by Curt Queyrouze, President
A major purchase is something most people have to plan for, whether it's a new car, a house, a widescreen TV, a big vacation or something else entirely. Knowing how to save effectively for these one-time costs, without disrupting your normal budget and ability to pay your bills, is an important part of financial planning. It's also something that provides a clear reward at the end of the process, whether it's spending a week sipping tropical drinks on a white sand beach or watching your favorite film on a screen so big and clear that it feels like you're inside a movie theater.
Let's look at how you can save effectively for big purchases:
If you already have a personal budget, the process of saving for a big purchase is that much easier. When you already have visibility into how much money you bring in each month and where it goes, you can make an informed decision about how to save. If you don't already have a budget, follow the advice in our e-book to create one. This budget won't just help when it comes to a single purchase - it gives you an informed financial perspective as you move forward.
With a budget in hand, figure out a reasonable cost for your purchase, one you can comfortably take out of your paycheck each pay period and set aside until it's time to take the plunge.
It's much easier to pay for a vacation, TV or similar purchase if you give yourself lots of lead time. On the most basic, yet very important, level, a longer timeline means you can set aside a smaller amount from each paycheck as you save for your goal. It also gives you room to look for deals, as U.S. News & World Report pointed out. When you have time to wait for a sale to be offered on electronics or to see if airfare will dip in price many months before your planned trip, you can cut down on costs and put that money toward a better trip or bigger screen - or simply stash the difference in your savings account. If you're looking to buy something that traditionally goes on sale during certain holidays, like cars during Presidents Day, be sure to build that into your timeline.
If you're looking into buying a home, car or similar item out of necessity as opposed to a desire, don't be afraid to look into a loan or financing. This is especially important when it comes to homes, as few people have the cash on hand necessary to pay off such a large purchase. You'll want to carefully explore your options and avoid exceptionally high interest rates and fees. A little bit of research and planning can help you find the right arrangement for your needs.
TAB Bank offers safe avenues to grow your cash savings, leaving you with more to spend on your big purchase. Our high-yield savings account offers an exceptionally easy way to realize a return as you wait to make your purchase - just deposit the money and leave it until it's needed. Our certificates of deposit lock up money for an agreed-upon period of time, then provide interest as well as the return of the principal. If you're planning ahead for a big purchase and have your timeline mapped out, a CD can give you a valuable boost before you make the purchase. To learn more, get in touch with us today!
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