How to Save for Big Purchases?

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How much thought do you give to preparing for big purchases? Do you swipe your credit card and worry about paying it off later, or do you actually save up for big purchases and only buy when you have the cash available to spend?

While the fiscally responsible thing to do would be to save up for big purchases, I’d be lying if I said that I never swiped my credit card for more than I could afford. Perhaps you’ve considered personal loans, opening a home equity line of credit or even took out title loans to finance your big purchase.

What is a big purchase?

A big purchase is anything that may be financially out of reach.

Big purchases don’t necessarily fit neatly into your monthly budget and when you check your bank account, you might not have enough money to buy the item(s) right now.

From your next vacation to buying a car or putting a down payment on a house, big purchases vary from person to person. Being able to afford big purchases depends on a variety of factors, including income, timeframe, and available savings.

When I bought my house back in 2017, I quickly realized that I needed a lot of money to furnish my place. I needed everything – a living room set, a bedroom set, a mattress, a dining room set and appliances all of which cost over $1,000 each.

Yeah, the first year of being a homeowner was rough! Here’s what I recommend doing after you purchase your first home.

But do you see how making lots of big purchases can potentially get you into debt? It’s a slippery slope, but I have some ideas on how you can budget for large expenses.  

How to Plan for Big Purchases

Step 1: Plan ahead and create a savings goal.

First, figure out how much your big purchase will cost. This is important because once you figure this out, you can create a game plan to save for it.

Next, figure out how long you have before you need to make your big purchase.

Do you need the item right now or can you wait a bit?

If you don’t have time constraints, feel free to skip to the next step. However, if you need to reach your savings goal quickly, figure out how many weeks or months you have until the purchase date.

For even more tips, learn how to set goals and achieve them and sign up for my goal setting workshop here.

Step 2: Review your budget.

Review your budget and determine what it will take to save up for this big ticket item.

How much money can you afford to put aside towards your savings goal every month? And how high on the priority list is this savings goal?

To work out how much money you can save, reverse engineer your goal(s) by breaking it down. You can easily do this by determining how much you have available in your budget to save for this item per month. Ideally, this is after all of your mandatory expenses are taken care of.

So let’s say a new bedroom set cost $2,400 but you can only save $300 a month (after everything else is taken care of). It will take you 8 months to reach your savings goal.


Savings goal / Amount you can save per month = # of months

So in this example:

$2,400 / $300 a month = 8 months to reach your goal

Step 3: Set money aside evenly.

When it comes to planning for big purchases, don’t try to save for it all at once. Instead, even out your monthly savings goal by saving the same amount every paycheck.

How I did it: I’ve found that it’s so much easier to save large sums of cash when I save the same amount every pay period. Not only does this provide me with financial stability, but I learn to live without the extra funds.

If you get paid biweekly (every two weeks), divide your monthly savings goal evenly by 2.

So in this bedroom set example:

Save $300 per month / 2 paychecks = $150 per paycheck

If you get paid weekly, you’ll divide your monthly savings goal by 4.

Save $300 per month / 4 paychecks = $75 per paycheck

This is much more approachable right?

Remember to save the same amount every pay period.

Step 4: Automate your savings.

I recommend opening a new bank account for each savings goal. This way you can better track your progress. This also avoids commingling funds.

Having multiple bank accounts is just one of the things we talk about in the Back to Budgeting Basics Course. In this comprehensive budgeting course, I teach you exactly how to create a goal-centric budget that you’re excited to stick to every month. This course is perfect for anyone interested in taking a new approach to managing their money and want a step-by-step framework for getting started.

Lastly, automate your savings by having your employer direct deposit funds into a specific bank account dedicated to your big purchase until you reach your goal.

Overall, I appreciate this method of saving for big purchases because when you are ready to buy, there’s no stress and no interest payment.

Bonus Tip for Financially Savvy Travelers:

Want to optimize your big purchase and earn your way to free travel?

Instead of paying cash, consider opening a new credit card so you can take advantage of the sign-up bonus. Make the big purchase by swiping your credit card, meet the minimum spend required by your credit card company and pay off your credit card immediately with the funds you’ve saved up! This is an easy way to earn enough points and miles for a free flight or hotel stay. Sometimes all it takes is one big purchase to meet a new credit card’s minimum spend, especially when you’re planning a wedding, moving or repairing your home.

Check these other budgeting articles:

Back to Budgeting Basics: What is budgeting?

Back to Budgeting Basics: Things To Do Every Time You Get Paid

How to Save for Big Purchases?
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