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How to Budget for Your Next Big Purchase

How to Budget for Your Next Big Purchase
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Do you have a big ticket item that needs to be replaced? Or maybe you have had your eye on an expensive purchase for a while? For many of us, we will need to budget to make those big purchases and here we are taking you through the different ways in which you can do this.

Emergency Purchases

While it is always ideal to budget in advance for your next big purchase, this is not always possible in emergency situations. An emergency situation could be needing to replace your fridge, washing machine or making repairs works to your house such as carrying out work on the roof. These are things that cannot wait and if you don’t have any savings then you may need to look for another option. Payday loans can be great for the short-term and will allow you to purchase the items that you need. You can find specialist short-term lenders like Uncle Buck whose loans of up to £1000 are designed to cover emergency expenses. However, you will then need to budget how to pay back these loans instead of using this saved money for a purchase, so use the below tips to budget how much you can pay off your payday loan every month.

Determine Your Budget

One of the first things that you should do when saving for a big ticket item or paying one off is to determine your budget. Although most of us know that it is not a good idea to live paycheck to paycheck, sometimes this is easier said than done and we are unsure of how much we really should be spending. What’s great about advancements in technology, however, is that there are plenty of great apps such as Money Dashboard and even online banking that can help you keep track of your day to day spending and can help you create a budget. These apps can track your income, your outgoings and will also help you set aside money that you want to save.

Start Saving Small

If you are new to budgeting and saving, or you just know that saving is not your forte, then you might want to start off small and work your way off. If you have an end goal of say £10,000 for a new car, instead break this down into smaller monthly saving goals that are easier for you to reach. Make sure that you are saving consistently and that you are getting into a routine with this so that it eventually becomes second nature.  Automate your savings plans so that this money comes out automatically. Meaning you won’t notice or miss it when it’s not there.

Open Up A Separate Account

An easy way to ensure that you don’t spend money that was intended to be saved is to open up a separate account dedicated to saving. With a separate savings account, you can see how much progress you are making towards your monthly goal and you won’t accidentally spend this cash. What’s more, just being able to log in once a month and see your savings build up, or your payday loan goes down, is great motivation to keep you going and remind yourself of why you are saving in the first place.

Invest Your ‘Extra’ Income

So, what exactly do we mean by extra income? It probably is not what you think! If you are budgeting, then you may think that anymore extra cash is too hard to come by. However, if you are looking at your budget and wondering whether you really need that magazine subscription, are not really getting much use out of your gym membership or are thinking of ways in which you can reduce your energy bills, then this is all extra cash floating around that could be put towards your savings account or debt. Each time you make extra savings, put it into your savings account to try and reach your goals faster. Furthermore, if extra money comes your way in the form of a tax return, a raise or a side project, put all of this money towards saving for your big purchase as this is money that you won’t miss anyway!

Remember to reward Yourself

Budgeting, saving and paying off debt can be exhausting and so it is important that you don’t tire yourself out. It can become very draining if all you are doing is saving and while you may be able to implement this strict discipline at the start, this will quickly wear down. This is why it is important that you treat yourself along the way and make sure you don’t run yourself down as this can, in the long run, demoralize you so that you fall back into your old spending habits and ways.

Try out these budgeting tips to see how much you can potentially save!