– Heather Ah San
How often do you sit around wishing you had the money to jet off to Europe next summer? Maybe you’d like to be putting a down payment on a house or car?
As tempting as it is to whip out that credit card, one thing the recession has taught us is that credit cards don’t just magically create money. A lot of credit card users learned this lesson the hard way, getting themselves into unfathomable amounts of debt.
It’s never too late to learn good money habits, however. And learning how to save your money for future use is one of the best practices you can get into. When you are saving money for a big ticket item, it’s important to watch your daily spending on smaller purchase items as well.
Don’t know where to start? Here are some tips and tricks for how to save your money for big purchases:
- Create Budget For Yourself
If you’re saving for a future purchase, you must start being more conscious of your money habits. The first step is to distinguish between your wants and your needs. Make absolutely sure you have the funds necessary for all of your needs. House, food, clothing and transportation are the most basic needs. If going to the bars for the third time this week sets you back for rent money next month, you should reprioritize.
The second step you can take when you create a budget is cutting out unnecessary spending by tracking you purchases for awhile, then seeing what unnecessary purchases you may be making. You don’t have to cut out all the fun, or unpractical purchases in your life, but cut back a little and put the extra cash in your pocket.
If you feel like you need to save even more, cancel your cable (most TV is online anyway) or try splitting the internet bill with your neighbor.
- Make sure you have a savings account
While you may have a savings account, you may not be utilizing it to its full potential. For one, make sure you are putting in your money in a bank where the interest rate is decent. It also might be wise to take a certain percent, or amount of money out of your paycheck every pay period into your savings and toward your future purchase. If you are able to, start by putting $100 every pay period towards in your savings. Try to increase that amount by maybe 10 to 20 percent every time you do it. The money won’t go anywhere, and you can always put it back in your checking later. But gaining at least some interest is always good.
Okay, you probably won’t rake in the dollars like Donald Trump by getting a babysitting gig, and you’ll most likely have to give up a weekend night. But by getting a little extra cash here and there, the road to your dream purchase will be so much faster!
- Give yourself some fun money
Saving money doesn’t mean you have to sit alone eating Top Ramen on the weekends. The key is to allot a certain amount of money for certain “fun” purchases a week. If that money happens to roll out before Friday night, well then tough luck. It does, however, show how fast your money will disappear when you’re not careful with it.
- Remind yourself what you’re working towards
Sometimes it’s hard to remember why you started skimping and saving in the first place. One reason is that it’s a good habit to get into; no matter how expensive the dream item, having backup funds in case of emergency or to pay off a large credit card bill is always smart.
Furthermore, imagine how satisfied you will feel once you buy it, and don’t have debt to pay off afterward. Research the item, print a picture and put it on your wall. If you’re planning a vacation, read up on the area. If you want an iPad, browse all the cool apps. Remind yourself of the rewards of your purchase, especially if you’re forced to tutor a kid on a Saturday night.
If you would love traveling in the summer of 2011 to Europe, but the price of it all is blowing your mind, maybe you should push the date back a bit, or change the date you leave for an off-season like winter or early spring. When buying something like a car, make sure you wait long enough to provide a substantial down payment, and have the money to pay off the minimum on the loan every month. Yes, while you feel like you’ve been waiting and wishing forever, keep in mind that no matter how fancy the car or how much you want that expensive dream purse, being in debt is not trendy at all.