We all buy stuff that is way more than our paycheck or monthly savings. So, we usually save up bit by bit to buy that stuff. This may be down payment for a home, a Rolex watch, cost of a car or simply expenses for your vacation or set up cost of your business. I have saved up for most of these things. So, I have some idea about what to do and how to approach this. As a matter of fact, I have saved up for down payment for a home. And I want you too Save Money To Buy Something Expensive, and not to take a loan to buy anything.
So, How to save money to buy something expensive? You can save a portion of your pay check the moment it hits your account. But make sure you account in all your necessary expenses for the month. If you have access to an emergency fund then save the full amount after leaving the amount you will need to cover all the bills. In my experience, I often over saved when I did this. Sometimes, I had to make unforeseen expenses. If you have an emergency fund it would not be a big problem.
Once you figure out what is the maximum amount you can save every month, do a quick calculation, how many months will it take to hit your goals. Nowadays many banks are actually offering options to create recurring deposits to save up the amount. I am personally using one of those to same money to buy something expensive.
While you save the amount and the amount sits in an account, remember that you should not touch the amount while you wait. And you still cannot ignore inflation. So, make sure at least you make a return to match or beat inflation. Ideally the return has to be fixed. It cannot be anything volatile and speculative such as Bitcoin or stocks. Use a debt instrument so you earn a fixed interest, that way you do not lose capital when you reach your target.
Is It Better To Save or Spend Your Money?
In a low interest age we are in, it is a question we have. Do we save money or do we spend it because, you live only once. Unfortunately we will grow old and we would not be able to work or won’t want to work, so we need to prepare for retirement. When we are young retirement is the last thing we think about, but it is eminent. So, since change is the only constant, we do not only change physically, we change mentally too. Like I do not want to depend on my earning from job, so I am building up a passive source of income, with my savings, so it will be useful in long run.