A woman standing next to a car

How to Afford Big Ticket Items

Finally, you have a couple of months where things are going well. The bills get paid on time and you actually have money left at the end of the month. Then Pow! Without warning, the water heater bursts, the car breaks down, and the first half of the property tax bill is past due—and suddenly you’re broke.

A woman standing next to a car

How can you possibly plan or budget for life’s big-ticket items? Many people believe it just can’t be done, that they have no choice but to rely on their credit cards to cover the cost of emergencies—whether it’s something they should have known was coming or not. 

There is a way out: anticipate these expenses. You know they’re coming so cut the price tag on that big ticket item into small pieces and make it as routine as paying the phone bill.

Define the goal

The first, most important step is to figure out what your next big money decision will be. You may not be aware you have any, but the truth is you have several to choose from. Do you think a big dental bill is coming your way? Is your car starting to show its age?

Let’s say, for example, your refrigerator is slowing down. At 7 years old, you’ll be lucky to get three more years out of it. Knowing this gives you something valuable: time. Time to start researching and saving.

What style and size do you need? About how much will it cost? Are there options you should consider? Brands you should avoid? Look into it now.

Identify the terms

If you start saving for the refrigerator right now, you’ll have about 36 months. Let’s say you determine that it’ll cost about $1,800. Divide that amount by the term of 36 months. The result is about $44. You’ll need to save $44 each month, starting now, so you’ll be able to replace your refrigerator in three years.

Make it smaller

Cut your goal into pieces—smaller payments are psychologically easier to handle. Instead of 36 months, divide the cost of the refrigerator by 156 weeks. With this slight change in terms, you need to save only $10.26 each week to reach your goal.

Make it predictable

View this as a new, regular bill you must pay each month—or week. It will soon become as ordinary and predictable as your mortgage or car payment.

Set up an account

Don’t keep this stash in a drawer or even in your regular savings account. That puts the money within easy reach and makes it too available for you to borrow for some other purpose. Create a savings account specifically for the item you want to buy instead. Check out SmartyPig.com, a fabulous online savings bank that makes saving easy and fun. Your account is free—there are no fees, no minimum requirements.

Make it automatic

Set up an automatic savings plan to regularly transfer money to your SmartyPig from your regular household account.

Visualize the goal

Stay focused by finding a picture of the item. Post it where you’ll see it often, like on the ‘fridge. This will go a long way in motivating you. Get creative and draw a grid over the picture with a pen and ruler so you have the same number of squares as payments you’ll make. After each payment, fill in a space on the grid with a highlighter.

A little more now and then

Look for new ways and frugal choices that will result in money you can put toward reaching your goal even faster. The money you saved on groceries this week? Use it as an extra payment. The loose change in a jar on your dresser? Use that, too.

One goal at a time

About now you’re probably thinking about several savings goals you want to work on simultaneously. I understand your enthusiasm, but I know from experience that it’s best to start slowly. If you have additional funds, use them to reach this goal before starting on another. In time, as you become adept with managing big money decisions, you’ll be able to handle several at once.

Updated 9-14-19

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2 replies
  1. Pat C says:

    Something else that’s useful besides of course saving up, is to know what you’re going to buy when the time comes. Because if something breaks down, especially crucial and expensive things like cars, furnaces, or major appliances, you won’t have the time to look at the various models and their options at several different stores and decide which is the best for you while your food is rapidly defrosting/going bad in your fridge, or your house temperature is dropping rapidly. And sales people can smell desperation and will steer you to the most expensive option. As our fridge aged, my husband and I spent time at the big box stores, looking at the various possible replacements and when it started to make awful noises, we knew which was the best for us and we were able to order it, much to the chagrin of the sales person who wanted us to consider much more expensive models. I had not done that when my washer decided to emulate the lilies of the field (It toileth not neither did it spin). But at least I could go to a laundromat while I considered which was the best model. And of course if your furnace quits in the middle of winter, you’re stuck with whatever’s on the truck which is bound to be far bigger and more expensive than you need.

  2. Edith says:

    I pay to do my laundry. I have a piggy bank in the cupboard with my laundry soap and deposit $1 for every load I wash. I should have plenty in the piggy bank when it comes time to replace the washer or dryer.


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