It was just last year when I was thinking about buying an engagement ring for my now Fiancé. Being a college student with a rather poor cash flow made a purchase like this seem like a stretch, but after developing some good habits and setting some attainable goals, it worked out quite well!
If you’re saving for some sort of big purchase and need to build up some cash, this post is for you. Whether it be a ring, a car, down payment, or whatever!
Before we dig into the saving, I think it’s important to understand as much as possible about whatever it is you’re buying. For instance, if you’re buying an engagement ring, do some research and homework and find out as much as possible about rings and diamonds and even jewelers. Ask friends and family what they did and learn from them. Their experience can provide you with some wisdom when you make your big purchase. Especially when it comes to cars!
My brother is a mechanic so when I was looking for a car he would be my filter because he knows all the ins and outs about cars and the business. See who can help be your filter. Take a look at your connections and do your homework so you can maximize the value of your purchase!
Now that we discussed the preface, let’s get to the cash savings!
1.) Set a timeline for your purchase
Think about when you want to make the purchase and make a realistic timeline. You can’t expect to save 3k in a week. Bust out the pen and paper and write down when you want to buy, how much you need to save, and how you’re going to do it. It really helped me to write down some short term, easy goals with my saving so I could keep motivated and keep the ball rolling.
2.) Out of sight, out of mind
I know a lot of people who immediately see they have some money saved up and can’t resist not spending it. The key is to keep that money out of sight and put it somewhere you aren’t so tempted to use it. So what I recommend is having 2 bank accounts that you can transfer money back and forth from. This way you can start moving your money from your checking to savings account. Start moving as much excess cash as possible to your savings and don’t touch it. This will really help you monitor how much you can spend and how much you have saved.
3.) Decrease spending
This one is a no brainer. Of course if you want to save at an accelerated rate you need to decrease your spending. During this time start learning ways to be more frugal (the good frugal). Train yourself to live happily below your means. There are a lot of creative ways to decrease spending and save in small ways, all you have to do is take the time to learn! Some times less is more.
4.) Increase your cash flow
Cash flow is a critical part of any business. In this case it’s your life. The more money you can bring in, the more you can save. One way of increasing your cash inflow is of course decreasing the cash outflow which is tip #3 (Decreasing spending). But the second way that I am referring to here is simply just bringing in more cash. For me, I picked up as many hours from work as I could and eventually moved into a higher paying job. When you can, take some opportunities to make some extra money. This could range from a second job, a side job, picking up more hours, or really anything you can think of. Get creative! Stay legal of course…
-Optional- 5.) Make your money work for you
I took on some risk and started investing a couple years ago. I will write more about this in the future, but it turned out to be pretty beneficial to me in this case. Fortunately, I enjoy investing and economics and I began to take my knowledge and money to the markets. With the money that I was saving, I would store half in the bank and invest the other half in the market buying and selling some stocks that I researched and analyzed carefully. If you have no interest in this or no knowledge, I don’t recommend doing this. But if you do, start learning as much as you can. Don’t forget about taxes either.
Overall, I made around 15% in 8 months on my investments and used that money along with my bank savings to buy the engagement ring. In fact I saved a good amount more than I even needed. You’d be surprised at what you could do when you follow these incredibly simple steps!
If you have some creative ways of saving share or comment your ideas!
Cheers & God Bless