Lofty goals: how to save for something big
Whether it’s a car, a family vacation, college tuition or home renovations, those big-ticket items can sometimes seem like financial impossibilities. But with careful planning, diligence and patience, those big dreams can eventually come true.
As with pretty much anything related to personal financial goals, the very first step is to create a budget. You need to know where your money is going and how much you have left at the end of each month in order to determine what spending habits you need to change, and if you need to augment your income to reach your goal. Review our seven easy steps for building a budget, and if you haven’t already done so, make your household budget.
Next, follow these simple tips from Bank of America1 to help you save your money:
- Set a goal date. You already know what it is you want to purchase, so determine when you hope, or need, to buy it. Is it 5 months, 10 months, or a year down the road?
- Determine how many paychecks you will receive between now and your goal date. Divide the cost of your item by the number of times you’ll be paid. That amount is the amount you’ll need to save per paycheck. So if the item you want to purchase costs $1000, and you get paid twice a month and want to purchase your item in 5 months, you’ll need to save $100 per paycheck. Your equation looks like this:
2 x 5 = 10 paychecks
$1000 ÷ 10 = $100 per paycheck.
- Determine if that goal is achievable. Do you need to extend your time frame by a few months? Do you need to augment your income by working extra shifts or picking up a part-time job? Do you need to revisit your household budget you determine where you can cut spending in another area? This is why it’s so critical to have a budget already set up. It’s simple to see what needs to be done to achieve your goal when you can account for all your income and expenditures at a glance.
- Put your saved money in a special account. This will keep you from being tempted to use it, and you can have your bank automatically move your predetermined amount into that account after each pay period. You can also simply pop your saved money into a jar or piggy bank, of course, but it’s a lot easier to “borrow” from that jar when it’s sitting right in front of you!
Following these steps can help alleviate some of the stress and anxiety you may feel when it comes to saving for a big-ticket item. You’ll always know how much you have saved, how long it will take you to achieve your goal, and what you need to be able to do it.
If you need any additional help as you strive to reach your goals, don’t forget that as a Foresters member you have access to Everyday Money. It’s our toll-free financial helpline that connects you to an accredited counselor who can help answer your questions about your personal financial matters such as debt management and budgeting. Visit MyForesters.com to find out more.
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