For most people, there will come a time where you might want or need to purchase something that you don’t have the funds to buy outright at the moment. While you could make this purchase by borrowing money or using credit, the smarter option is to wait to make this purchase until you can actually afford it, which means saving your money. However, saving money isn’t that easy for many people.
If this is how you often feel about your finances, here are three tips for creating a savings plan for making large purchases.
Make Sure Your Goal Is S.M.A.R.T.
In order to save your money for a future purchase, you have to be very clear about what your goal is.
According to Jenny Schaub, a contributor to AmericaSaves.org, the best way to set up a financial goal is to make it a S.M.A.R.T. goal. This means that the goal is specific, measurable, attainable, relevant, and timely. By ensuring that your purchase and your goal to affording this purchase ticks all of the boxes of a S.M.A.R.T. goal, you’ll have a much better chance of maintaining your commitment and meeting that goal.
Do Your Monthly Math
As part of creating a savings plan for making a larger purchase, you’ve got to do a little math to figure out just what kind of numbers you’re working with.
To do this, Tim McMahon, a contributor to YourFamilyFinances.com, shares that you’ll need to take the total amount that you’ll need to make the purchase, including any taxes or fees, and then divide that by how much time you have to make this purchase. Then, you’ll know how much you need to save each month in order to afford to make that purchase in the time that you need it. For example, if you’re wanting to buy a $1,000 hunting rifle before the season opens in five months, you’ll need to save a little over $200 a month in order to reach your savings goal.
Separate The Money
Once you actually start getting some money to put toward your savings goal, it’s important that you put this money in the right place.
According to Kimmie Greene, a contributor to U.S. News and World Report, it’s best to put any money that you’re saving for a specific purpose into its own savings account. Then, you’ll be sure not to spend that money on anything but the thing that you’re saving up for.
If you have a larger purchase coming up that you’re going to need to save for, consider using the tips mentioned above to help you create a savings plan for this purchase.