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7 Easy Tricks For Saving For Your Next Big-Ticket Purchase

It’s one of the Golden Rules of personal finance: every big-ticket purchase must eventually be replaced.

If you’re like most Americans, you may only have $500 in your savings account tucked away for an emergency or unexpected cost.

According to a survey from GoBankingRates, “nearly seven in 10 Americans (69%) had less than $1,000 in their savings account,” reports USA Today.

That’s hardly enough to cover the cost of a mortgage down payment - or a new car. So how do you save up for your next big purchase?

Here are seven easy tricks to make sure you have enough money in the bank to cover the cost without going broke:

1. Know Your Budget

Budgeting is the un-sexy secret to saving up for just about anything.

Unfortunately, the average person has a hard time budgeting accurately. Why? According to business professor Rakesh Gupta, it’s because most of us only have a vague idea of how much we really should spend.

“When they are spending...money, they don't know how much discretionary income they have," Gupta told U.S. News & World Report. "They have a mental idea of how much to spend."

This mental picture isn’t exactly a great tool for tracking our spending habits. But thanks to services like Mint and Simple, a vague idea of your financial picture is no longer an excuse for leaking cash. Mint gives you up-to-the-minute details about your income and expenses - and can also help you set aside money for saving. Simple offers similar budgeting services, in addition to banking.

Here are just a few of the other variables in your financial picture that you should have down pat before you even think about clicking “buy”:

  • Your monthly income. Count all the money from your employment and any side gigs, like freelancing or consulting.
  • The cost of your big-ticket item. Have you done your research on your desired purchase? Do you know how much the item will cost, as well as any associated fees and taxes? Get ready to shell out money above and beyond the list price, especially if you’re buying a car or a house.
  • How much you can afford to sock away. Once you account for your monthly expenditures, like rent, utilities, food, and other incidentals, you’ll - hopefully - have an amount left over. Determine how much you can put aside to save for your item.
  • Your saving timeline. Say you want to buy a new computer and know you need $2,500 - but you can only comfortably afford to set aside $200 a month toward this purchase. It’s going to take you just over a year to get that computer without going into debt. It might fly in the face of our “want it now” culture, but a realistic timeline could save you more in the long run.

2. Save Small, Buy Big

If you’re not a good saver, it’s most likely because the task seems daunting - so you just don’t make it a habit.

Instead of thinking about your end goal - say, $10,000 for a new car - break the amount down into a feasible monthly or weekly savings goal.

“The key to saving is consistency and only putting aside small increments at a time,” contributors Chris Haddon and Jason Balin share at Entrepreneur.

One of the best ways to do this is to automate your savings plan. Set up an automatic withdrawal of $25 or $50 to coincide with your biweekly paycheck. Over time, that’s an extra $50 or $100 per month socked away toward your big goal.

Newer financial services like Digit make this even easier. Digit is an automated savings account that analyzes your spending habits and sets aside money you won’t miss - in a totally separate account.

Whether you use an automated service or manually shuffle money around, start small to save big.


3. Open a Separate Account

Want to make sure you’ll save up without dipping into your nest egg? Open a separate savings account so you can easily track monthly progress toward your goal.

Not only will this strategy keep your money separate, but it’ll also help you maintain morale as you get closer to buying that big-ticket item.

“Without targeted savings accounts, people are more likely to raid their emergency savings accounts for big purchases,” personal finance blogger Neal Frankle explained to BankRate.com.

“Instead, targeted savings goals spur good spending behaviors because you must monitor your savings and spending to meet your goals,” Frankle added.

Bonus tip? Open a savings account that offers a solid interest rate - that way, you can get extra money toward your goal.

Online accounts like ING Direct and Ally offer budgeting tools and multiple accounts for just this reason. Learn more about how to open multiple savings accounts at The New York Times.

4. Schedule Reminders

If you’re nervous about automating your new savings plan, make sure to schedule yourself a reminder to move money around.

Maybe it’s the first of the month, when you pay your rent check, or the 15th, when you pay your bills.

And, if you’ve automated your payments, schedule a time to check in on your accounts and all the progress you’ve made so far.

Targeted savings accounts are great for this kind of motivation, since they help you feel more attached to your goals.

“I’m able to name what I’m saving for,” writes personal finance expert J.D. Roth of his targeted saving strategy. “I’m much more motivated to set aside money for my travel fund than I am to just put it into a plain, vanilla savings account.”

When your statement comes, take a moment to read up on the trip you want to take, or the car you want to buy, so you remember why you’re putting aside all that money, too.

5. Invest “Extra” Income

“Extra” money isn’t exactly easy to come by, even if you’ve budgeted for your new big-ticket purchase like a boss.

But if your recent budgeting efforts have made you rethink monthly purchases - like saving on your cable and phone bill, or cutting back on your magazine subscriptions - then you do have some “extra” cash floating around.

Divert these savings into your new savings account, suggests Liz Weston at NerdWallet.com, so you can reach your grand total even more quickly. Just don’t forget to account for the money in your budget.

Finally - did you get a raise this year? A hefty tax return? Start a side gig? Put aside all - or some - of that money toward your new purchase.

Voilà. That new computer will be yours in no time.

6. Take a Break

Need an extra boost for your savings? Sometimes it’s easier to take a break. Not from saving, of course - from spending.

Finance reporter Anna Davies recommends going on a “spending fast” to help you reach your goal that much faster.

“Denver resident Anna Newell Jones, 34, and her husband curbed their spending for an entire year and saved nearly $24,000, allowing them to begin to plan to purchase a house,” reports Davies at the Citibank blog.

The idea, says Davies, is to scale back your expenses and funnel the savings toward a single financial goal.

You can even consider living like you did a few years ago - before you landed that new job or got a raise. What did you used to live without that you can give up again? If it puts you on a faster path toward a down payment, cutting the cord on HBO for a year might be worth it!

7. Ditch Your Credit Mindset

If you have a credit card set aside for making big purchases, you may want to put it away.

According to Jim Probasco, putting major purchases on a credit card - especially if you have limited means to pay it back - has a tendency to backfire.

“Sometimes people are forced to save because their financial situation won’t allow them to take on more debt,” Probasco acknowledges at Investopedia. “It may be better to put off that large purchase until you have the money in hand.”

Still, if you have a 0% interest credit card - and a plan for paying down your debt immediately - you could use credit for more flexibility, says Probasco.

Just swipe that card with caution. Remember that a credit card payment will have to be added to your monthly budget - along with any interest you accrue once your 0% interest offer expires.

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