Top 4 ways to plan and save up for your expensive purchases

Buying a luxury car or a house can drain you financially. One of the primary takeaways from most financial planning experts is to save up for any impending expensive purchase. Long-term planning will ensure that you do not erode your otherwise earmarked finances for other financial milestones. A costly purchase is often guided by brand, look, feel, product features, and pricing. However, it is seldom guided by means of financing such a big-ticket expense! Pricing and financing of an expensive purchase are two different aspects. This article highlights how you can efficiently finance your expensive purchases without having to drain your finances or avail of credit.

1. Immediate transfer of funds to savings account on payday
 

It has been observed that people tend to spend on high-value items, particularly during the first week after receiving their salary. This can be avoided if you immediately earmark a certain sum towards a savings account, which will fund your expensive purchase. This way, you will avoid any impulsive purchases or expenses that your want or imprudence may guide. Unless your expensive purchase arises after a 5-year timeframe, it may not be sensible to look at investment options such as equity mutual funds or balanced mutual funds, which will provide a significant upside. 

There are alternatives within the savings bank account that offer higher than normal returns. IDFC FIRST Bank provides monthly interest credits on your savings bank account; this can result in substantial wealth creation. It is an easy way of putting your money to work.

2. Budgeting your expenses
 

Budgeting your expenses will ensure that you never go overboard on any of your expense aspects. Some of your expenses may be fixed for, e.g., the children's school fee, rent, help/driver's salary, etc., there may be some variation in the spending pattern of other household expenses such as maintenance, groceries, etc. apart from this you may have to allocate a certain sum towards any existing EMI commitment. 

By tracking your expense pattern for a few months, you will be able to establish the percentage allocation towards each of these items. Apart from these, you may have to spend on your lifestyle aspects which helps you maintain sanity and keeps the delight quotient intact. 

There is the popular 50/30/20 rule which financial advisors often highlight to get started on your budgeting journey. 50% of your salary should be spent on fixed spending, including rent, school fee, help/driver salary, etc., 30% should be used for your lifestyle choices such as shopping, ad-hoc purchases, dining, and entertainment. The other 20% should be strictly set aside for savings and investment. 

This is a great way to start a disciplined approach towards wealth creation. By inculcating this habit of savings early on in life, you will be able to achieve your financial milestones with no stress or anxiety. It will also become easier to purchase any luxury item without creating a dent in your existing financial corpus.

Buying a luxury car or a house can drain you financially. One of the primary takeaways from most financial planning experts is to save up for any impending expensive purchase. Long-term planning will ensure that you do not erode your otherwise earmarked finances for other financial milestones. A costly purchase is often guided by brand, look, feel, product features, and pricing. However, it is seldom guided by means of financing such a big-ticket expense! Pricing and financing of an expensive purchase are two different aspects. This article highlights how you can efficiently finance your expensive purchases without having to drain your finances or avail of credit.

3. Immediate transfer of funds to savings account on payday
 

It has been observed that people tend to spend on high-value items, particularly during the first week after receiving their salary. This can be avoided if you immediately earmark a certain sum towards a savings account, which will fund your expensive purchase. This way, you will avoid any impulsive purchases or expenses that your want or imprudence may guide. Unless your expensive purchase arises after a 5-year timeframe, it may not be sensible to look at investment options such as equity mutual funds or balanced mutual funds, which will provide a significant upside. 

There are alternatives within the savings bank account that offer higher than normal returns. IDFC FIRST Bank provides monthly interest credits on your savings bank account; this can result in substantial wealth creation. It is an easy way of putting your money to work.

4. Budgeting your expenses
 

Budgeting your expenses will ensure that you never go overboard on any of your expense aspects. Some of your expenses may be fixed for, e.g., the children's school fee, rent, help/driver's salary, etc., there may be some variation in the spending pattern of other household expenses such as maintenance, groceries, etc. apart from this you may have to allocate a certain sum towards any existing EMI commitment. 

By tracking your expense pattern for a few months, you will be able to establish the percentage allocation towards each of these items. Apart from these, you may have to spend on your lifestyle aspects which helps you maintain sanity and keeps the delight quotient intact. 

There is the popular 50/30/20 rule which financial advisors often highlight to get started on your budgeting journey. 50% of your salary should be spent on fixed spending, including rent, school fee, help/driver salary, etc., 30% should be used for your lifestyle choices such as shopping, ad-hoc purchases, dining, and entertainment. The other 20% should be strictly set aside for savings and investment. 

This is a great way to start a disciplined approach towards wealth creation. By inculcating this habit of savings early on in life, you will be able to achieve your financial milestones with no stress or anxiety. It will also become easier to purchase any luxury item without creating a dent in your existing financial corpus.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.