The idea of saving for something big–like the down payment on a car or a long European vacay–might feel impossible, especially if you’re just getting to a point where you aren’t living paycheck to paycheck. But take heart! Like with any other big challenge, saving up for a big ticket item is doable: You just have to take it one step at a time.
For the purpose of this post, we’re talking about goals that might cost anywhere from $1,000 to $10,000 or so: Certainly a lot of money, but an amount you can probably scrape together within a few months or years.
Saving for something big
How much will you need?
To get started, take the time to create a budget for your goal. How much money will it actually take to make it happen?
Some big purchases might be fairly easy to estimate–if you’re interested in buying a specific model of car, you can do some research to figure out how much others have paid for it. You can also find information about the cost to maintain the car, and how much gas will cost you each month to come up with an overall total you’ll want to save.
Figuring out how much to budget for other big purchases might be harder to estimate: Like a trip to Europe. The total cost will depend on where you stay, how much you spend on airfare and other transportation costs, and how much you choose to indulge in local delicacies.
There might be other associated costs to save up for, too–for example, if you want to take a longer vacation but you have pets at home, you’ll need to include boarding costs in your budget. If you don’t have a passport or the right kind of luggage for a long trip, you’ll need to pay for those as well.
If you have a friend or family who recently made a similar purchase to the one you’re planning, ask them to help you come up with a realistic budget. Write down everything you’re including in your budget, and ask them to let you know if there’s anything you’re forgetting. A little research can also help you figure out everything you’ll need to include in your total (for travel budgets, try looking on Pinterest).
Once you know how much you’ll be saving, it’s time to set a due date to put your plan into action! This will help you figure out how much you need to save per day, per week, or per pay period in order to make your goal a reality.
Be sure to think through when you’ll actually need the money, which might not be the same as when you plan on doing the goal. For example, If you’re planning a vacation, you might need to purchase flights or pre-pay for other parts of your trip in advance. If that’s the case, set your ‘due date’ for your goal for when you think you’ll be making those purchases, instead of when you’d actually like to leave for your vacay.
How will you fund your goal?
The best way to save for something is to save automatically! If you have it in your budget, set up an automatic deposit into the account where you’re saving for your goal!
If you create your Goal in Simple, you’ll be asked to create a Funding Schedule for your goal. This lets you choose how money will be added to your Goal–whether it’s every day, every time you get paid, or on some other schedule.
If you already have Direct Deposit set up for your Simple account, then this should be easy. When you’re creating your Goal, just create a Funding Schedule that aligns with your payday!
Tips for saving extra money
Once you have all the details of your goal figured out, it’s time to find ways to help you save for it even faster. Don’t worry: This doesn’t mean you have to constantly scrimp and sacrifice in order to meet your goal. In fact, you’ll be more likely to stick to it if you find realistic, small, automated ways to help you save, instead of relying on willpower and big lifestyle changes to make it happen.
If you have a Protected Goals Account, Round-up Rules is a tool in Simple that can help you save extra money. When you turn on Round-up Rules, we’ll save the change every time you swipe your Simple Visa® Debit card. Whenever your saved ‘change’ reaches $5 or more, we’ll transfer it to your Savings Goal!
Here are some more ways you can save extra money every month (or protect the money you’ve saved) to help you achieve your Goal faster!
Set up an account buffer
An account buffer is a stash of money (think one to two weeks of living expenses) that you use to cover expenses that you maybe didn’t plan for–like if you get a crack in your car’s windshield and have to pay your $250 car insurance deductible to replace it.
Having an account buffer will help you avoid the temptation to dip into your savings when money is tight, so it can keep growing!
Look for opportunities to reduce your Expenses
If you already have a pretty good understanding of your recurring monthly Expenses, run through them to see if can cut back anywhere on a regular basis. (If you’ve never tracked your spending before, here’s a guide to get you started.)
Think big first, then small. If you aren’t making a lot of use out of your gym membership because you’re enjoying running outside–cancel it.
If your apartment lease is up soon and you could save by getting a smaller place or sharing a space with a roommate, that could be a great way to save more every month–but obviously moving isn’t a realistic or cost-saving option for everybody.
Luckily, there are lots of ways you can try to reduce your monthly Expenses. Maybe there is a way to lower your utility bills or cut down on some subscription services to save a little more each month. Maybe you’ve been paying for more phone data than you actually need, and can change your plan to save a few bucks every month.
Wherever you find savings, try to increase your monthly goal contribution by that amount: So if you figure out that you can save $10 a month on your phone bill, edit your Goal in Simple to contribute ten extra dollars each month. That’s $120 more you’ll be able to contribute to your Goal in a year!
Cut down on discretionary spending
Once you’ve looked at ways to save on your monthly living Expenses, think about some other spending habits you could change to save more money each month.
This isn’t about giving up the things you love, or that bring you joy. It’s about finding ways to spend less money on the things that you don’t really care about: Like if you can save money just by getting your favorite vitamins online instead of from a drugstore. Or if you’re willing to switch to kitchen towels instead of using paper towels (yay Earth!).
Take a look through your recent transactions and see if you spot any opportunities for finding cheaper alternatives. If you’re having a hard time finding a suitable, frugal substitute, take a moment to think about why the purchase is important to you. Maybe your daily afternoon trip to the coffee shop isn’t about the caffeine rush—it’s about getting out of the office or chatting with the friendly barista. If that’s the case, then making your own coffee isn’t going to cut it, but a walk with a friend (while drinking that coffee) might.
Pay off debt as you go
The longer you’re in debt, the harder it is to get out of debt–and the harder it is to work toward your other personal finance goals. If you are currently carrying debt (especially high-interest debt like credit card debt), check out this post about how to pay off debt and save money at the same time.
Getting out of that hole quickly will not only help you in the long-term, it will also make it easier to get laser-focused on achieving your goal!
Find other ways to earn more money
If spending less isn’t feasible, or you want to accelerate your savings rate, look for ways to earn more. Consider picking up a little freelance work, or selling something you’ve made or own (but don’t need). If you think you are in a position to ask for a raise, go for it!
If you have a room available in your house to rent, consider getting a roommate. Just like with spending less, little sums add up quickly—just an hour or two of work per week can make a big difference.
Watch your money grow!
You’ve already done the hard part, by creating a plan and making all the tough decisions. All you need to do now is go about your daily life (cutting back or earning more where you decided to do so).
We highly recommend taking the time every few weeks (or days, if you’re Goal-obsessed like us) to check your progress. Saving can mean sacrifices, especially if you’re changing your spending habits or there are other temptations you’d like to spend money on. Taking a few moments to think about why you’re saving and watching yourself get closer to that Goal will keep you focused on the bigger picture.
Adjust as needed
You might be able to stick exactly to the original plan. Or, you might run into unexpected expenses. Sometimes, you can adjust by changing your behavior. If groceries cost a little more than expected, it’s easy to spend a little less on restaurants. But what if your car breaks down and it costs $400 to fix?
If you fall behind on a Goal, you’d like to pause it, or you need to pull money out to pay for an emergency expense, don’t worry—it’s easy to make an adjustment. If you stick to the original completion date, we’ll automatically show you how your savings rate needs to change. If you decide you need more time, you can edit the Goal to choose a new end date.
One day, after a few months, a year, or a little longer, you’ll be done! Take a moment to think about what you’ve just achieved. Saving takes persistence and sometimes, sacrifice. We build tools to show how little changes can add up to amazing things—while you put those changes in action. You should be proud (and even if you’re not, we’re proud of you!). And now? It’s time for you to do that thing you’ve been dreaming about.
Create a Savings Goal with Simple
If you have your sights set on a big purchase, we’d recommend this as your first step: Create a Savings Goal where you keep money specifically dedicated to your goal.
Here’s why: Creating your goal will help make it real –and will set you up to start saving for it automatically, or on a regular schedule.
Disclaimer: Hey! Welcome to our disclaimer. Here’s what you need to know to safely consume this blog post: Any outbound links in this post will take you away from Simple.com, to external sites in the wilds of the internet; neither Simple nor our partner banks, The Bancorp Bank and BBVA Compass, endorse any linked-to websites; and we didn’t pay/barter with/bribe anyone to appear in this post. And as much as we wish we could control the cost of things, any prices in this article are just estimates. Actual prices are up to retailers, manufacturers, and other people who’ve been granted magical powers over digits and dollar signs.