How To Budget for A Big Purchase

Maybe you have your eyes set on that new car or computer, or maybe it’s time to replace your refrigerator, either way, these items are not purchases you can make at a moment’s notice. No matter if it’s something you want or need, big purchases mean big bucks for you. More often than not, the budget needed for these items isn’t something you have lying around, which means you’ll have to start saving. Follow a few of these simple tips, so when the time comes, you’ll have the money set aside and be ready to make your purchase.

Figure Out How Much You Need
Your first step to budgeting for your purchase is figuring out just how much money you’ll need. Shop around and try to get a good estimate of what you’ll have to spend on the item you’re purchasing. Consider any additional fees or accessories you may have buy with your item as well. It may be a good idea to give yourself a little wiggle room, just in case your item ends up being a tad more expensive than you thought. If you end up needing extra, you’ll be happy to have it, and if not, you can save it away for another day.

Set Some Goals
Decide how long you’ll have to save for your big-ticket item, and then figure out how much you’ll want to set aside each week or month to reach that goal. The longer you have to reach your goal, the less money you’ll have to set aside each period; be sure you’re not overextending yourself by trying to save too quickly.

Establish a Separate Account
The best way to save is to form a separate account solely for that purpose. If your money is filed away in a separate account, you’re much less likely to be tempted to spend it in the short term. Furthermore, it will give you a clear way to track how much you’ve accumulated, so you know exactly how much you have left to save.

Add It to Your Budget
Treat saving for this item the way you would your other monthly expenses, by adding it into your budget. This will help you regularly account for the savings each time you receive a paycheck; so again, you don’t spend it before you save it. This is also a good way to see what you might need to cut out of your budget in order to save your big purchase, like your daily lattes or your take-out three times a week.

Whether it’s something you want or need, there always comes a time when you have to purchase something big and expensive. Although it may seem easy to put it all on a credit card, those large purchases can be hard to pay off, in the end. Instead, follow some of these tips to add it to your budget and make a goal to save for it yourself.