How to Afford the Big Stuff

Mary Hunt talks about gamifying financial goals to make it easier and more fun to work toward them. DenisProduction.com/Shutterstock

One day, the market is crashing, inflation is climbing. The next day, it seems like everything’s coming up roses. No matter how the economy’s swinging, your mortgage and car payments are still lurking in the shadows, waiting to pounce.

And then there are the big-ticket items. A busted water heater often comes without warning and with the potential to blow a giant hole in your finances. A car that’s nearing its end of life. It all seems hopeless. But there’s a way out: Anticipate these expenses, cut them into small pieces, and make them as routine as paying the phone bill.

Define the Goal

Start by identifying your next major financial move. Your trusty fridge is losing its cool after a dozen years of faithful service. Instead of sitting back and waiting for the refrigerator to take its last breath, use your knowledge and common sense to determine the years left. The refrigerator manufacturer suggests with a simple repair, the fridge has three more years of useful life. Now you have time to research to discover the best way to proceed. What type and size do you need? How much will it cost? Any brands or options to avoid? With this information, set specific goals.

Identify the Terms

If you start saving for the refrigerator right now, you‘ll have about 36 months. Let’s say you determine that it will cost about $1,600. Divide that amount by the term of 36 months. The result is about $44. You’ll need to save $44 each month, starting now, so you'll be able to replace your refrigerator in three years.

Make It Smaller

To make your goal more manageable, break it down into bite-sized chunks. Instead of thinking about the cost of a new refrigerator over a 36-month period, divide it into 156 weeks—the number of weeks in the same time frame. This way, you only need to save $10.26 each week to reach your target.

This approach is more psychologically doable and adds a sense of predictability to your financial plan. Consider this a new, recurring bill that you have to pay each week. Over time, it will become as routine and predictable as your mortgage or car payment.

Set Up an Account

Don’t keep this stash in your sock drawer or even in your regular savings account. That tactic puts the money within easy reach and makes it too available for you to borrow for some other purpose. Open a savings account specifically for the item you want to buy instead. An easy way to do that is waiting for you at SmartyPig.com, an online savings bank that makes setting up and reaching small goals actually fun.

Visualize the Goal

Keep your eye on the prize by snagging a snapshot of the desired item and sticking it somewhere visible, like your trusty fridge. This visual reminder will do wonders for your motivation. Take it up a notch and draw a grid over the picture using a pen and ruler—each square represents a payment. Once you make a payment, grab a highlighter and color in a square. It’s like a game of financial tic-tac-toe, but with actual rewards!

Pay a Little More Now and Then

Get creative with new ways to save money and you'll reach your goal even quicker. That extra cash you squeezed out from your grocery bill this week? Put it toward your target as an extra payment. And don’t forget all the spare change. Use it to speed up reaching your savings goal. With a little resourcefulness, you can turn your frugal choices into a financial game of “Where’s Waldo?”—except this time, Waldo is that new fridge or better car. He’s hiding in the little things.

One Goal at a Time

About now you’re probably thinking about several savings goals you want to work on simultaneously. I applaud your enthusiasm, but hear me out: It’s better to take it slow and steady. Start with one goal. Keep your eye on the prize and don’t become distracted. Once you reach it, you'll be adept at handling big financial decisions, then you can start juggling multiple goals with ease. Think of it like leveling up in a video game. Start with one quest, master it, and then take on more challenges.