How to Save Wisely for Your Next Big Purchase

Determine a Savings Goal

When you’re ready to get serious about saving, the first step is to come up with a realistic savings goal. There are two parts to this: knowing how much your purchase is likely to cost and understanding how much you can afford.

For instance, if you’re interested in buying a home and want to start saving for the down payment, you first need to figure out how much you can spend on a home. This can be done by getting pre-qualified for a home loan and then determining how much of a down payment you plan to make. Traditionally, down payments are 20% of the home’s value, but some lenders accept as little as 3%. Whatever amount you choose, that is your savings goal.

Setting a goal amount is important. When you have a specific number to aim for while saving, your end result will feel more reachable.

Be Realistic About Your Goal

It’s fun to picture yourself finally making your large purchase, but the anticipation of reaching that goal can sometimes lead people to be more aggressive with their savings than they should be. While it’s good to be serious about saving, it’s also helpful to be realistic about how much you’re able to save without sacrificing too much in your normal life. Monthly bills, for instance, still need to be paid.

Being realistic about how much you can set aside each week or month can actually allow you to attain your goal sooner. This may seem counterintuitive, but when you aim to save more than you’re actually able to, it can occasionally lead to skipping out on saving altogether. Instead, having a steady, even small goal that you’re able to meet on a regular basis is the best way to do it. Being consistent can ensure that you don’t get yourself into a situation where you have to dig into your savings at any point and lose the progress you’ve made.

Set a Timeline

Large purchases don’t often happen at the drop of a hat. They take time and effective saving to accomplish. Setting a savings timeline is a great way to figure out exactly when you’ll reach the finish line and be able to hit the buy button. The timeline you set will depend on how big of a purchase you plan on making. A car purchase can likely be accomplished faster than buying a home, but having an end date to strive toward can be strong motivation either way.

Open a Credit Union Savings Account

Saving is a lot easier when your spending money is separate from your savings. It can prevent you from being tempted to use your savings before it’s time and give you a better idea of your progress toward your goal. Opening a credit union savings account can also come with a few perks that help you contribute to your overall savings goals.

Credit unions like MHV offer competitive interest rates, online and mobile banking options, and direct deposit. As a member, you also get access to a variety of educational resources to help you meet your goals. Often, it only takes a $5 deposit to open a credit union savings account, making it more than attainable for most members to take advantage of.

Consider a side hustle

Increasing your income, even by a small amount, is one of the best ways to save effectively without affecting your normal monthly budget.

You might consider picking up a short-term job, seasonal job, or side hustle. You can also sell slightly used belongings that you no longer need. Devote all of the money you make from any of these to your large purchase, and you may find yourself bumping months off your initial savings timeline.