Savings: Saving for a Specific Purpose

Image from www.valuecitynj.com

When you think about spending a lot of money for a single specific reason, you typically think of two things: your house and car(s). But there are other things that qualify. People around my age often get staggered by the cost of really furnishing a first home or apartment with furniture. People of any age often end up with sticker shock when looking into vacations.

If you’re not planning ahead, these things can cause you all sorts of financial head-aches. Or, worse, they can cause you to punt financially and to choose to go into debt in order to get what you want now rather than waiting for it. Remember this: “Maturity is achieved when a person postpones immediate pleasures for long-term values.” -Joshua Loth Liebman

Saving up ahead of time is always a better way to finance such things, whether they’re furniture or a vacation or something else. You’ll own it outright and you won’t be paying interest on it- interest that can sometimes end up costing more than the thing you purchased!

So how to do this? Set up a savings fund! This doesn’t necessarily mean going to the bank and opening a new savings account for that specific purpose (though you can, if you want). All it needs to be is an envelope, kept in a safe place, into which you put a specific amount of money every month or every paycheck. Do the math and figure out how much you can afford to save each month toward that new couch, a new car, or that nice ski vacation, then save that amount every month until you can buy it.

One last note: if you walk into that car dealership or furniture store and wave a handful of $100s under the salesman’s nose, odds are good you can negotiate a nice discount on the price.

 

Thanks for reading,

-Taylor

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About Taylor Kothe

I'm a husband, accountant, and sometime blogger from Tulsa, Oklahoma. My passion is for personal finance, especially as it relates to teaching everyday people how to handle their everyday incomes and expenses. If you've ever found yourself lost in a rising tide of strange financial terms and incomprehensible policies, you're far from alone. So let's put our heads together and see if we can de-mystify some of the financial challenges that we all face.

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