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Planning a Big Purchase? Here’s How to Get Started.

November 28, 2023 • Adulting

Spending money on a big-ticket item or experience can be daunting and exciting at the same time. For important purchases such as a down payment on a new house, throwing your dream wedding reception, buying a new vehicle, or taking a bucket-list vacation, having a strategy and a plan for saving to make it happen can help you get there.

Here are a few tips to help make the process easier and less stressful.

1. Estimate how much you’ll need and how long you’ll have to save

Break your savings goal down into smaller, more manageable pieces. For example, if you need to save $25,000 in two years, you’ll need to save just over $1,000 per month. Then you can either adjust your budget to set aside the money you need or adjust your goal and timeline to make it more manageable.

2. Set up a separate account

Setting cash in a separate savings account keeps it away from the funds you use to manage your day-to-day expenses and reduce the temptation to borrow from “future you” to pay your current bills and expenses.

Since you’ve already established a timeline for savings, consider putting funds in a high-yield savings account like Canopy’s Kasasa Cash Account.

3. Automate your savings

Talk to a Canopy Member Advocate about setting automatic deposits to move funds from your paycheck deposits in your designated savings account automatically. That way you don’t have to remember to regularly move cash into the account.

4. Don’t ignore your other financial goals

Setting savings goals to fund a big purchase is great, but make sure you’re paying attention to other important elements of your financial life like retirement contributions, day-to-day expenses, and additional emergency savings to handle unexpected expenses.

5. Avoid the temptation to tap into expensive sources

It’s almost always a bad idea to take money out of your 401(k) or use a high-interest credit card or personal loan to finance a large purchase. The costs associated with accessing 401(k)money can include penalties and taxes. With credit cards, the cost comes in the form of high interest rates, which can significantly increase your costs.

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