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Wednesday, October 2, 2013

How to save for a car and other big purchases

By Amanda Sozak

There are things people try when they’re trying to save money for a rather extravagant purchase like a new car. We’ve put together a list of things we think can help you save for your next car, or that you can apply to your general spending habits to help you save more overall.

Avoid wasteful spending using smart shopping techniques
Reduce impulse purchases using the "put-back rule"

Depending on the purchase you’re making, there are a couple of simple rules to follow that can help you to save money.

1. The “Put Back” rule: It’s safe to say most of us have fallen victim to this: running into a store “just to grab a couple things,” getting distracted and leaving with bags upon bags of things we didn’t need. A great rule to follow on these trips is what I like to call the “put back” rule.  Think you can’t live without that $30 shirt that barely differs from several other shirts you own? Put it back where you found it, go pick up the things you actually need, and then go back to the shirt. If you’re still longing for it when you come back, go ahead and purchase it. After the impulse passes, if you still want the item, whether its clothing, a book, a movie, etc, it’s more likely that you will get a better use out of it.

2. The “24 Hours” or “One Month” rule: When deciding whether or not to make expensive purchase or an online purchase, follow one of these two rules, depending on the spending situation. Following either the “24 Hours” rule or the “One Month” rule will help you to make smarter choices when it comes to expensive or online purchases. Waiting a period of time and then reconsidering your purchase will help you to save money because you may realize you don’t need to make that purchase, or maybe you’ve found a better deal somewhere else.

3. Force your shopping timeline: The next time you need to go grocery shopping, make sure you have a list prepared and go when you need to shop in a hurry. Something as simple as not wanting to miss your favorite TV show that starts soon, or needing to be somewhere at a certain time, will help you to stick to your list and avoid impulse purchases that can add up.

4. The spend/save equilibrium: Another great way to save money is to match your savings to your indulgences. Spent a little too much at the bar on Friday night?  Match what you spent by putting that exact amount into your savings account. Doing this can help you to make more responsible choices and ensure that you’re saving as much as you’re spending. It may also deter you from spending more money than you would have, which ends up saving you more in the long run.

5. Go cold turkey: Making yourself participate in a “no spend week” (or month if you’re especially strapped for cash) can help you to save tons of money. Create a budget for any necessary spending, such as gas money, groceries, etc, and stick to it. Don’t spend any extra money than you’ve allowed in your budget for necessities. Depending on your spending habits, you can save an extra $50-$200 a week.

6. Bury your money in the yard (not literally): Finally, another great way to make sure you’re saving money is to put your savings on lockdown. Keep your savings somewhere or with someone where it won’t be easily accessible. Maybe keep it with a trusted relative or friend who won’t give in no matter how much you’re begging to tap into the savings.

To assist with your budgeting it can make sense to use one of the many apps available to help you track your saving and spending. Mint's iPhone app and the free app called Toshl are just a couple of options that can assist in your budgeting.

Apply these tips to your spending habits, as well as other helpful tips you can find on the internet, and soon you will have saved up enough money for your next big purchase.

About the author: Amanda Sozak is a guest blogger with a major interest in cars, car care and personal finance. She is a regular contributor for several automotive and financial websites including used car warranty provider Auto Warranty One.
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