It is important to plan and save ahead of time for large purchases such as vacations, cars, weddings, and a house. The following tips are meant to help you financially prepare for these purchases and make the most of your investment.
Large Purchases – Saving for Vacation
With a little bit of planning in advance, you can make the most of a relaxing vacation. By taking some time to think about how you will afford and save for a trip, you can relax more in the moment and anticipate the expenses you will incur. Consider the following five tips to get started with your vacation financial planning.
- Open a dedicated vacation bank account – Separating your vacation savings from your general money will help you avoid dipping into it for other expenses. A high-yield account can also help you grow your savings leading up to your trip.
- Create a savings target – Take into consideration the expenses you expect to incur on your vacation, such as flights, hotels, food, and entertainment. After totaling those costs, create a savings target that will comfortably cover them.
- Resist impulse buys – While saving for vacation, resist buying unnecessary large items to save money.
- Set aside a portion of your tax refund – If you anticipate receiving a tax refund in the near future, set aside a portion to your vacation fund. This will help you avoid using it for unnecessary impulse buys, while boosting your vacation savings amount.
- Get a travel rewards credit card – Many travel rewards credit cards offer sign-up bonuses, travel rewards with money off travel purchases, and earn miles that can be used towards future travel expenses.
Large Purchases – Saving for a Car
Cars can be extremely expensive and may be a necessity if you live somewhere with no public transit or other transportation options. Therefore, it’s important to start saving early if you are looking to purchase a car. Try following these tips to begin your car savings journey.
- Consider how much you can afford to put down – If you can afford it, it may be a good idea to buy your car in cash to avoid paying any loans. However, for many people this isn’t possible, so take some time to research different car financing options to find the best rates and options for you.
- Use a budgeting app – Budgeting apps can help you see your progress towards savings goals and you can make progress faster by establishing better spending and saving habits.
- Contribute any spare cash – Put work bonuses, government checks, tax refunds, and extra birthday cash aside to go towards your car.
- Buy used – Consider buying a used car rather than a new one if it meets your needs. Especially if someone you know and trust is selling one, you could get a much cheaper price for a car with many years still left in it.
- Trade in or sell your old car – If you already own a car, consider trading it in to contribute towards your new one and reduce the cash you have to pay upfront. If you have the time and effort, you can also try selling it yourself, which can generate more money than trading it in.
Large Purchases – Saving for a Wedding or Large Event
Weddings and other important events can feel out of reach and overwhelming from a financial standpoint. However, with the right planning and savings strategy, you can tackle the financial challenges associated with weddings. The following tips will help you save and plan for the big day:
- Create a wedding budget – Set realistic expectations and priorities to create your budget. Think about how much you’re willing to spend and consider some cost saving opportunities such as having your wedding during the off season, compromising on location, or a having smaller guest list.
- Open a wedding bank account – Setting aside your wedding savings in one spot can help you avoid dipping into the money early. A dedicated bank account allows you to build savings until the big day and stay motivated towards your wedding goals as you can watch the balance rise.
- Automate deposits weekly or monthly – Set up regular deposits to your wedding account to save a little every week. This will feel less overwhelming and unattainable, and provide some momentum to your savings.
- Comparison shop – Research different wedding venues and vendors to get several quotes on each expense before deciding.
- Search for wedding deals – Make the most of wedding deals during off seasons. For example, you may find deals on wedding rings in March or a wedding dress that is on sale in January.
Large Purchases – Saving for a House Downpayment
When purchasing a house, the downpayment is a huge financial commitment that can take some time to plan and save for. The following tips will help you kickstart your savings plan.
- Consider downsizing your vehicles – If you or your family have multiple cars, consider giving one up to help save for a down payment. You can save thousands of dollars per year on insurance, gas, and maintenance costs, as well as make some money on the sale of your car.
- Consider downpayment assistance – There are many government plans offering down payment assistance, such as the Home Buyers’ Plan, which you can learn more about in our “Guide to purchasing a house in 2021” article.
- Eliminate unnecessary expenses – Look into your monthly expenses and eliminate ones you don’t need or use, such as music or TV subscriptions.
- Find cheaper alternatives – To increase your savings fund, find cheaper ways of doing everyday things. For example, take a staycation instead of an expensive vacation or use coupons for grocery trips.
- Boost your income – Pick up an extra income stream or side job to supplement your income while saving for a down payment. Check out our blog post, “How to Create Additional Income Streams – 6 Ideas to Get You Started”, to get some inspiration for additional passive and active income streams.
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