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How to Budget for Large Expenses

We often discuss the challenges associated with unexpected or larger than expected expenses, particularly emergency issues that can derail even the best planned budget. But what about expenses that you are planning for that will be large yet are not urgent in nature? Whether you’re planning to purchase a new car or appliance for your home or dreaming of a very overdue vacation and plan to pull out all the stops, saving is key to success. Many people choose to utilize a line of credit from a retailer or a credit card to pay for large expenses,2 but that choice can affect your credit if repayment is not handled properly. Often, people decide that saving money over time for a large purchase is a better option for their long-term goals. If they are able to stick to the savings plan and follow through until they have enough in savings without running into any additional emergencies that tap into that savings.

Why is having a household budget important?

Planning and budgeting are the methods that are most often recommended when considering how to pay for a large purchase, so the team at Cash Central put together a quick, easy to follow guide with unique budget strategies to help you do just that. Having a household budget can help you plan for larger expenses that you know are just around the corner and help you plan for a brighter future that will require a lump sum to accomplish. There are a few comprehensive budget strategies that you can consider when preparing for a big purchase:

  • Planning purchases seasonally to coincide with sales
  • Utilize debt by charging the purchase and immediately repaying the loan
  • Saving the tried-and-true way with cash in a high yield savings account
  • Utilize loan options via a personal loan from your lender of choice

Before diving into saving for a large, planned expense, however, it’s important to consider recurring annual expenses2 and emergency savings goals. As you set up your household budget and account for recurring expenses, savings goals, monthly household expenses, and large purchases, the Cash Central Budget Planning Tool will come in handy. Download a copy and use this fantastic guide as you build your budget. When facing a larger expense, it’s important to factor in the equally important goals and budget plans you already have in place to avoid derailing other payments and goals. Creating a budget strategy that fits with your lifestyle and your financial journey is key to success. Try to keep the budgeting process as simple as possible by utilizing a tried and true method like the 50/30/20 budget.1 Once you’ve set your household budget up, it’s time to strategize your large purchase.

Planning Purchases Seasonally

You know those ads about sales during certain holidays? Sometimes, just sometimes, those deals are actually excellent. If possible, start your savings plan with the goal of purchasing a big-ticket item, like an appliance for example, at the time of one of those sales. Sales weekends can really payoff3 if you time things just right. Waiting a little longer to make a purchase can take the strain off your bank account by stretching out the time you have to save. You can also plan to make purchases during the off season. For example, if you’re planning to purchase outdoor furniture or perhaps even an air conditioning unit, those purchases can be significantly lower3 when made during the winter months.

Charge It, Then Pay It Off

My grandparents were big believers in this method of utilizing credit responsibly, and many consumers feel the same. Making a purchase with a store credit card can offer significant savings and benefits.4 Some retailers offer a percentage off your purchase if you utilize their in-store credit to make a large purchase. The key to successful utilization of this method is the part where we advise paying it off, quickly. Major credit card companies also offer deals and low interest rates, sometimes as in 0% interest for a certain amount of time, but you have to plan to stay within the parameters of those offers. Your best bet is to save the money needed for the item, utilize the credit card of your choice, then pay the bill in full as soon as you receive your statement. Keep in mind that it can be difficult to resist the urge to pay your balance off a little at a time and hang onto the cash you have on hand. Emergencies can also end up happening between the time that you make your purchase and the time that you plan to pay your bill which can take away from the planned funds. Extreme discipline and determination to follow through with your plan is needed for success when using this strategy, so proceed carefully. Remember, you have big financial goals to hit!

Good Old-Fashioned Savings

Arguably, the best method for saving to make a large purchase is to simply save the money and practice patience until you have enough. This is hard for some people—hi, I’m talking about me, too, here! However, saving a little at a time is a great way to practice good financial habits. The feeling you will get when you make a purchase, in cash, after saving up for months or even years in some cases will be amazing. You did that! Break up your savings into monthly or weekly goals by setting a goal purchase date, getting an exact purchase price, and doing a little math. Let’s say you need to save $1,200 dollars for a new item and you’re giving yourself a year to save. You’ll need to save $100 a month to hit your goal or about $25 per week. That’s totally doable! No matter the goal, figure out smaller goals to get you there and you’ll be checking off big wins all along the way until you hit your big goal! Another fantastic benefit to paying in cash after saving is the ability to negotiate better pricing because you’re a cash buyer.5 Sometimes, retailers will discount your purchase if you pay in cash which can equal needed savings and little more money for something else on your list of financial goals.

Utilize a Personal Loan

Personal loans from the lender of your choice are an option, similar to a credit card, that can be used if necessary. Personal loans are available from a variety of lenders with various interest rates that are determined, typically, by your credit score. However, despite the option being workable in certain situations keep in mind that a large, planned purchase is different from an emergency. Emergency situations that are beyond your control and require cash quickly, may be cause for applying for a loan like the loans offered at Cash Central. However, personal lending can be quite expensive and should not be viewed as an alternative to planning and budgeting, which is recommended for all purchases and emergency savings goals. With that said, a personal loan to cover an emergency is a viable option that we are proud to offer at Cash Central.*

No matter the option you choose, the decision to plan for your financial success and to budget for a large purchase is a great choice! Cash Central is always rooting for you as you make your way on your financial journey. Our blog is filled to the brim with fantastic information that will help you along the way because your success is our central focus.

*In California, deferred deposit loans are provided in accordance with the Department of Financial Protection and Innovation pursuant to California Deferred Deposit Transaction Law, Cal. Fin. Code §23000 et seq. Exact funding time depends on the terms of your financial institution.


1Bev O’Shea and Lauren Schwahn (2022, Dec 2). Budgeting 101: How to Budget Money Retrieved from: https://www.nerdwallet.com/article/finance/how-to-budget

2McGurran, Brianna (2021, Mar 28). How to Budget for One-Time Expenses Retrieved from: https://www.experian.com/blogs/ask-experian/how-to-budget-for-one-time-expenses/

3Palmer, Kimberly (2022, Jul 18). How to Afford Big-Ticket Items for the Year Retrieved from: https://www.nerdwallet.com/article/finance/how-to-plan-big-expenditures

4White, Alexandria (2023, May 5). 4 questions to ask yourself before making a big purchase Retrieved from: https://www.cnbc.com/select/questions-to-ask-yourself-before-making-a-big-purchase/

5Probasco, Jim (2021, Sept 11). Saving Money vs. Borrowing for a Large Purchase Retrieved from: https://www.investopedia.com/articles/personal-finance/112516/saving-money-large-purchase-better-debt.asp