Saving for a big-ticket item is a smart strategy. Whether you’ve got your eyes on a motorbike, an engagement ring or an original Pac-Man arcade machine, it makes sense to avoid going into debt. You’ll save money on interest, and you might even earn a bit back while you’re saving.
We’ve got five easy steps to help you with your big goal saving.
1. Know what you’re saving for.
It’s easier to save when you’re aiming for something tangible. You might be saving for a car, planning an overseas trip, or even thinking about saving for a first home. Whatever the case, set a goal that inspires you and you’ll be more likely to achieve it. Knowing when you’ve reached your goal means you can start working towards the next one, too.
2. Set a timeframe.
Just like knowing what you’re saving for, having a date to work towards will make you more likely to succeed. Set a deadline (with our handy savings calculator for example), then work backwards. If you want to save $3,000 by Christmas, how much will you need to put away every pay cycle? Or flip it – if you can afford to save $150 a fortnight, how long will it take you to reach your goal? Fix the date. Put it in your phone. Write it on your hand.
3. Keep your savings separate.
Nothing makes your goal seem more real than opening a savings account dedicated to your big-ticket purchase. It’s so new, so full of promise. Putting money into it feels like looking directly into your bright future. Keeping these funds separate makes it easier to see how close you are to your goal. The interest you earn will help grow your savings, and by keeping your savings separate from daily finances you won’t be tempted to dip into your nest egg.
Look for a savings account paying a healthy ongoing rate of interest. Accounts that have strings attached can make it hard to earn a consistently high rate.
4. Make automatic transfers to your savings.
Setting up electronic transfers from your everyday account makes it so easy. You don’t need to think about it – the money is gone before you have a chance to spend it.
Don’t just plan to save whatever is left over after you’ve paid regular expenses. Aim to give your savings top priority.
5. Share your goal with others.
Don’t keep your savings goal to yourself. Let family and friends know about it. They can hold you accountable, help you stay motivated, and might even chip in with a cash injection h on special occasions like birthdays, International Children’s Day or Mondays.
6. Think about using cute stickers.
Just like little kids respond to elephant stamps, marking small milestones can be a great motivator. Don’t spend all your dosh buying the rewards, though; sometimes a simple gold star can be enough to keep your savings balance climbing.
Saving for something major is a great goal. You get the satisfaction of achieving it and whatever amazing thing you’ve decided to save for. Plus, paying in cash will give you more room to negotiate and keep you out of expensive debt.
Make it easy for yourself with these tips and you’ll be picking up your new car/TV/hot air balloon in no time.
This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.