Want a new big screen television to ring in the New Year? I don’t blame you; they are certainly all the rage. Plus, those after Christmas sales can be a way to save money on big ticket items.
Still, no matter how good the sale, these sorts of purchases can’t come out of our normal miscellaneous expenses in our budget. The key is to find a way to buy what we want without disrupting our cash flow.
There are three main ways to budget for a larger purchase, like a car or fancy television. Find the one that works best for you.
1. Start a budget category just for saving for those larger extras. Put aside the most you can afford each month. When you have saved enough – go out and enjoy! You have deserved it!
2. Saving for a large purchase through your budget is really the smartest method from a cost standpoint, but it can take a load of patience. You have to wait until you have the money before you buy. This is a good test of willpower for luxury items, but it can be trickier if the large purchase is more of a necessity – like a car to drive to work. In this case, looking for a loan is usually the best option. Obviously paying off your loan will need to be a new budget category in itself, but at least you can have the item while you pay for it. Just keep in mind that the interest will end up driving the actual price of your purchase even higher. If you do decide to borrow in order to buy, do the research and find the best credit options with the lowest interest rates.
3. The last option is to borrow from you. Do this by using your savings to buy a large purchase. Definitely don’t dig into your emergency funds, but if you have some savings for something else… then borrowing from it is an option. But, make sure you do place a category into your budget to pay yourself back. This makes it almost like a low interest loan. But, it is not free… while you pay yourself back you will be missing on any investment income this additional money could be bringing you.
Related Articles:
*Saving For a Car to Drive Later
*The Importance of Saving for a Down Payment