Saving money for big-ticket items isn’t that difficult if you give it enough time and planning. It does require some discipline. You may have already decided that 2019 will be the year you finally take your family on that weeklong African safari. You have done your research, and you know that you’ll need to save about $6,000 for the whole trip.
Trying to earn that $6,000 in one go or a month before your trip may be difficult, especially when you need to keep up on your monthly bills. Saving that $6,000 over the next six months will be manageable if you use the S.M.A.R.T goal setting approach and follow a few money-saving tips.
What is the S.M.A.R.T goal setting approach?
The S.M.A.R.T goal setting approach is a system that brings structure and trackability into your savings goals and objectives. Research shows that people who write down and picture achieving their goals are 1.2 – 1.4 times more likely to accomplish them.
The S.M.A.R.T goal approach provides you with specific and actionable line items that have a defined timeline to help you save money. Using the African safari as an example, let’s see how you can use this approach to start saving money for big ticket items:
S-Specific. You will need to research and find out exactly what your big-ticket item will cost. Sticking with the African safari example, you know you’ll need at least $6,000. M-Measurable. You know that you have six months from January 2019 to start saving money for this trip. That means that you will need to put away $1,000 every month to have $6,000 by June. This gives you enough time to plan the trip for July or August. Your goal then becomes measurable because you have a set timeline and know how much to save. You can hold yourself accountable by looking at your savings account each month to see if you’re on track. A-Attainable. Most people don’t like to acknowledge their limitations when it comes to saving money and their long-term goals. Even if you’re willing to save up to $1,000 a month, your monthly income and expenses might not allow for it. You need to account for everything including your income, expenses and emergency fund. It’s good practice to cut unnecessary expenses to achieve financial savings goals. It’s not wise to let that goal severely interfere with necessary bills like rent or utilities. Don’t fall behind on essential things like your mortgage payments just because you want to go on safari in July. R-Relevant. Is the goal you have set relevant to what you want to achieve? The intrinsic value of the desired big-ticket item comes into play at this point. Is an African safari that important to your family? Maybe it’s a wedding, a down payment on a home, or new furniture. The idea is to find a way to fund the big purchase and start saving without going overboard or ruining your credit. T-Timely. Do you have enough time to achieve your financial goal? One of the main reasons why the S.M.A.R.T goal setting works is because it gives you enough time to achieve your objectives. Six months is enough time to make some adjustments along the way to ensure that everything remains on course. Say for example you realize after the first month that saving $1,000 a month just isn’t feasible with your current financial capabilities.You have enough time to move things around. You can either get another source of income like a part-time job or side gig to increase your income. Or you could readjust the timeline and go for that safari next year. Either way, with enough time to plan, you can analyze and adjust your short-term goals and long-term goals accordingly as opposed to waiting until the last minute.
While saving money for big-ticket items over time is an excellent way to go about reaching goals, you could also try a different approach. Try and find other ways to save money on these big purchases. Depending on what it is you want to purchase, you could consider the following saving ideas:
How to save money on big purchases
Shop around. You should get several quotes and see which ones offer the same quality service or item for a cheaper rate. If you’re thinking about going on vacation, consider going in the off-season as this can also save money.
Use your credit card rewards. Learn how to get the most out of your credit card rewards. Using points, miles, or cash back can save you a lot of money on big purchases.
Pay in advance. Saving money this way depends on what it is you want to purchase but if we stick with the African safari example then paying well in advance of your travel date helps you save on everything from airfare to accommodations. Take the time and research if the same principle applies to what you want to purchase.
Saving money isn’t always the easiest of things to do. Developing a system and using a savings account to reach your savings goals can give you more control over your personal finances.
You can also automate your savings to help you develop the habit of saving. If you keep your financial goals in mind, it will be well worth the effort and you will eventually find other ways to save as well.
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