Starting off on your own can be exciting, but also challenging—especially when it comes to budgeting and saving. As you navigate this new phase of life, you might already be dreaming of your first car, planning to move into your own apartment or itching to go on an unforgettable adventure. Achieving these goals requires careful financial planning. Take a closer look at the process of setting financial goals and saving up for your next big thing.
How To Budget for Your Next Big Purchase
Cars, housing and vacations all come with hefty price tags. Fortunately, careful saving and budgeting will help you achieve your dreams faster than you might expect. Here’s a step-by-step guide on how to make them happen.
Step 1: Identify Your Goals
The first step is to clearly define your financial goals. Do you want to buy your first car to have more freedom and convenience? Are you eager to move into your own apartment for independence? Or, are you dreaming of an exciting adventure like traveling to a new country or exploring the great outdoors? Whatever your aspirations are, you need to solidify them to craft a useful financial plan.
Step 2: Break Your Goals Down Into Smaller Steps
Big dreams can feel overwhelming, especially when you’re just starting to manage your own finances. To make your goals more achievable, break them down into smaller milestones. Use a savings calculator to see how much you need to save and for how long to reach your goal.
For example, if you want to buy a car, determine the estimated cost, then set intermediate savings targets for each month or quarter. This approach will help you stay motivated and focused on your progress. Even if you need to take out a loan for the bulk of the cost, having a savings cushion will ensure you’re covered for insurance, maintenance and any unexpected financial setbacks.
Step 3: Create a Budget
Once you have your goals and milestones in place, it’s time to build a budget. Take a close look at your income and expenses. As a college student or a new military member, your income might be limited, so it’s crucial to allocate that money wisely. Identify areas where you can cut back on non-essential spending and redirect those funds toward your savings goals.
There are many types of budgeting methods, from the cash “envelope” method to the 50/30/20 rule. Research budgets and figure out which method you’re most likely to stick with.
Step 4: Open a Dedicated Savings Account
To avoid dipping into your savings unintentionally, consider opening a separate savings account for your large purchase. Having a dedicated savings account for your financial goal will make it easier to track your progress and prevent any accidental overspending.
Step 5: Automate Your Savings
Make saving money even easier by setting up automatic transfers from your checking account to your savings account. By automating your savings, you ensure that a portion of your income goes directly toward your goals before you have a chance to spend it. Most people set aside a certain amount per paycheck or per month.
Step 6: Take Advantage of Student and Military Benefits
If you’re a newly enlisted military member, don’t forget to explore the financial benefits available to you. Military life often comes with allowances and special programs that can help you save money, such as the Thrift Savings Plan (TSP) or housing stipends. Many organizations also offer military discounts or special offers. Maximize these benefits to accelerate your savings journey.
If you’re in college or trade school, look for student discounts everywhere, from your bank to restaurants to travel options. These savings will help you keep costs down while you’re putting money away for a big purchase.
Step 7: Research and Plan
No matter what you’re saving for, you’ll want to research and plan ahead throughout the whole process, so you’re prepared when it comes time to buy. Look for the best deals, compare prices and be patient when making big-ticket purchases. Planning ahead will help you make informed financial decisions and get the most value for your money.
Step 8: Stay Disciplined
As you save, it’s essential to stay disciplined and avoid unnecessary splurges. Automating your savings can help, but it’s also important to keep your everyday costs down. Keep reminding yourself of the exciting reward waiting for you at the finish line—something much more meaningful than eating at a restaurant or buying a new video game. Consider finding an accountability partner, such as a friend or family member, to help you stay on track.
Step 9: Celebrate Milestones
Remember to celebrate your achievements along the way. Each time you reach a milestone or get closer to your goal, take a moment to pat yourself on the back. Celebrating small victories will boost your morale and keep you motivated to keep saving.
Step 10: Embrace Flexibility and Make Adjustments
Life is full of surprises, and financial situations can change unexpectedly. For example, you might experience a reduction in income, need vehicle repairs or receive an unexpected bill. Be prepared to adjust your goals and plans if necessary. Flexibility is key to staying on track and maintaining financial stability without getting too discouraged.
Start Saving With Navy Federal Credit Union
As a young adult starting out on your own, setting financial goals can seem like a daunting task. However, with careful planning, discipline and a clear vision, you can achieve anything you set your mind to. Financial responsibility is a valuable skill that will serve you well throughout your life.
Navy Federal Credit Union can help you make the most of your money. Turn to us to open your first savings account, take advantage of our financial planning tools and explore loan options if you need financing for your next big purchase.
- Think hard about your next big financial goal—whether it’s saving for a trip to Europe or putting enough away for a security deposit on your first apartment. Determine how much you need to save in order to pay for this goal.
- Use Navy Federal’s Savings Goal Calculator to make a savings plan. This will give you an idea of how long it will take you to reach your goal and how much you need to put away regularly to do so.
- Open a new savings account through Navy Federal that’s dedicated to your big purchase. When choosing an account, consider how far off your financial goal is. You might be able to earn higher dividends through a longer-term certificate.
This content is intended to provide general information and shouldn't be considered legal, tax or financial advice. It's always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.