To manage your personal finance, you have to figure out how you will be handling your expenses. However, this is not always easy considering that some purchases require lots of cash and some credit.
When you’ve determined the exact amount required for a big-ticket purchase, the most appropriate action is to plan how you will get the money. Of course, saving enough cash requires patience and dedication. If you can use the tips discussed here, you’ll be in a position to achieve your goals faster.
Review your finances and plan early
Knowing how much you need is the first step in the planning process. However, you need to understand your finances in order to determine the best approach towards the objective.
Once the plans are in place, it’s easier to stay on the lookout for attractive deals that can save you some money. At the same time, preparing well before making the purchase means you will have an easier time executing the plan. Besides, you don’t want to feel overwhelmed by the purchase.
As long as you have the estimated amount you need for the item, it’s in your best interest to decide the amount you will set aside every month.
Create a dedicated savings account
If your goal is to buy a home or a car, it’s best if you opened high-yield savings account to make sure you’ll be earning some high interests for the entire period of saving. However, most of these accounts come with minimum balance and deposits requirements. In addition, the fact that there are transaction limitations make it great for saving for a huge ticket item.
Since it can be daunting to keep up with a huge saving goal, having a plan with automated contributions can make things better. Today, there are multiple ways of sending funds automatically thanks to online banking options.
Break down the goal and save more than minimum amounts
If you look at the purchase as one huge target, it’s easy to be scared. But if you break it down depending on the time you’ve left until the deadline, things become quite easy.
For instance, if the goal brings you to a minimum amount of say $500 every month, strive to contribute more than this. While it may put some pressure on your finances, you will achieve your objective faster and you’ll also be cushioned from any future mishaps that can affect the contribution. With this in mind, direct any extra cash you receive to the savings to fast-track the plan.
Control your spending habits
As long as your spending habits are out of control, accumulating enough funds for a huge purchase may be a far-off dream. Take a look at your budget and identify the items that you can cut back without inflicting excess stress on your life. The best way to achieve this is by ranking all your expenses by order of importance then determine whether it’s a necessity or a need.
When you can eliminate an item from the budget but it’s taking a huge share of your finances, it’s possible to renegotiate the deal with the vendors. This will also give you the opportunity of downgrading to a lower version which costs less money.
Ideally, the objective is to eliminate the budget busters and ensure that you’ve freed up as much money as possible. At the same time, it’s important that you curb the urge for spontaneous spending which can end up eating into your savings.
A safety net is quite important
When you set out on a savings journey, you will be making several changes to your lifestyle. However, this doesn’t mean that something nasty can’t happen. Most of the times, emergency expenses creep on you when you least expect it.
If this happens, it’s easy to use the money that you’ve been saving. As a consequence, the progress achieved will be reset and this can put the objective in jeopardy. To avoid this, it’s wise to have an emergency fund which will serve as your landing pad if the worst happens.
Use credit to your advantage
If you develop a habit of taking advantage of the benefits of credit cards, you can save lots of money in the form of rewards. This is definitely not something that will work out for everyone considering that some people have lots of debts already. Nevertheless, if you don’t have a problem handling the monthly payments, the cash back and points earned can be a great boost.
Therefore, you need to determine the most appropriate credit card depending on the benefits offered. For instance, if you do a lot of traveling, you can take a card that will give you maximum points on travel related expenses. This means that you can put the saved amounts into your dedicated account.
If the credit card is offering significant benefits in terms of savings when making the big purchase, you might consider taking a loan from justrightloans.com to finance the expenses. Here, the loan will be used to clear the credit card balance to avoid incurring high-interest rates. Then, you can comfortably repay the loan since it has a lower interest rate than the credit card debt. Besides, you will have reaped the benefits of the reward card.
Whether you want to take a long vacation or purchase a vehicle, it can be achieved. You just have to make sure the goal is not too fictitious as far as your financial standing and timing is concerned. Although it can get scary, you will make progress if you take your time to plan well and in advance.
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Author: James McQuiston
Ph.D. in Political Science, Kent State University.
I have been the editor at NeuFutur / neufutur.com since I was 15. Looking for new staff members all the time; email me if you are interested. Thanks!
View all posts by James McQuiston