If you’re planning to buy something expensive, it can be smart to take some time and save up for it. Here are 7 things you should save up for before buying them, and why each one deserves your hard-earned cash.
1) A home of your own
The average cost of a home in America is $350,000. Yes, that’s steep. But it’s an enormous investment in your future—with rising property values, you could potentially have a valuable asset when it comes time to retire.
The money you pay upfront will quickly compound into equity (aka free rent). And if you're disciplined enough to start saving in your 20s, by age 30 or so you could be looking at a hefty down payment on that dream house. Do yourself a favor and start saving now—your future self will thank you.
2) To have kids
Having children is an enormous responsibility and a life-changing decision. It’s not something to enter into lightly.
Not only does it mean spending money on diapers, food, clothes, and toys, but you also have tuition payments, insurance costs (including maternity leave), medical bills and countless other expenses.
If your partner wants kids now, have a serious conversation about whether you’re ready. And if you don’t want kids at all? There are more options than ever before—including freezing your eggs or embryos—but that still requires plenty of research and planning.
3) A vacation home
For many people, a vacation home is their ultimate investment. It’s more than a place you can use for a getaway—it’s an asset that will likely appreciate in value over time.
One of my favorite quotes comes from Warren Buffett: If you don't find a way to make money while you sleep, you will work until you die. When it comes to rental properties and other investments, I take that one very seriously.
4) An education or career change
You’ve always wanted to learn another language, travel abroad or return to school. Why not treat yourself and make it happen? If saving money is a priority—and we hope it is—make your dream a reality by saving for these experiences over time.
When you add something as significant as an education change into your life, you’ll want to be ready financially so that you don’t have any unexpected costs along the way.
This way, you can focus on learning new skills and building your future instead of worrying about how much everything will cost.
5) A luxury vehicle
A lavish lifestyle is not typically associated with saving, but it doesn’t have to be a contradiction.
If you really want that brand new luxury car or SUV and can make it fit into your budget, go for it! The important thing is to plan how you’ll pay for it.
6) Your dream wedding day
Planning a wedding is one of life’s most exciting and nerve-wracking processes, from deciding on your guest list to finding your perfect dress.
The best advice we can give you when planning a wedding is that there’s no such thing as too much planning.
Be prepared: know exactly how much money you have allotted for food, decorations, music, etc., and work within those bounds.
A bad or sudden economy may throw a wrench in your plans; having everything well thought out will ease worries down the road.
Once you know what you want in advance, it’ll be easier to find creative ways of achieving it—and cutting costs where necessary!
7) Retirement
Without a doubt, retirement is probably going to be one of your biggest financial goals. If you’re planning to retire in your 60s, that can be a long time away.
Therefore, it’s critical that you start saving as soon as possible. The best way to do that is with an Individual Retirement Account (IRA).
Every paycheck you get from work, set aside at least enough money so that you max out your IRA each year—and even better if it's automatic or incentivized.
You might not think it now, but putting money into an IRA today will give you plenty of income in retirement when you need it most.
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