Saving for Large Expenses Gets Possible Through these 5 Tricks

Big expenses sometimes give a serious jolt by popping up at the most unfortunate times.

Well, the only thing this teaches us is to have a plan ready for tackling such large expenses, popping up.

A huge home maintenance item or a sudden costly car repair can both be predicted in general terms.

It’s a cold hard fact that neither of these items lasts forever and many people can calculate the average life of such items.

So, what’s the optimum thing to do in order to save for these expenses rather than of ruining your budget or falling into debt when they pop up?

You can use these 5 ways to start saving.

Initiate a Sinking Fund

The perfect way to begin saving for such expenses is to set up what we call a sinking fund.

Basically, a sinking fund is an individual account or an amount of money that is set aside. This key role of this money is to ultimately cover the cost of a big expensive item when it fails or to replace the item when you want to buy a new one.

To run a sinking fund successfully, set one up right after you buy something that will eventually need to be changed.

For example, if you recently bought a $30,000 car that you suppose would last 10-11 years, you would need to set aside $3,000 per year to change the car when your existing car reaches the end of its life.

To calculate the amount of money that is needed to set aside is fairly simple. Take the money you think will be enough to cover the large expense and just divide it by the total number of months before it needs replacement.

Simply, save that much money in a sinking fund every month and you’ll have enough money to cover for the large expense, supposing it occurs on or after when you planned for it to happen.

Keep Bonuses Aside

Another awesome way to save money for hefty expenses is to place your bonuses aside.

Sadly, not everyone is fortunate enough to earn bonuses, so this won’t be everyone’s cup of tea. That said, if you do receive bonuses, it can enable you to cover a long way towards your next bulky expense.

Set a Part of Your Raise Aside

Setting aside some part or every penny of your raises for large expenses is another means to save. 

It’s quite simple to understand - the larger your raises, the more you can save.

For a plethora of people, you’ll need to save in other ways in order to make sure that you have the money to tackle your next planned expense. However, this will enable you to reach at least half way there.

Keep “Gifts” and “Found Money” For Your Large Purchases

When it comes to “gifts” and “found money”, they can also assist you to fund your planned expenses. Generally, whenever we receive cash, our first thought is to keep it for our vacations, but you could also set it aside for those expenses that have the tendency to break your bank and your savings, such as for a new car or roof repairing.

Setting aside “found money”, like utility deposit refunds, will add to your sinking fund even further.

Sell Items and Save the Earnings

If your large expense is on the verge of happening and there is not enough money to pay for it, you can consider arrange a garage sale or sell your items so that to save that income for the large expense.

Probability is that you have a lot of stuff resting around the house that you don’t use anymore. Convert those items into cash using different online platforms, such as eBay craigslist, or Facebook Marketplace. 

By maintaining the cash for such expenses, you can be sure of paying for at least a part of your major expenses.

Be Ready For the Future, Today

Big expenses seldom just occur. So if you know where to find them, you’ll surely see them approaching. For the rest of the things, you can always make use of your emergency fund.

Remember, just don’t use your emergency fund for something that you should have seen coming, such as a roof replacement.

Rather, take advantage of the above-mentioned tips by ensuring that you are well-prepared when such large expenses introduce themselves. Planning can prove to be of a great use, especially when need financial help while maintaining your efforts for gaining debt relief.

You can share with us about what big planned expenses do you save for? What steps do you take to save for them?