How to Budget for an Expensive Purchase

Do you have your eye on an expensive purchase but don't want to break the bank with a sudden splurge? Expensive purchases can feel daunting to save for, but you can make them in a responsible way with enough planning. When it comes to major purchases, such as a family vacation, a brand-new car, or even a single-family home, early planning and regular saving are the keys to reaching your goal without straining your budget too much. Here's how you can start budgeting for that expensive purchase right away. 

Ask a Financial Professional If You Should Use Cash or Credit 

You may want to ask your financial professional whether you should pay cash or use a credit card when making your purchase. Although this question may seem like an easy decision, your choice of payment method could actually end up making a big difference. For instance, if you have a credit card that offers reward points or cash back, making your purchase with that card could potentially help you save a little money. Just make sure you're able to pay it off promptly. 

Shop Sales and Use Special Offers to Your Advantage 

Just because you’ve got your eye on a big purchase doesn’t mean you can’t take advantage of special offers or sales. With a little creativity, you may be able to find discounts. For instance, you could try the following. 

• Contact the manufacturer or seller to determine whether your desired item will go on sale soon 

• Look for ways to use coupons or redeem credit card points to help make the purchase more affordable 

• If you’re purchasing a home, consider waiting until the market cools off so you won’t pay an overinflated price 

Create a Dedicated Fund and Automatically Transfer Savings Each Month 

You may find it helpful and even motivating to have a special account or fund just for your savings for the big purchase. This one fund will make it easier to track how much money you’ve currently saved toward your goal. You can even transfer money to it automatically each month. To successfully use this method, you should: 

• Determine when you’ll want to make the purchase and calculate how much money you’ll need to put away each month 

• Create a dedicated fund or separate account for the savings you’ll use for your big purchase 

• Set up an automatic transfer to your account each month until you hit your savings goal 

With enough planning, you can make a big purchase happen while keeping your bank account happy. By consulting with a professional, setting up dedicated savings funds, and taking advantage of special offers, you can work your way toward making that purchase responsibly