There are some purchases in life which can seem almost overwhelmingly huge. And the impact that they have on your life can sometimes be proportionate to the expense. A nice, big fridge will make a huge difference to your kitchen, just as a luxury car might make a big difference to your commute.
Saving money for a large purchase like this can often be difficult. But you can make things slightly quicker and less stressful if you take a systematic approach to saving. Let’s take a look at a few key tips.
Determine how much you need to save
If you have a figure in mind for the amount you need to save, and a realistic idea of how much you’re able to save each month, then you can calculate a timeline for your new purchase. Then, when you come to cut costs, you’ll have an incentive in mind. The more you can cut, the sooner you’ll be able to make your big purchase.
Review your spending
If you’re like many people in the UK, then you’ll have several direct debits coming out of your current account each month. This might include subscriptions to magazines, streaming platforms, and other things that you might not even remember signing up for. Go through all of these and see if you can work out exactly what you need, and what you don’t need.
The same applies to one-off discretionary purchases, which can quickly accumulate. Many banks will allow you to set up alerts on your contactless payments, so that you can monitor how much you’re spending from week to week. Those takeaways can quickly add up if you’re ordering them more than once a week.
Set up a savings account
For certain one-off purchases, it might be useful to create some separation between your day-to-day funds and your savings. You can do this by setting up a separate savings account, into which you’ll deposit a fixed amount each month.
If you know that you’re going to need to make an investment within a certain timeframe, then you might adjust your monthly spending accordingly. For example, if you know that you’ll need a new car before you start a new job the following year, then having this in mind will allow you to make better decisions when it comes to saving.
Being able to reduce the cost of your big purchase might mean changing exactly what it is, and who you’re buying it from. If you can knock a few hundred pounds off your new fridge, then you’ll be able to save for it that much more quickly. Going second-hand might be worthwhile. Bear in mind that the more cash you save, the more vulnerable you’ll be to inflation – so buying sooner is often worthwhile.