Tips to Help You Save for Large Purchases

Tips to Help You Save for Large Purchases
Topics BudgetingSaving

Budgeting and saving play a key role in your financial journey, particularly when it comes time for larger expenditures.

A recent WSFS study found 35% of regional respondents had a goal to save for a large purchase such as a wedding, car or vacation, but 25% of respondents with this goal were less confident they could achieve it than they were last year.

Elevated interest rates and inflation have made it more difficult to save, but with the right steps, you can ensure you stay on track to meet your goals.

Here are tips to help you save for large purchases.

Put a Plan in Place
Planning plays a key role in many aspects of life, including your finances. Start by setting actionable goals and put a plan in place for how you will achieve them.

For example, if you’re saving for your wedding, start by estimating your costs for the facility, vendors, attire and anything else you may need for your big day. Once you know your target number you would like to save, put a plan in place to get there.

While weddings tend to already be on a defined timeline, setting a timeframe for achieving your goal can be an important step regardless of what you’re saving for.

Once you have your goal and timeline, look for additional savings where possible to help grow your nest egg quicker. Actions like cancelling unused subscriptions, making your morning coffee at home, shopping at discount or bulk grocers, and more can add up over time. Remember, every little bit counts.

Pay Yourself First
Paying yourself first is a great way to build savings. Having a portion of your paycheck directly deposited into your savings account rather than the checking account you use for daily purchases, like groceries, is a great place to start.

You’re less likely to miss money that was “never there,” and even small, incremental amounts can add up over time.

If you find the balance of your account for daily purchases exceeds what you need, transferring those extra funds and increasing the portion of your paycheck that goes directly into your savings account can help you reach your goal quicker.

Look for Ways to Grow Your Savings
High interest rates and inflation can make it harder to save and make borrowing more expensive, so it is important to monitor your credit usage during these times and try to pay off any debt in full each payment cycle.

The tradeoff is that higher interest rates have helped bring back the popularity of savings vehicles like money markets, high-yield money markets and certificates of deposit (CDs). These accounts tend to offer higher interest rates than a traditional savings account.

Money market accounts earn interest over any period of time and are considered liquid, so if you need access to your funds more regularly, these may make the most sense for you.

CDs earn a fixed interest rate over the term of the CD, but your money is committed for the length of the CD, which can range from a few months to a few years, so these are often best used for long-term goals.

Wherever you find yourself on your financial roadmap, speaking with your local banker can be a great way to help formulate a plan to achieve your goals.

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