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Saving for a Large Purchase

Photo credit: Pixabay

Photo credit: Pixabay

Prepared by Financial Planning Association

Saving for a large-screen television? A new car? A real estate down payment? This checklist can help you reach any savings goal.

Buying something on credit can be significantly more expensive than paying cash when you figure in the cost of borrowing the money for the purchase. Many people find that saving the money beforehand is a more efficient strategy. Here’s a checklist that can help you along the way.

Getting started

  • Estimate how much money you will need to meet your goal. Although prices may vary over time for any specific item, you should be able to make a good estimate based on comparable items today.
  • Determine how much time you have until you need the savings. One year? Five years? The more time you give yourself to reach your objective, the easier each step will seem.
  • Create a schedule for adding to your savings fund and calculate an amount to contribute each period. The best time to set aside money is when you receive it. Create a savings schedule that lines up with when you receive your paychecks.
  • Establish a separate savings account for this goal. This will help you keep the funds for your goal separate, and you’ll be able to clearly see how quickly you are approaching your goal.
  • Include the savings amount in your budget with all other regular financial obligations. Treat your savings effort the same way you treat your utilities and other bills — as regularly scheduled commitments.

Finding the money to save

Reaching a major goal calls for a disciplined savings habit, which also may involve disciplined spending habits to back it up. Keep in mind that items you pay for out of pocket can add up to a great deal more than you might realize. Consider economizing on these expenses:

  • Take-out coffee and soft drinks can cost several dollars each. Eliminating one such purchase per day could give you $10 to $20 a week for your savings goal.
  • Buying lunch at work could cost $10 per day or more. Bringing your lunch could potentially free $50 a week or more for your savings.
  • Entertainment costs for movies, night clubs and sporting events can add up. Skipping even a few such expenses each month could save you $100 or more for your large purchase.
  • Commuting costs can be made more manageable with some planning. Gasoline, tolls and parking fees can far exceed the price of commuter passes or mass transit fares, creating a significant savings opportunity. If mass transit is not an option, consider carpooling: Two people sharing one ride to work can cut their commuting costs in half.
  • Cable/pay TV subscriptions may cost more than your telephone service. You may find that you can reduce the number of options in your service to give you more money to redirect to your savings goal.

Taking a tighter rein on spending

  • Write down all of your outlays to clearly see where you are spending money each month.
  • Pay down credit card debt and revolving loans, which are typically the most expensive forms of credit. Unless you are paying more than the minimum each month, you may never pay those debts off and could face never-ending interest expenses.
  • Compare rates on credit cards, homeowners insurance and automobile insurance since prices for these can vary widely, creating new opportunities for savings.

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Because of the possibility of human or mechanical error by Wealth Management Systems Inc. or its sources, neither Wealth Management Systems Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall Wealth Management Systems Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2016 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.

 


Categories: Personal Finances, Savings

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Marty Higgins Women's Choice Award

MEET MARTY HIGGINS

Martin V. Higgins CFP, ChFC, CLU, AEP, LUTCF, RHU is a Certified Financial Planner, author and retirement income specialist who helps people prepare financially for retirement by designing written retirement income plans for people who may need to last 30+ years.

He is the CEO of Family Wealth Management and creator of “The WealthCare Process” designed to simplify and coordinate the financial affairs of his clientele of pre-retirees, retirees, widows and small business owners. He’s won the Women’s Choice Award for Financial Advisors and Firms.

His latest book “DistributionLand”, published in October 2014, immediately became an Amazon Best Seller and is a must read for anyone preparing for retirement.

 

The Women’s Choice Award Financial Advisor program was created by WomenCertified Inc., the Voice of Women, in an effort to help women make smart financial choices. The program is based on 17 objective criteria associated with providing quality service to women clients such as credentials, experience, and a favorable regulatory history, among other factors. Financial advisors do not pay a fee to be considered or placed on the final list of Women’s Choice Award® Financial Advisors, though they may have paid a basic program fee to cover the cost of a client survey through Advisor Impact. The inclusion of a financial advisor within the Women’s Choice Award Financial Advisor network should not be construed as an endorsement of the financial advisor by WomenCertified or its partners and affiliates and is no guarantee as to future investment success. This portion is updated periodically. Please access updated content here: http://www.womenschoiceaward.com/financial-advisor-information.

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