We’ve all been there. You need to buy a new car, treat yourself to an expensive vacation, buy a new house… Whatever the case, you do not want to begin a last minute scurry for creditors or begin an extremely uncomfortable last hour frugality as your big budget spending draws nearer.
Whether your big money expense is coming this year or in a few years, here are some simple tips to help cushion its effects.
Undoubtedly the most important part of your purchase is planning. The success of your financial goals depends on how well you plan for them. If you’re looking to enjoy a proper vacation towards the end of the year or sometime in the summer months, why not begin saving for it now? Advanced planning could afford you the opportunity to get cheaper tickets for your flights and hotel bookings.
What if you plan on buying a car later this year or the next? If you plan for it and begin saving towards it well in advance, you will find that the financial stress will be much reduced. So, take the time to identify your next big expenditure now. Analyze your paycheck and see how you can split the load across many months. Set up a separate savings account to this effect, and ensure that your future expenditure is first paid for before you begin your monthly spending.
Improve your Savings with Some Creativity
Knowing you have to save is one thing, actually getting to save is another. With all of the bills to be paid, transport, daily feeding, regular treats, etc., the list of potential expenses is endless, making it easy to spend beyond your budget and touch into what you planned to save. The first step to actualizing your saving goals is to create a separate account for your big purchase.
Inform your employer so your planned savings is first paid into your designated account before your paycheck reaches you. Or give your bank a standing order to have your designated account funded monthly.
You could also test out your creativity by storing all of your day’s change in a piggy bank where they would not be touched until year end. It would surprise you just how much you can save if you put away your small change and avoid spending them just for spending sake.
Use Credit Cards Profitably
Just as credit cards can become a major drain on your finances, they can be used profitably. For the one thing, credit cards afford you the opportunity to earn rewards on certain purchases or to get cash back on your expenses. Be sure to only go for these benefits when you actually need the product. Travel rewards credit cards, for instance, allow you earn miles or points which you can redeem for your vacation.
Credit cards also allow you build credit if you are sure you will be needing credit for your big ticket purchase (as is normally the case with buying a car or a house). By getting a credit card and making sure to pay it off every month in timely fashion, you display credit responsibility and improve your credit score. For this strategy to work you must not lose track of your purchases with your card.
Rid Yourself of Unnecessary Subscriptions
Many of us have our funds tied away due to monthly subscriptions we never really use. Whether it’s a magazine you hardly have time to read, or it is your monthly Netflix subscription, look out for those subscriptions you don’t totally enjoy and cut them off. Private networks like Netflix and Hulu announce what you can expect in the upcoming month, so you can always unsubscribe in months where there is nothing of interest.
Bargain and Shop
Every purchase you wish to make will be available in more than one outlet or provider. Before committing to an expensive purchase, take the time to shop around for the best deal. There are almost always avenues to cut down on paying the full price for an item.
Some particular products are best bought during certain seasons and periods to enjoy cheaper deals. Do your research and check the offers with different providers before making a choice. If prices are up for negotiation, do not fail to negotiate for better deals before settling on one.
A big purchase can be scary when you consider just how deep into your paycheck it will have to eat. But with proper planning, careful savings and excellent shopping you can make the load much lighter. Be sure to check in with your short term goals as well as long term goals and start saving well in advance. Set monthly or quarterly savings targets and constantly review them to see how far you’ve come. Your vacation (or whatever your big spend is) can be much more fun when you do not have to worry so much about money.