Most of us have a good handle on our monthly budget. We know how much it costs to cover insurance, utilities, housing, and so forth. Those expenses are easier to track because they come up every month. The hard part is finding a way to budget for those occasional items–a vacation, new appliances, or other big outlays that come along less frequently. Here’s a simple guide to preparing for those purchases without getting strapped for cash.
We’ve all had that car repair or broken dishwasher that hit us with no warning, but most other big expenses are visible on the horizon if we will just look.
Is your car 20,000 miles from its next set of tires? Start putting some money aside for them. You know you want to take a vacation each summer, so start saving for next year’s trip as soon as you get home this year’s. Each time you pay bills, think about what may be coming along next and put some money toward it.
You can learn something about planning ahead from the business world. Successful businesses always start early on upcoming projects. Procrastination and business finance never cross paths in those successful companies, and they shouldn’t for you either. Identify your upcoming financial needs, then immediately start saving for them. The more months you have to reach the goal, the less it takes each month; if you save up for two years instead of one year, you need half as much each month.
If your favorite restaurant wants to add a second location, they don’t wait until the last minute to get started saving up the money. They begin that process as soon as they have the idea to expand. Successful companies know that procrastination and business finance do not go together, and the same is true for personal finance.
When you have several different savings goals, it can be easy to lose track of how much you have set aside for each. Twenty years ago, you might have found it easier to start a coffee can for each project, but today’s solution is as close as your phone.
There are countless budgeting apps available that can help you break a single savings account into line items for each of your upcoming big-ticket expenses. If a generous uncle gives you money to replace your roof, you simply plow that money into a different effort. Just remember to maintain your usual emergency fund in a totally separate location.
TV, social media, and even your mailbox are full of credit card offers. While it’s good to have a card for emergencies and as a safer option for online shopping, you must remember that your available credit is not money. It’s potential debt–specifically, unsecured debt with a very high interest rate.
Only use your credit card for things that you know you will be able to pay in full immediately. Wise credit card use can earn you rewards and airline miles while also improving your credit score, but racking up debt on it inflates the cost of everything you bought and makes it harder to reach long-term goals like buying a home.
Whatever exact strategies you use to reach your financial goals, the most important thing is to stay focused on the goal. Picture yourself having the money to pay a tuition bill, buy a new lawnmower, or get the front porch painted without undermining your monthly budget or your other savings goals. With that happy image in mind, saving becomes easy.