Sure, I’m getting by money-wise at the moment, but how do I save enough money to be able to buy a house, car, or plan for a family in the future? If this is the type of question in your mind right now, you’re at the right place. Saving large amounts can be overwhelming, and at times seemingly impossible. Read on to find simple, but effective ways to save enough money for the “big stuff” in life.
- Cut back spending!
Of course, spending less is easier said than done, but reducing unnecessary expenses on a daily basis can save much more than you think in the long run. For example, if you save the $7 that you spend for a cup of Starbucks’ ultra-premium coffee every morning, you could save $2,555 within one year! Honestly, how different could that cup of coffee be from one that you would brew yourself at home? Other little areas to save that can make a big difference include eating meals at home instead of at restaurants, or rather than purchasing microwavable frozen foods; using coupons to the fullest extent when you’re at the grocery store or buying wholesale; and, cancelling unwanted cable television packages, gym memberships, landlines, magazine or newspaper subscriptions (after all, the internet hosts your favorite television shows and Hollywood gossip free of charge!)
On a larger scale, if you’re renting a home right now and the rent is hindering you from saving enough each month, consider moving in with parents to significantly cut back on the monthly payment. As a result, more of your money will go toward your saving rather than your current housing. Options such as these depend on how comfortable you are making such drastic changes in your lifestyle, of course.
- Feeling a Little Guilty is Good . . .
Write down your purchases immediately after you’ve made them. This way you can visualize how much you’re spending, and take the opportunity to reconsider where your money is going…in other words, it forces you to feel guilty about unneeded spending. Once you see where your money is going, you can set up a budget to help you control how much goes where. Also, staying on the guilty track, consider getting rid of your credit card and paying with cash. Paying with cash gives you the harsh feeling of “forking over cash”—not a pleasant emotion to experience. However, regardless of the guilty feeling, you experience the sweet satisfaction as you move closer towards your goal of saving enough to make that big purchase or to provide for a family. However, knowing that having good credit is important if you want to take out a loan or buy a home, perhaps just put specific purchases/bills on your card each month, being sure you can pay all or most of the balance each cycle.
Make sure that you consider whether or not the amount of cutting back and the sacrifices you’re willing to make is proportional to what the end result of your “hardships” will be. The end result may lose its value in your mind if you push yourself too far. Be sure to treat yourself once in a while to keep yourself geared toward saving enough money within your desired time frame.
- Actually Handling the Money
Divide the total amount you want to save into smaller, more achievable milestones. For instance, assume you want to purchase a car worth $24,000 within the next two years. This amount on its own may seem overwhelming, however viewing it as saving $1000 per month makes the task of saving seem more feasible. Another easy way to set aside money is to have a certain portion of your paycheck be automatically transferred towards what you’re saving for. This way you don’t have to worry about saving a certain amount by the end of the month and the money becomes off-limits to your spending without you having to worry about it. Some experts suggest diverting retirement savings towards saving for the “big thing,” then make up for it by putting more money towards retirement when you’ve reached your goal.
Once you have saved enough to start a family or make your big purchase, continue with your more new, economical lifestyle. Perhaps, by doing so, saving for your next “big thing” in the future will be even simpler! Be sure to not deprive yourself by ridding yourself of all indulgences in life. Allow yourself to slip every now and then! Your new lifestyle, along with your desired “big thing,” can be extremely satisfying.
Angie Picardo is a staff writer for NerdWallet. Her mission is to help consumers stay financially savvy, and save some money on their homes with NerdWallet.