Saving for large purchases: Top money saving tips.

We all have things we want to buy or do—maybe it's a new gadget, a relaxing vacation, a new vehicle or a much-needed home renovation.

However, these big dreams often come with big price tags. Saving the necessary funds might seem tough, but with a good plan it can be quite simple. This guide will help you understand how to save smartly and make your big purchases less stressful.

What is Saving?

Saving is putting aside a little money regularly, so you have a good amount when you need it. It's about controlling your spending today so you can make bigger purchases easily in the future.

Needs vs. Wants

Before you start saving, it's good to know what you really need and what you just want. Needs are things you can't live without like food, shelter and basic utilities. Wants are nice-to-haves but not essential. This includes things like a new video game or a spa day. Knowing the difference helps you prioritize your spending. 

Want to save money fast? Scale back as much as possible on your wants (while still meeting your needs) and direct your extra money into a savings account. 

Tips to save money: Creating a Sinking Fund

A sinking fund is a smart way to save for big expenses. It doesn’t matter if you have a low or high income—with realistic timelines and discipline, anyone can save. Here’s how you can set it up:

1. Calculate the Cost: Figure out how much money you'll need for your big purchase.
2. Set a Timeline: Decide when you need to make this purchase and divide the total cost by the number of months left. For example, if you need $5,000 for a new furnace by October and it's April now, you have six months to save. So, you'll need to save $833 every month ($5,000 divided by 6). Our savings calculator can help you determine how much you need to save. 
3. Open a Separate Savings Account: Having a different account for your sinking fund helps you keep track of your savings and reduces the temptation to spend the money you’ve saved. 
4. Automate Your Savings: Set up automatic transfers from your checking account to your sinking fund every month. This way, you don’t have to remember to save, it happens automatically.
5. Track Your Progress: Check your savings regularly to see how you are doing. If something unexpected happens and you need to save less one month, that's okay. Adjust your plan and keep going. Just because you have one “off month” doesn’t mean you need to abandon your plan. 

Benefits of a Sinking Fund

Here's why a sinking fund is helpful:

• Avoids Debt: You save little by little, so you don't need to borrow money when it’s time to make your big purchase.
• Less Stress: Having a plan makes the process less worrying.
• Builds Discipline: Regular saving helps you develop good money habits.
• Improves Financial Health: By avoiding debt and saving regularly, you are taking good care of your finances.
• Clear Goals: You know exactly how much you need to save and how long it will take.
• Flexibility: If an unexpected expense comes up, you have some money set aside to handle it without disturbing your big purchase plan.
• Reach Goals Faster: With a clear savings plan, you might find you reach your goals sooner than you thought.

Tools and Tips to Help You Save

Managing your funds and sticking to your budget is easier than ever with Associated Bank Digital's Money Monitor feature. Money Monitors gives you clear summary of your spending and savings, along with insights to help guide you along your saving journey. 

With Actionable Insights in Associated Bank Digital, you can set up alerts for things like duplicate charges and notifications on changes to subscription fees. Additionally, the budgeting tool helps you set, track and achieve your financial goals, making it simpler to grow your savings and stay on top of your budget. Whether you're curious about your spending patterns or looking to stick to a budget, Money Monitor provides an easy-to-use solution.

Saving requires patience and a bit of effort, but the rewards are well worth it. Start with a dream, make a plan and watch your savings grow to make it come true. With a sinking fund, you have a simple and effective way to manage your money and enjoy the things you’ve been dreaming of without financial stress.