Tips to Save Money for a Planned Big Expenditure

You are lucky if you can pay for something outright. However, not all can be lucky enough. As long as it is about small expenses, you can manage to pay for it outright, whether it is a planned or financial emergency.

If the latter is the case, you can dip into your savings or emergency cushion. However, things become complicated when you have to make a big purchase. For instance, if you have to buy a car, you will need a lot of money. It is not possible for everyone to buy it outright.

Although car finance is the option, you need to arrange money for a down payment. It is a portion of the purchase value of your car that you have to pay down at the time of the purchase. The size of this down payment consists of 10% of the value of your car.

However, it is not that easy to pay for the down payment at the time of buying a car. You will have to save money, and you will start saving money now because it can take a couple of months or years.

Likewise, there are some big expenses that you have to set aside money for. These expenses can be a wedding, home improvement, etc. Well, if you have some planned big expenses that are going to occur down the road, you should follow the following tips to save money by the time you need it.

Vital suggestions to save money for a planned big expenditure

Follow these tips and save money to manage well your significant expenses.

1.       Make a budget

First off, you need to make a budget. This budget will help you control your expenses. The more money you save, the better it is. Since you are trying to save money for the down payment, you should try to cut back on your expenses.

The money you save by cutting down on your expenses should be transferred to your car’s down payment emergency cushion.

Try to create a lean budget. A lean budget is one that allows for only essential expenses. This completely cuts back on discretionary expenses.

With the help of a lean budget, you can set aside a great amount of money. You should make a list of all of your expenses, and it must include only essential expenses.

Make sure that your budget does not include any expenses that are inessential. Now you should consider it cut back on your essential expenses.

To save money on your essential expenses, you should buy things from a thrift store. Make sure that you do not own stock upon perishable things. If you overstock things that quickly go off, you will end up hurting your budget.

2.     Build a separate savings account

You should build separate savings account for saving money for your planned expenses. Whether you have to save money for your wedding or for your car, you need to have separate savings account for such expenses.

Make sure that you do not mix through these funds and emergency cushion. The latter is totally dedicated to emergency purposes. You may take a couple of months to reach your savings goal, and you may come up with an emergency.

Having emergency funds separate will let you know how much funds you have to meet that emergency. Otherwise, you will end up dipping into your savings for a planned big expenditure. This is why it is recommended to have a separate emergency cushion from the savings account for planned expenses.

If you have come up with unforeseen expenses, you can freely use your emergency cushion. However, if it falls short, you can borrow from money lenders in Dublin. However, make sure that you can repay the debt. If you do not have a repaying capacity, you should not borrow money.

In that case, it is a better option to dip into savings you set aside for your planned expenses. You can at least avoid falling into debt. However, at the same time, you need to boost your contribution to fill the gap. Experts suggest that you should take all factors under advisement to come to a conclusion.

3.     Avoid your credit card

You should avoid using a credit card, so you do not end up making purchases of things that you do not need. A credit card is a bad card for many people because it seduces them into buying even those things that they do not need.

If you are looking to building a savings account for your big planned expenses, you should avoid completely using your credit card. Try to freeze it temporarily, so you do not end up using it to make a big purchase.

A rule of thumb says that you should use cash because this helps you know how much money you have at the time of shopping and how much you can use. If you use your credit card to buy anything, you will not realize how much you are paying, and eventually, you will end up buying an expensive product, which may hurt your budget.

This can truly affect your whole budget. Eventually, you will find that you have ended up overspending. Things become extremely complicated for you at this time. You will start financing for you and your everyday needs.

Financing your daily needs can be a good option if you can afford its repayment. If you repay the borrowed sum within the time limit, then it will prove good. Instead, this can dangerously affect your budget.

The bottom line

Setting aside money for a big planned expenditure can be quite tricky, but you can do it easily. The tips mentioned above can truly help you set aside money successfully.