Saving for big expenses
Step away from the credit card.
Do not apply for a loan. Stay calm, we can do this. What are we talking about? We’re going to cover how to budget for big expenses. Certain things like home improvements and new cars and holidays to a paradise where the only thing bluer and clearer than the skies is the water at the beach all cost so much that we pretty much only do one of them per year (if we’re lucky).
Social media doesn’t help.
One flick through your friends list and you’ll see multiple people enjoying a little fun in the sun, in their new convertible, even though you know they’ve just had a new ‘east wing’ added to their already huge home. But there are things that we can do that avoid the high-interest rates on credit cards and loans.
First, depending on your circumstances you may be owed more money in welfare than you think (for example, see VA individual unemployability income limits).
Time is against you
The thing with big expenses is that they always seem to appear out of thin air just when you least expected it. Last-minute weddings that you’re expected to travel for, holidays with friends coming up in just three months, a broken-down car that will cost more to fix than to replace, etc.
Early preparation is key, meaning you need to start potentially a separate savings account set aside specifically for car/home/holiday. As little as 10% of your income saved each month can soften any unexpected financial blows.
Give yourself pocket money
Month one of living on a set amount of pocket money is going to be difficult.
The pride you will feel at the end of that fourth week, when you are able to look back on the amount you’ve saved compared to your normal expenditure, is worth waiting for. Just remember to save the extra money for big expenses.
Be brave and check your bank account
Nobody likes doing this. We see all of our guilty purchases.
Fast food. Shoes we didn’t need. A pair of sunglasses for the car instead of having one pair for in and out of the car. We all convince ourselves that we’re not spending too much more than we need to spend. But we’re all wrong, mostly.
Choose something that you are spending money on that you don’t need (like an unused gym membership), cut it out, and put the money towards your savings instead.