You’ve spent months dreaming about those fancy earbuds, an upgraded phone, or high-end furniture. But how do you know when you can afford to make big purchases like these? Planning ahead is the only way to ensure you won’t regret an occasional indulgence.
If you’ve never created a budget before, it’s not too late to start. Planning your expenditures will allow you to see where your money goes each month. It will also build greater financial awareness. Try these tips to create a budget.
Before making large purchases, you should already have an emergency fund in place. Otherwise, if disaster strikes or you lose your job unexpectedly after spending money on a recent big purchase, you won’t have anything to fall back on.
Ideally, you should have enough in your emergency fund to cover your expenses for six months. If you’ve never had an emergency fund, aim to build a two-month cushion to start.
Throughout your savings journey, don’t take any money from your emergency fund unless it’s an emergency. As you get close to making your big purchase, you may feel tempted to grab a little from the fund to get you to your big-purchase goal. Wait the extra month or two instead, and feel good about accomplishing your financial goal.
When you’re planning for a big purchase, you need to take many factors into account. Two of them are what seasonal expenses you’re facing now and what expenses you’ll be facing in the time surrounding your purchase. These seasonal expenses can impact your ability to set money aside for your purchase or rebuild your savings once the purchase is made. For example, in the winter or summer, you pay for heating or air conditioning, respectively, which is usually – though not always – more expensive than keeping your home comfortable in the spring or fall. The winter also brings holiday months. Do you buy presents for friends and family? If so, you may not save much in December. Follow these tips for seasonal expenses.
Black Friday deals and other specials can shave a lot of money off the regular price of your big-ticket item. By waiting patiently until these deals come around, you can get what you want for a lower price. You can even set up alerts to track the price of an item across several sites and get notifications when the price drops.
Being a savvy shopper will save you money. Big-ticket items are often cheaper on Black Friday, during the run-up to Christmas, on Presidents’ Day, and on Labor Day, depending on what you need. Here are some other ways to save:
By following these tips, you can better plan for a big purchase. Learn about additional money management tips on our WalletWorks page.