Totally Worth It, Week 6: Saving up for something big

An illustration of a swimming pool shaped like a piggy bank.
(Jackson Gibbs / For The Times)

What’s the point of all this budgeting — tracking expenses, paying down debt, negotiating interest rates — if you’re not having any fun with your money?

To me, there are two big rewards to being more conscientious about your finances. One is the peace of mind. No more tossing and turning wondering if your bills will be paid or if you can afford to investigate that “check engine” light. But the other part, the one that will help motivate you when you’re doing the less-than-thrilling parts of budgeting, is using your money for the big things you want out of life.

If you’ve followed this newsletter since the first week, you’ve already created “someday funds” for mundane things such as car repairs and medical bills. And I hope you’ve started saving up for those, or at least have a plan to start. But this week, we’re going to talk about setting bigger and more exciting goals than “have enough in my bank account to cover a brake job.” I’m talking about vacations, weddings, going back to school, even a down payment on a house. All the stuff that makes tracking your expenses and managing a budget worth it in the end.


Can I save up for big things while I pay down debt?

I think so. As I’ve said before, some personal finance types think the only way to be serious about debt is to make it all-consuming. But a lot of us have a lot of debt. You’re young and you want to have fun. Budget for it.

I think having a money goal in mind makes the banal aspects of budgeting easier to swallow. Like, sure, you have to stretch your grocery budget this month and say no to the Hollywood Bowl concert all your friends are going to, but you’re going to throw the most insane all-out 30th birthday party any of them have ever seen. If you have to eat frozen pizza a few more times to fund it, who cares? Load that bad boy up with hot sauce and brainstorm options for the mimosa bar you’re going to have.

Here’s my example: My “budgeting journey” began in 2017. In 2018, my whole extended family decided to go on a big trip to London for the holidays. We decided on it early that year. It wasn’t an experience I wanted to miss. Instead, I restructured my budget to save up for it, and didn’t take on a penny more debt. The whole trip was paid for by the time our flight took off.

Did it push back my debt-free timeline? Sure. We could have been fully out of debt a few months earlier if I’d said, “No, thanks.” But to me, it was worth it.

Break up a big goal into manageable pieces

How much wedding can you afford? How much can you really spend on your big trip? A down payment is how much in this market? Instead of guessing a large number, break your goal into the necessary components.

Take my international trip as a sample.

What I like to do is make a new spreadsheet (yes, more spreadsheets!) and estimate what I’m going to need to pay for. There are the big parts: plane tickets, hotel rooms, money for food and sightseeing (museum tickets, walking tours, a ride on the giant Ferris wheel tourist trap). But also the little stuff: passport renewal, how you’re getting to and from the airport, the rental car or transit costs at your destination, snacks at the airport, souvenirs, a last-minute trip to the drugstore because you forgot to pack sunscreen and toothpaste. (In our case, the airline lost our luggage for the first two days, so we ended up at a Marks & Spencer buying underwear and pajamas.)


This turns a big-ticket expense into bite-size bits. Now, instead of thinking, “This trip is going to cost so much and I have no idea how I can afford it so I’m just going to close my eyes and put it on a credit card,” you can say, “Here’s exactly how much it will cost, and I’m going to make a plan to make sure it’s all paid for by the time I leave for the airport.”

It also made planning the trip easier. We didn’t have to stay in the very cheapest hotel we could find — we made a plan to splurge just a bit and stay in the pretty nice option right next door to the extremely luxe place where most of the family stayed. Instead of feeling guilty any time I wanted to do something extra, I could check my vacation budget and say, “Yes, I would like to do the Christmas afternoon tea at the Ritz.”

How to build savings into your budget

Saving up for something that sounds expensive is easy if you have enough time. I treat my savings goals like any other line item in my budget. We decided we were a “yes” on London in March of that year, and we had until December to save up. It was time to break it down.

Look at your total cost for the trip. Now figure out how many times you’re going to get paid between then and now. Divide the total cost by that number. That’s how much you need to set aside every paycheck.

I prioritized those savings before I funded my regular fun categories. When I was saving up, I cut a couple more subscriptions and reduced my monthly dining-out budget. Saying “no” to a fun night out with friends was a lot easier to do when I could tell myself that it was either that immediate reward of a few drinks at our normal bar in Hollywood or viewing the Crown Jewels at the Tower of London with my parents and sisters.

Also, once the trip ended, I was able to reallocate the monthly set-asides I’d made for London back into my fun categories.


Do not take on more debt

When you have a big purchase in your future, resist the urge to take a personal loan or open a new 0% credit card to pay for it, and do not use one of those “break this up into four easy payments that make the total sound less scary!” point-of-sale financing services. These are, financially speaking, traps.

In an earlier edition, we talked about things like 0% credit card balance transfers as a strategy for paying off debt. But that is for debt that you took on in your previous life as a non-budget-conscious person. You are not making a responsible financial choice if you buy things with more debt right now. The only exceptions are debts like mortgages, car loans and medical bills. You need to live somewhere and get around and take care of your body. You do not need to go to Tulum.

If you can’t afford something by saving up and budgeting for it, you can’t afford it, period.

Stay motivated

I don’t know what your big dream is. I hope it’s something great, something that motivates you to say: “OK, I’m going to sit down and categorize all my expenses today and next week and the week after that.” Like your emergency fund and your car repair fund, even if you’re able to budget only a few dollars toward your goal right now, that’s a few dollars you weren’t dedicating to this before. Celebrate that win!

Next week, we’ll talk about protecting your money and planning for your financial future. See you then.

— Jessica


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