might surprise yourself with how quickly you have a new place to eat supper!

Kelley C. Long, CPA is a Chicago-based financial coach and member of the National CPA Financial Literacy Commission, which represents the 360 Degrees of Financial Literacy campaign ( and Feed the Pig ( She is currently saving all her change for a vacation to Colorado this summer.

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