How to Save for a Big Purchase
Obtaining one or more big purchases–a home, new car, or dream vacation–will likely require time, discipline and planning, combined with wise investing and consistent saving.
Many people can't imagine completing a marathon–26.2 miles is a daunting distance. What also may seem out of reach for many is buying a home (the median price of houses sold in the U.S. in Q1 2023 was $436,800†) or a new car (the average transaction price in February 2023 was $48,763‡).
But like long-distance running, slow, steady training, or in this case, budgeting, saving and investing may help get you over the finish line.
Preparing for big purchases
How to budget money for one, two or maybe three big purchases can be simplified if written out. More than three may spread yourself too thinly.
Of course, your goals may have different deadlines–purchasing a home could have a flexible timeline, while a child's college tuition may have a firm deadline.
Consider the cost of each future big purchase and determine if individually and collectively they make good sense. Planning on buying a house in 10 years and paying for a child's college tuition in seven and getting a new car in three years may be challenging.
Here's an example of a big purchase outline. Yours will differ but laying out the basic details can help determine if your goal is achievable and if so, what and how long it'll take. You might have to adjust the cost, timeframe and/or monthly save.
||my portion of sue's tuition
|When i want to purchase
|How much I can save monthly
|Amount saved by deadline
||Trade in + down payment
Budgeting for big purchases
If your budget allows you to set aside monthly savings from your paycheck, setting up a direct deposit may help with consistent savings. This simple practice soon becomes routine, and you'll find the amount set aside–as long as it's reasonable–isn't being felt. You'll adjust your lifestyle to the 'revised paycheck.'
However, if meeting your monthly savings amount(s) will be difficult, you can extend the deadlines, reduce the cost amounts, pick up a side gig or cut some of your discretionary expenses. Or maybe a little of each of those options. If necessary, personal loan options may fill whatever gap you see, but remember that you'll be paying interest on a loan.
Like training for a marathon, or even a 5K, success will require dedication, consistency, and flexibility. Remember that sometimes life gets in the way, so understand that an unexpected event could impact your goals.
Because your credit score may impact getting approved for an auto loan or mortgage, it's important to continue paying all your bills on time. Keeping up with your saving and investing schedule will also be important.
Where to place your money
One aspect to consider as you work toward your goals is the timeframe. If the expected purchase is three to five years out, investments such as certificates of deposit, Treasury bills and short-term bonds might be appropriate in your case. If your timeframe is longer than five years, you may want to speak with a Huntington Financial Advisor to discuss options for investing. Keep in mind that all investing involves risk, including possible loss of principal.
For shorter-term goals, a money market account, a savings account, or checking account may be good options.
However you invest your savings, one of the accounts could also act as an emergency fund if it can be easily and quickly liquidated without penalty.
Connect with a Huntington Financial Advisor
The information provided in this document is intended solely for general informational purposes and is provided with the understanding that neither Huntington, its affiliates nor any other party is engaging in rendering financial, legal, technical or other professional advice or services, or endorsing any third-party product or service. Any use of this information should be done only in consultation with a qualified and licensed professional who can take into account all relevant factors and desired outcomes in the context of the facts surrounding your particular circumstances. The information in this document was developed with reasonable care and attention. However, it is possible that some of the information is incomplete, incorrect, or inapplicable to particular circumstances or conditions. NEITHER HUNTINGTON NOR ITS AFFILIATES SHALL HAVE LIABILITY FOR ANY DAMAGES, LOSSES, COSTS OR EXPENSES (DIRECT, CONSEQUENTIAL, SPECIAL, INDIRECT OR OTHERWISE) RESULTING FROM USING, RELYING ON OR ACTING UPON INFORMATION IN THIS DOCUMENT EVEN IF HUNTINGTON AND/OR ITS AFFILIATES HAVE BEEN ADVISED OF OR FORESEEN THE POSSIBILITY OF SUCH DAMAGES, LOSSES, COSTS OR EXPENSES.
Third-party product, service and business names are trademarks/service marks of their respective owners.
† Federal Reserve Bank of St. Louis. 2023. Median Sales Price of Houses Sold for the United States. Accessed May 9, 2023.
‡ Cox Automotive. March 8, 2023. New-Vehicle Transaction Prices Trend Downward as Incentives Rise. Accessed May 9, 2023.
Huntington Private Bank® is a team of professionals dedicated to delivering a full range of wealth and financial services. The team is comprised of Private Bankers, who offer premium banking solutions, Wealth and Investment Management professionals, who provide, among other services, trust and estate administration and portfolio management from The Huntington National Bank, and licensed investment representatives of The Huntington Investment Company, which offers securities and investment advisory services. Huntington Private Bank® is a federally registered service mark of Huntington Bancshares Incorporated.
Huntington Financial Advisors® is a federally registered service mark and trade name under which The Huntington Investment Company offers securities and insurance products and services. The Huntington Investment Company is a registered broker-dealer, member FINRA and SIPC, and registered investment advisor with the U.S. Securities and Exchange Commission (SEC). The Huntington Investment Company is a wholly-owned subsidiary of Huntington Bancshares Incorporated.
Certain insurance products are offered by Huntington Insurance, Inc., a wholly-owned subsidiary of Huntington Bancshares Incorporated, and underwritten by third-party insurance carriers not affiliated with Huntington Insurance, Inc.
Trust and investment management services are provided by The Huntington National Bank, a national bank with fiduciary powers. The Huntington National Bank is a wholly-owned subsidiary of Huntington Bancshares Incorporated.