Purchasing something big like a car or a house can be quite overwhelming for you and your pocket. If not planned and accounted for financially, a sudden big purchase can empty your bank accounts and throw you off track from your financial goals.
Being prepared financially for a big purchase by calculating how much you need to save monthly can go a long way in ensuring that you stay on track.
Here are some ways in which you can save up for big purchases:
Always Plan For Your Big Purchases
The most important thing is to never make sudden financial decisions and always ensure that you have a good plan for a big purchase. Whether it is buying a house or even your own wedding, having a solid financial plan will help the entire process much smoother and easier for you financially. It is good to always be proactive with your finances, rather than being reactive.
Create a Savings Plan with Wizely
Once you have planned for a big purchase and decided how much money you will need to spend, create a savings plan specifically for that goal. Putting aside a dedicated sum of money every month in that savings plan will help you take care of the bigger expense easily. So, if you need Rs 5 lakhs for your wedding after 10 months, then clearly you will need to save Rs 50,000 per month for the next 10 months to achieve your target amount. So plan your finances accordingly.
Use the 50/30/20 Rule to Review Your Expenses
Saving for a big purchase will also need you to review your current, day-to-day expenses and cut any unnecessary costs. Use the 50/30/20 budgeting rule to budget and evaluate your expenses.
The 50/30/20 rule is a budgeting framework that outlines what percentage of your income to allocate for the three of the most important parts of your budget.
The premise is simple - you allocate 50% of your budget for your essentials, 30% for wants, and 20% for debt and savings. This simple strategy will definitely help you stay on track with your bigger financial goals.
You can read more about the 50/30/20 budget rule here.
Invest Your Money
If you are planning to purchase something in a few years’ time and not immediately, then a good way to grow your money is to invest it. Consider investing in a high-yielding mutual fund or move your money to a high-yield savings account that can help you earn additional interest. Start with small amounts of money, if you are unsure of investing and gradually invest large sums of money once you are comfortable with the flow.
Use Credit Smartly
If you are in the habit of using your credit card to its full capacity, then you might want to take a step back and review your habit. While planning for a large expense, you must ensure that you don’t have a huge amount of debt eating away your savings. Do not overuse your credit card and always pay your credit card bills in full and on time to avoid paying recurring interest charges. A healthy credit activity will also help boost your credit score.
Create a Secondary Income Stream
To pay for a big purchase without hurting your current savings, you might also want to consider creating an alternate income stream for yourself. Can you pick up coaching or tutoring on the side to make some extra money? Or create a blog or a YouTube channel to earn some extra cash? Having a secondary source of income will also build your financial confidence and help you prepare for unexpected situations.
Stay Motivated and Review Your Status Regularly
And finally, it is important to stay motivated and not get distracted. If you want that dream wedding or buy that beautiful house, you will need to sweat it out, figuratively speaking! From cutting unnecessary costs in your daily budget to saving up regularly, you will need to push yourself to stay on track and review your status regularly. Achieving your financial goals will not be easy, but it will definitely be worth it and you know it!
Follow these steps and let us know if you were able to achieve your financial goals. Feel free to reach out to us on the Wizely app or on our social media handles and share your experience with us.