While spending money can be as easy as swiping a card or tapping your phone to a screen, saving for a big purchase requires patience, commitment and often a strict budget. We’re here to help you master the skill of saving.
Our guide to saving for big purchases will help you reduce your reliance on credit cards and achieve long-term goals. Buy a house in the Baltimore suburbs, travel the world, or just upgrade from a coffee machine to an espresso maker with these simple saving tips.
1. Set your savings goal.
What are you saving towards? A down payment on a house or an exciting trip abroad? Even if you’re just saving towards a fun personal splurge, setting a specific goal can help you stay committed. Start by putting your goals into words. Whether you write them down in a notebook or type them into the notes app on your phone, verbalizing your goals can help you stay motivated.
Try jotting down these things:
- Identify what you’re saving for.
- Estimate how much money you need to save over time.
- Determine how much time you have to save money.
- Estimate how much money you should save each month to achieve your goal.
- Reflect on whether or not your goal is realistic – and amend it if necessary.
Maybe you’re aiming to host a wedding with a budget of $25,000. When budgeting for that goal, set realistic expectations. Don’t impose a timeline you can’t meet or aim to spend more than you can afford.
2. Compromise on your big purchases for cheaper alternatives.
Before committing to your savings goal, explore all your options. You’re likely to uncover opportunities to reduce your spending and bring your goal even closer within your reach.
Couples planning for a wedding can opt for a more affordable wedding date or venue, aspiring homeowners can tour houses in more affordable neighborhoods. Even people saving towards a smaller purchase, like a fresh laptop or a high-tech exercise bike, can find ways to reduce the expense. Compare different brands to find the best deal, and consider purchasing refurbished or used.
3. Set your savings timeline.
Your savings timeline impacts what kinds of savings accounts you might choose. If you’re giving yourself a couple years to meet your savings goals, a Certificate of Deposit (CD) allows you to take advantage of higher interest rates and ensure your money goes at a designated rate. However, if you only have a short amount of time to save money for a big purchase, then it’s best to focus on saving the old-fashioned way – by cutting back on your expenses.
4. Identify wants vs. needs in your budget.
Whether you already have an established spending plan or you’re building a budget from scratch, conduct a review of your current expenses. Identify how much you need to set aside each month for necessities like rent, food and electricity. Then, determine how much you need to save each month to reach your saving goal. Separate your spending based on whether the expense is a want or need, and consider whether you can reduce it or do away with it altogether. Any expenses you can cut can go directly towards your savings.
5. Make a few changes to your spending habits (a little can go a long way).
You don’t need to overhaul your entire lifestyle to reach your savings goals, but you might need to make a few changes. Simple adjustments to your spending habits can have a big impact. Are you paying for a meal delivery service you don’t really use? Does your cell phone data plan provide more gigabytes than you need?
Really take the time to dig into your expenses for areas where you can save. You can even make a temporary change to put a little extra money in your wallet. Switch from a weekly delivery order of groceries to a weekly pickup to shave off the expense of tipping. Even shaving just a few dollars off your weekly spending can make a big difference because when it comes to saving, every little bit really does add up.
6. Keep your savings separate.
Mobile banking has made it easy to take control of your funds from anywhere. However, it’s so easy to transfer funds fast that it might actually make it harder to save money. It can be tempting to spend more frivolously when you can instantly transfer money between your savings account and your checking account. Simply opening a separate savings account can help you develop smarter spending habits.
Be sure to keep your emergency fund separate from your other savings accounts as well. That way, if you have an emergency expense – like a surprise visit to the emergency vet – you don’t derail your goal to save money for a big purchase.
7. Start saving for big purchases automatically.
The SECU Share Savings account lets you set up automatic transfers, so you can easily save money over time. After you’ve set your budget, decide how much you can easily save each paycheck. Even if it’s just $5, setting up an automatic deposit can help you get closer to reaching your savings goals.
8. Contribute any extra cash you get to your savings goal.
In fact, any extra money you find yourself with should go towards your savings. If you receive a bonus from work or sell an instrument that’s just been collecting dust in your house, that money can go a long way towards your savings goals.
9. Take advantage of high-yield savings.
Make your savings earn more by taking advantage of high interest rates. The one perk to high inflation and interest rate hikes from the Federal Reserve is that interest rates on savings increase. SECU members have a variety of options available to them to maximize their savings:
- Share savings: easily set up automatic transfers and create separate savings accounts for each of your savings goals
- Money Market: enjoy higher interest rates than traditional savings accounts without compromising on flexibility
- Certificate of Deposit (CD): take advantage of high interest rates and ensure your savings grow at a fixed rate
Learn more about how SECU helps you reach savings goals faster.
Achieve your savings goals with SECU
Regardless of what big purchases you’re saving for, commitment can go a long way. Once you’ve gotten into the habit of conserving your cash, you’re likely to find it gets a lot easier.
Our trained financial experts can work with you one-on-one to build a savings plan that works with your budget. Schedule a free financial wellness checkup for expert advice on affording major purchases in life without relying on credit.