Having financial foresight is crucial when planning for big expenses. Many people find themselves longing for something shiny and new, like a car, or imagining the comfort of a dream house, or even planning a once-in-a-lifetime holiday.
The excitement of these dreams can quickly dim when faced with steep price tags, leading some to think they must abandon their goals. But saving for big purchases does not need to be an intimidating task; it simply requires a well-thought-out strategy.
In 2025, saving money is a top financial goal for about two-thirds of Americans, according to a NerdWallet survey. Other common aims include making more money (38%) and paying down or off debt (35%).
People are focused on putting money aside for different reasons:
Vacations (33%), emergencies (31%), buying a car (22%) or purchasing a home (14%). However, many face real barriers that make saving harder. These include increased expenses (41%), unexpected expenses (28%) and a decrease in household income (19%). These numbers highlight both Americans’ ambitions and the financial obstacles they must overcome.
Every financial situation is different—people have unique needs and budgets. What works for one person may not work for another. But there is a universal truth when it comes to saving: you must save by spending less than you earn. Using smart saving techniques can help keep you on track toward lasting financial wellness.
How to Save for a Big Purchase
Identify Big Purchases and their Estimated Costs
- Estimate how much money you’ll need to reach your goal for a big purchase. Although prices for an item may vary over time, you can estimate based on comparable items available today.
- Determine the time you have to save for your purchase—whether it’s one year or five years. The more time you give yourself, the easier each step will be.
- Schedule your savings plan by calculating how much you need to contribute each period. The best time to set aside money is when you receive your paychecks.
- Establish a separate savings account dedicated to your goal. This will keep your funds separate and help you see how quickly you’re approaching your goal.
- Include your savings goal in your budget, alongside your regular financial obligations like bills. Treat your savings effort the same way you treat utilities and other bills.
Pay Yourself First
- Pay yourself first by setting aside a percentage of your income for your savings before you spend on monthly expenses and debt repayments.
- Automate your savings by setting up a direct deposit into your savings account from your paycheck. This ensures that you consistently contribute to your savings without the temptation to spend.
- Even if you start small, saving a little bit regularly can add up over time. Increase the amount as your financial situation improves.
Set Attainable SMART Goals
- Setting SMART goals is a game-changer for saving. Instead of saying, “I will save more this year,” set a specific target like, “I will save $200 every month for the next two years for my dream vacation.”
- Write down your goals and place them where you can see them regularly, like on your fridge or phone reminders. This helps you stay committed to your savings plan.
- Review your goals periodically to track your progress and make adjustments if necessary.
Finding the Money to Save
- Finding extra funds for savings requires disciplined spending. Consider economizing on daily purchases like take-out coffee or soft drinks, which can cost several dollars a day. Cutting these out could save you $10 to $20 a week.
- Bringing your lunch instead of buying lunch at work can free up $50 or more per week.
- Look for ways to reduce entertainment costs like movies, clubs, or sporting events, as skipping these could save you $100 or more monthly.
- Commuting costs like gasoline, tolls, and parking can add up quickly. Consider carpooling or using mass transit to save on transportation.
- Review your cable/pay TV subscriptions and reduce services that you don’t need, freeing up more money to put towards your savings goal.
Taking a Tighter Rein on Spending
- Write down all of your outlays to see where you are spending money. This will help you identify areas where you can cut back.
- Focus on paying down credit card debt and revolving loans, which often come with high-interest rates. This can help reduce interest expenses over time.
- Compare rates for credit cards, homeowners insurance, and automobile insurance. Prices for these services can vary widely, so shopping around could save you money.
Adopt the 50/20/30 Rule
- The 50/20/30 rule is a simple guide for budgeting. Allocate 50% of your income to necessities (like rent and food), 20% to savings, and the remaining 30% to discretionary spending.
- If you’re struggling to meet your 20% savings goal, cut back on the 30% allocated for personal spending.
- Regularly review your spending habits to ensure you’re sticking to the rule and not overspending in any one category.
Open a High-Interest Savings Account
- A high-interest savings account can help your money grow faster. By earning compound interest, your savings will increase at a faster rate compared to a regular account.
- Shop around for the best interest rate, and consider any fees or requirements like a minimum balance. This can ensure that you’re getting the most out of your savings.
Leverage Technology
- Use apps and online platforms to help you save and budget. Many apps can round up your purchases to the nearest dollar and deposit the change into a savings account.
- Budgeting apps can also track your spending and provide actionable insights to help you identify where you can cut back.
- Some apps help automate your savings, making it easier to reach your financial goals without extra effort.
OK, I have a plan to save money. Now what?
Once you have your plan to save money, it’s important to review your budget and check your progress every month. This will help you stick to your personal savings plan and make sure you stay on track. Regular reviews allow you to identify any issues early and fix problems quickly, which can prevent small setbacks from becoming bigger issues.
Having a clear understanding of how to save money might also inspire you to explore more creative ways to save. As you track your progress, you might discover additional ways to reach your goals faster, accelerating your savings and helping you hit your target quicker than expected.
Frequently Asked Questions:
The $27.40 rule is a simple daily savings strategy designed to help you save $10,000 in a year. By setting aside $27.40 every day, you build a habit that makes saving feel easier and more consistent. Instead of thinking about the big number, you focus on small, manageable daily steps. Over time, this approach promotes saving as a daily habit, turning a large goal into something realistic.
The 70/10/10/10 rule gives a clear and simple structure for handling your income. You apply 70% of your after-tax income to living expenses, while the other 30% is split evenly between savings, investments, and debt repayment. This method helps you stay in control of your money by prioritizing essentials and consistently saving and investing.
- Create a budget to know exactly where your money is going.
- Automate your savings so a set amount moves into your savings automatically.
- Use a Savings Bingo Sheet to make saving fun and track progress visually.
- Negotiate your bills to lower costs.
- Separate wants from needs to control spending.
- Plan your meals to reduce waste and overspending.
- Buy generic brands to save without sacrificing quality.
- Cancel unnecessary subscriptions that drain your budget.
- Resell gently used items to earn extra cash.
- Pick up a side hustle for additional income.
- Use a cash back credit card for everyday purchases.
The 70/20/10 rule focuses on balancing your spending. You put 70% of your take-home pay toward needs, 20% toward wants, and 10% into savings. This method offers a more realistic structure for those who may not be able to save as aggressively. It ensures you’re still covering essentials while steadily building savings and enjoying some personal spending, helping your money go as far as possible.
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All information provided on this website is for informational purposes only and does not constitute financial advice. We recommend consulting with a qualified financial advisor before making any financial decisions. The accuracy and completeness of the information are not guaranteed, and we are not liable for any losses or damages arising from its use.