It doesn’t matter what it is: a car, a house, a baby’s arrival, a trip. Big purchases are difficult to save for, especially considering that nearly 63 percent of Americans report that they live paycheck to paycheck. You likely already feel that things are tight enough as it is – how can you put away extra hundreds or thousands of dollars to save for a big purchase or for a bigger goal in the future?
Based on my research and my own experiencing saving for big purchases, here are the best ways to put away money without feeling like you’re sacrificing. Follow these tips and you’ll find it’s easier to watch your savings account fill up, even if you aren’t living your lifestyle that differently.
3 Tips on How to Save for a Big Purchase
1. Remind Yourself That Every Dollar Counts
I know so many people who groan and say “I’ll never be able to afford a house like this” or “Ugh, I wish I could travel more.” Then, I watch these same people spend money freely on things like coffee, clothing, alcohol, dinners out, concert tickets, etc. That’s not to shame these people – those are perfectly fine things to spend your money on.
My point is that those expenses add up more than you realize. For example, let’s say you spend $15 on alcohol a week, which is fairly normal. In the course of a year, that’s $720 a year you could be putting toward a bigger expense. Add on the other fun things you’re going, and you could easily be looking at thousands of dollars that could be put toward a bigger goal.
Now, I promised you wouldn’t have to feel like you’re sacrificing, and giving these things up would definitely feel like a sacrifice. However, I’ve found that it’s all in your mindset. If I were to ask you, right now, which thing you wanted more: a trip to Hawaii or tickets to your favorite artist’s concert, which would you pick?
You’ll find that many times, your bigger goals are actually more important to you than those small expenses. It’s just that we don’t think about it that way. In reality, choosing to buy that $200 purse or go out for dinner almost every night is causing you to sacrifice your dreams for the future, so by cutting those things out more, you’ll actually sacrifice less.
2. Label Your Savings
There’s something incredibly satisfying about watching your savings add up, and that’s difficult to do if your savings are included in your regular bank account. Plus, you’re more likely to spend your savings if you have easy access to it.
I’d recommend putting your savings in a separate account that’s explicitly set aside for one purpose. If you’re saving for a house, open an account and label it “Dream Home.” Then transfer money into it on a daily basis and leave that money untouched as much as possible.
Be careful about which kind of savings account you use. As I said before, every dollar adds up, so you’ll want to choose an account with low fees and some kind of interest rate. Barclays, Ally, and Citi all have high-yield savings that are easy to open and use.
3. Plan Ahead
If you know that you can’t afford to put away more than $100 a month for your big goal, then don’t put unfair time constraints on yourself. That will just lead to more stress and discouragement. Think about how much you can reasonably save, then orient your timeline around that goal.
For instance, if you know you want to buy a house that costs around $350,000 and that you can save $1,000 a month, figure out how long it will take you to acquire a 20 percent downpayment. Don’t pick your move date before you’ve figured out how long it will take you to save the money without scrimping and saving dramatically.
In all honesty, saving for a big purchase is more about your mindset than it is about anything else. What are you willing to give up for your big goals? What’s important to you? How are you planning based on your own capabilities, not everyone else’s?
By following these tips, you’ll find that saving isn’t impossible. It just takes time and dedication, as well as a whole lot of self-control.
Related Reading: How To Save Money: 7 Tips