But if you can wait, saving has its advantages. First, it gives you the time to decide if you want to spend that much money and sacrifice a little now to get your reward in the long term. It also usually means spending less – you won’t need to incur interest charges, might earn a little (admittedly, it will be a little) interest and be able to pay for things with a cash offer can give you that little bit of extra bargaining power when doing the deal. 

Interest-free credit or save up?

If your credit history means you have easy access to zero percent credit, then this might be a good idea. It effectively means you can buy now and pay over time. However, there are some caveats.

• The item might be more expensive than if you bought it outright – going to the local electronics superstore, which offers zero percent interest, might be more expensive than shopping around. 

• you might not be able to access the credit

• You don’t have the time to decide if you want the item. Saving is an excellent way of determining if you really must have it.

• Interest-free credit – especially “buy now, pay later” is offered because many consumers will pay back the credit after the initial period has ended and incur interest. Shops and store card providers bank on this happening. If you plan to save to pay back the total amount in 12 months, for example, to avoid interest on the deals, you need to be sure that that is what you are going to do.

How much do you need?

Your first step to budgeting for your purchase is deciding how much money you’ll need. Shop around and try to get a reasonable estimate of what you’ll have to spend on the item you’re purchasing

Set Some Goals

Decide how long you’ll have to save for your big-ticket item, and then work out how much you’ll want to set aside each week or month to reach that goal. Of course, the longer you have to reach your goal, the less money you’ll have to set aside each period.

Establish a Separate Account

Open a separate account solely for that purpose. If your money is filed away in a different account, you’re much less likely to be tempted to spend it in the short term. Furthermore, it will give you a clear way to track how much you’ve accumulated, so you know exactly how much you have left to save.

Add It to Your Budget

Treat saving for this item the way you would your other monthly expenses by adding it into your budget. This is also an excellent way to see what you might need to cut out of your budget to save on your significant purchase.

Updated: March 2022