It's Never Too Early to Start Saving for a Big Spending Event
Written by Janine Rogan
Wednesday, August 22nd, 2018
Ever think about what sorts of things you're going to have to pay for six months or a year from now?
These big spending events can leave us vulnerable by either dipping into our emergency funds, for things that aren't emergencies, or racking up credit card debt because we just can't scrape enough cash together this month. When financial turmoil strikes, it tends to last longer than just a month. The vicious cycle continues and we find ourselves further and further behind. There's a way to get ahead of the eight ball and, as simple as it seems, planning for those big financial events is the way to do it.
Look Over Your Spending History
Forecasting 6-12 months out means anticipating what costs you'll incur during major events such as the holiday season. If you aren't sure how much these events may set you back, look at your credit card statement history for similar events that can give you a rough idea. It's always good to overestimate, so I'd suggest adding a couple hundred dollars more to act as a buffer.
Figure Out How Much You Need to Save
Once you've figured out how much you're going to need, divide the total amount by how many months you'll need to save this sum.
By opening a separate savings account, you can allocate this money to a specific account that you won't touch, and isn't mashed into your everyday spending. It's a lot easier to stay focused when you can see the individual balance growing. Find the highest interest rate you can for this type of savings account, since every dollar is going to help you achieve that financial goal faster.
Make It Automatic
The last step to take is to automate your savings toward this goal. It's easy to forget to move the money one month and accidentally spend it, so do yourself a favour and set it and forget it. By automating it, you won't have to think about logging into your bank account on a monthly basis to move the money to your savings. By the time your event arrives in 6 to 12 months, you'll have a large sum of money ready and waiting for you that you can spend guilt-free. You won't find yourself in a finanically vulnerable position, so you can rest easy at night.
No Need to Wait for a Special Event
Have a look to see what large expenses are coming up in the next few months or even years. Start stashing away a few hundred dollars each month. It's a lot easier to swallow these expenses in small increments rather than a large credit card bill that's staring you in the face!