How To Make Large Purchases Without Going Into Debt

So you’ve received a save the date for your BFFs wedding. While estimating just how much that’s going to cost, you’ve also been thinking about updating your apartment, or taking a much-deserved vacation. Not to mention, you’ve been meaning to upgrade your wardrobe. Unfortunately, doing all of these things at the same time is not possible, but where do you even begin? Past you might have just charged it all to your credit card and hoped for the best—but not this time. There’s a way to make all of these large purchases happen without racking up credit card debt. We’re not going to lie, it’s going to take time, dedication, and a whole lot of self-control, but the result will be so worth it.

Determine How Much It’s Really Going to Cost

This first step requires research—lame, yes, but essential. Once you confirm the event date or approximate purchase date for an item, schedule your calendar like you would for a real meeting. During this time, write out everything you need to consider for the purchase.

Here’s an example for your BFFS wedding:

  • Transportation to and from the wedding venue
  • Accomodations (Airbnb, hotel, etc.)
  • Attire (is there more than one fashion moment? Itemize!)
  • Gift (How many? Look at the registerty to get a sense of price point too)
  • Extras: Engagement party events, bachelorette, etc.

And another example if you’re buying a new phone:

  • Transfer costs
  • Insurance
  • tax
  • Protection plans
  • monthly bill
  • phone cases

Pro Tip: Microsoft Excel is your best friend. Once you have your itemized list of expenses, research approximate costs. This will vary based on where you live and what you’re buying, but it’ll give you an approximate number and you can begin to map out your timeline for saving.

Create a Timeline

Time to practice our elementary math skills. Luckily, Excel and well, the internet, make it very easy to create a savings timeline. If it’s a $500 purchase and you have six months to save, plan to put away $84 per month, as long as you can afford it. Or, use a bi-weekly method. This works well if you can transfer the savings amount right out of a bi-weekly paycheck. Microsoft makes it easy to find out how much you need to save with this savings estimator.

Make Room in Your Budget

This isn’t the easiest step as it requires us to be really honest with how we’re spending. Ask yourself, “Where can I fit in savings for this purchase?” The key is that longer timelines allow you to put away less money each month. If you have less time, make sure you’re not interfering with “must-pay” expenses like rent, utilities or credit card payments. On the other hand, your monthly restaurant or shopping allowance can be trimmed to make room for extra savings. Budget planners like YNAB and Mint are free and easy to use in order to get started.

Source: Color Joy Stock

Put Your Identified Savings into a Separate Account

We’ve made it here, so let’s make sure we don’t spend our savings accidentally. An easy way to do this is setting up an auto-transfer into a high-yield savings account immediately after getting paid, or just set up an automatic transaction to a different account every week or month. PNC Virtual Wallet makes this easy to do. Fidelity and Charles Schwabb both offer high yield savings accounts with free transfers to other banks.

Congratulate Yourself!

Proactive saving is a strategy worth celebrating. Make time to congratulate yourself, without spending of course! You can journal the experience, or put on your favorite song and break out into dance. Whatever makes you happy, just make sure you thank yourself. Plus, when you take a moment to acknowledge your hard work, you’re more likely to practice this positive behavior again.

Turn This Practice Into a Habit

If you make it to this step, why not continue the practice? You’ve found a place in your budget for this savings, so now you can put it towards your emergency fund, or the next big purchase on your list.

Don’t forget, making time for your money is self-care.

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