How to Save for a Large Purchase

How to Save for a Large Purchase

When you think about how much money you need for a large purchase, like a car, you may feel overwhelmed. But it’s a good idea to start by deciding how much you will need to set aside each month. Then you can implement a few money saving hacks that can help you set yourself up for success. While there is no one-size-fits-all approach, combining a number of these tips will put you on track to meet your goal.

Pay Yourself Before Anything Else

While you may or may not be able to save the amount you are hoping to each month, you can still pay yourself first with whatever amount you can spare. There are a couple of ways to do this. You could create an automatic transfer of funds from one account to another one dedicated to your goal. You could also have a portion of your paycheck go right to the dedicated account. 

Either way, it ensures you pay yourself first instead of waiting until the end of the month to see if anything is leftover. To make this more affordable, look for ways to save each month. You can refinance your current student loan debt to a new one. This can help you reduce your monthly expenses. With NaviRefi student loan refinancing, you may get more generous repayment terms or lower interest rates, allowing you to spread your money to other areas.

Start Small 

When you need fast cash or a significant amount of it, if saving a large percentage of your income seems like a lot, consider starting small. Even if you can only set aside $100 each month, it is better than nothing. If you start with smaller, easier goals, you are more likely to stick to them. Consider putting this money into a high-yield savings account. While a small amount in this type of account won’t net you much, it is still better than nothing, and as your savings accumulate, it could help you meet your goal a little faster. 

Stay on top of market conditions and make sure to implement strategies to keep your money growing. If you really want to start small, consider creating a change jar. This can help you build up some savings, especially if you regularly use some cash. If your wallet is too heavy, put the change in the jar and don’t think about it. Then you can check the jar to see how much you have managed to set aside for your goal.

Don’t Put Other Goals on the Back Burner

You might be eager to save up for your large purchase, but it is also important that you create a strong financial foundation beforehand. You’ll want to make sure you have a well stocked emergency fund, even after making the purchase. Ensure you are participating in your company’s retirement plan, even while saving for the purchase. The retirement plan gives you the potential for long-term growth, and it may have tax benefits. It’s also important to keep paying off debt instead of putting it off.

Don’t Use Expensive Sources

There are sources of money that are more expensive than others. A credit card with rising interest rates may not be the best option. Taking money out of your retirement account is always a bad idea because of the penalties and the need to pay it back. Plus, taking money out of your retirement account means you are that much less prepared for your retirement. Putting the money on a credit card means you will need to deal with high interest rates. As interest rates rise, you will spend even more money on that debt.