Like everyone else, I occasionally see something I really like and want to get it that moment. Problem is, it may not be anything I can easily afford. It could be something big, say a nice car, a new electronic gadget, computer etc.
Call it ‘instant gratification on steroids!’
Unless I have a lot of money saved, and I can spare some of it for this big purchase, I won’t be able to afford it.
Which is why you should always start saving early, so that you are able to afford things you want with ease. Remember, or if you haven’t already read it, one of our ‘5 Principles of successful budgeting and finances’ is to be patient and have discipline. In this case, if you start early enough, your patience will pay off at the end by being able to afford that big purchase.
I can’t stress enough how how important it is to start early and give yourself a good head start. The earlier you start the more ready you will be to make these big purchases. Moreover, by allowing yourself enough time to save for big things, you will not only be able to afford them, you will have spare money leftover for other purchases or emergencies. And last but not least, by starting early, your stretching your timeline which allows you save comfortably without making big sacrifices, compared to having a shorter timeline.
When it comes to incorporating it into your budget, saving for big purchases should have its own allocation and not to be mixed with all your general saving. Otherwise, what are you saving for: a rainy day, a big purchase or both? so it is important to separate the two saving goals.
If you didn’t start saving for a big future purchase yesterday, last month or last year, no problem. You can start today, and by this time next year, today will have been long in the past and enough time for you to have saved your money.
But saving doesn’t and shouldn’t stop. The idea is to keep saving, all the time, because your needs and wants will always be there. In a few years, you will want to replace your car. In a year from now, you may want to buy a new version of your favorite smart phone. And in a few months from now, you may want to take a vacation to a hot destination. The list doesn’t end and therefore our saving should always be active!
Failure to save for big purchases in advance-months or even years in advance- will mean you will either have to resort to using credit cards and other financial means where you will have to pay it back with interest, or not be able to afford your purchase at all.
Tip: you can either create a new item in your budget for these big future purchases or just include it as a sub category in your existing ‘savings’ allocation.