You have a massive savings goal. You want to save for the down payment on a house, or pay cash for a car, or take the entire family to Europe.
But you’re not sure how to save for such a large goal. You’ve saved for small goals before, like a new TV, but the prospect of saving for a down payment on a home seems intimidating. How can you do it?
#1: Start a specific savings account. Open a specific savings account for the sole purpose of this particular goal. Online banks like SmartyPig and Capital One 360 allow you to open multiple savings accounts and nickname each one, so that you can designate a particular “house down payment” fund.
#2: Work longer hours. If your job offers overtime, take advantage of it. Ask to work 40+ hours a week and put any earnings above your base pay into your savings account. If your job doesn’t allow this, look for a second side job, and put the entire paycheck towards your goal.
#3: Research the item. The biggest key to purchasing a big item is to know how much it will cost you. Once you have a specific monetary goal in mind, you can track your progress more easily.
#4: Stay away from credit. Even though good credit is vital for making large purchases involving loans, bad credit can ruin your chances of reaching your goal if you aren’t careful. Keep one or two credit cards on file but pay their balances off quickly.
#5: Spend less on groceries. Create a reasonable food budget and stick with it. Cut back on eating out at restaurants and buying chips, cookies and other non-essential snacks that hurt your wallet. Take that money and add it to your savings fund.
#6: Create small steps to reach your goal. Having a dream is important, but the path to getting there is equally as important. Set a monthly or weekly savings goal — perhaps you want to save $50 each week. (This feels more achievable than a big number). By the end of X amount of months you will have reached your dream.
#7: Commit to your goal. Is your major savings goal worth your time? Is it really important to buy a different car? Do you really need to take the family to Europe? If this item is something you really need or want, you’ll be able to maintain motivation.
#8: Downsize your home. Are you a renter? Consider downsizing into a cheaper place, or start living with roommates. Put the difference in rental costs into savings on a monthly basis.
#9: Get a second job. If you have the time and energy to work part-time on the weekends, apply for a second job. Some ideas include waiting tables, bartending, babysitting, tutoring, and freelance or consulting work.
#10: Be patient. Anything worthwhile takes time to attain, so don’t despair if it seems like it is taking forever to save money. The bigger your dream is, the longer it may take to reach. But in the end, it will be worth it.
Kennedi writes about frugal fashion, food and fitness. Check out her post on how to eat organic and healthy food on a budget.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.