The time has come. You need a new computer or maybe a new car. Mom and Dad can’t help you forever. It’s time to do it yourself. Here’s a guide to saving for a big purchase.
Traditionally when we think about saving for a large purchase we think about saving for a car or a home. But there are other short-term and life event purchases that could also fall into this category. For example, saving for a new computer, a vacation, or a wedding could all fall into the large purchase category. No matter what you are saving for, the way to achieve your goal is the same:
Set a Goal.
- Decide what you want to save for.
Make a Plan.
- Determine how much you want to save a month and for how long.
- Set up direct deposit or put part of your pay into a savings account automatically each month.
Strategies for Saving for a Large Purchase
- Build adequate emergency savings – Before you begin to save for any large purchase, make sure you have adequate emergency savings. You wouldn’t want to save for months or years only to have to dip into your large purchase savings in order to pay for an emergency.
- Pay Yourself First – Once you have set your goal and made a plan on how long it will take to reach your goal, have money automatically put into an account through direct deposit or an automatic transfer from your checking account.
- Keep your savings safe and protected
- If you are looking to save for a few years, consider putting your savings in a Certificate of Deposit (CD), a U.S. Savings bond, or a 529 account (for college savings) These types of accounts generally yield more than a typical savings account but also have limitations to when you can access your funds. Learn more about financial products to help you save.
- Some large purchases, like saving for an appliance, a computer, or a vacation take less time to save for. For these types of purchases consider putting your savings into a savings account or share account. This will keep your money safe and secure and you can usually access your savings at any time.
When it’s all said and done, you’ll be able to make that rather large purchase, without feeling guilty. You worked hard for this. Enjoy it.