This post is a paid collaboration with Tangerine, but all opinions and spending details are my own.
We recently wrapped up a major project: we renovated our kitchen.
This was a Major Spending Event for us, since it’s not every day we spend five figures on something. However, in the past few years, we’ve saved up for a few similarly-large spending events, including buying our house and hosting our wedding.
With three big-spending projects under our belts in the past three years, we’ve picked up a few tactics that have helped us not only manage big expenses, but actually make the most of them—without taking on debt or giving up on our other goals.
Plan ahead (like, way ahead)
I can’t be the only person who
- Is almost a decade away from going back to school in any real capacity, and
- Still thinks of September as essentially New Year’s 2.0
I’ve always seen the winding down of summer as a great time to start fresh and think about the upcoming year, and one of the most useful things that has meant over the past few years is getting clear on the big spending priorities for the upcoming “school year.”
The thing about Major Spending Events is that planning ahead, even by less than a year, can be a literal lifesaver.
To get a comprehensive view of your year, I’ve found the best way to do it is to bust out a plain old pen and paper. Grab a notebook and write down each month of the year, starting with next month. Then write down every kind of big expense you know is happening this year, with the estimated dollar amount, in the month you know it’ll happen.
For a kitchen, maybe you know there’s a big sale coming up (ahem, the IKEA kitchen sale for example) in March, so you know you’ll be buying cabinets and counters then. For a wedding, maybe you owe a 50% deposit in January even though the wedding isn’t until June.
Getting clear on the timeline can make sure you have the money available beforehand – and always strategize your spending so you’re not missing out on rewards you could be earning!
Optimize your rewards
When you’ve got some big expenses that are outside of the norm, it’s a perfect time to understand how you can get the most out of your spending with rewards programs. For most of us, that’s our credit card—but one thing we found when we were planning our spending was that many of our biggest expenses didn’t fit neatly into the set categories that most credit cards reward.
There are tons of cards that offer stellar rewards on categories like gas, groceries, and pharmacy, and even more focused cards that reward spending on restaurants and entertainment really well. I’m not going to lie, our restaurant spending did spike as we tore out our entire kitchen, but that expense didn’t even compare to what we spent at IKEA, which is categorized as Furniture, and Lowes, which is Home Improvement.
That’s why we stuck with our regular, day-to-day Tangerine Money-Back Credit Cards (yes, we each have one) to handle our purchases for the kitchen renovation. On a regular basis, we don’t usually spend multiple thousands of dollars on either furniture or home improvement, so those aren’t categories we opt for higher rewards in.
Once we knew that we would be making some major purchases in those categories, however, we could select them as 2% cash-back categories on our cards right from our online banking account. That’s one of my favourite perks about this card. If your spending is going to be out of the norm for a while, you can make sure your top rewards categories line up with that spending without applying for a new card.
We’ve recently changed them back, which you can do after 90 days, but earning 2% cash back on our IKEA kitchen, our countertops, and our major appliances netted us a cool $254 in instant cash-back rewards, which went straight into our vacation savings account with Tangerine. (For those who don’t want to do the math, we spent $12,719 on our cabinets, counters, new stove, microwave, and dishwasher.)
Based on what you plan to spend in the next year, it’s worth checking out the Tangerine Mastercard because it’s one of the most flexible cards out there—even if your big spending isn’t the same as my big spending. You can choose up to three 2% cash back categories:
- Recurring Bill Payments
- Drug Store
- Home Improvement
- Public Transportation and Parking
If you’re planning a big road trip, maybe you’d want to prioritize Hotel-Motel, Restaurants, and Gas for a while. For a wedding, if your venue is a restaurant, that’s a great way to earn some hefty cash back on an expense you’d be paying for either way. And hey, if you’re doing both in the same year, you can make sure your rewards fit your spending without any new cards. Outside of these categories, you’ll also earn 0.50% Money-Back Rewards on all your other everyday purchases!
You can check out even more details about the card in my overall Tangerine review.
Set up your savings plan
Cash-back on your purchases is an undeniably great perk, but it’s immediately less rewarding if you’re planning to carry those big expenses on your credit card. That’s why it’s so important to make sure you have a savings plan in place at the same time you’re planning your spending, so that once you’ve netted your rewards, you can pay your balance in full.
Once you know what your big spending events will be, my favourite thing to do next is set up a separate savings account, and name it with whatever my big event is. You had better believe I had both a Wedding Savings account and a Kitchen Reno Savings account at Tangerine—although frankly, they were the same account because once we finished paying for the wedding, the few hundred dollars that was left over was the first few hundred dollars we saved for the kitchen.
Having a separate, named account makes it easy to stay on track in a few ways.
- You can set up separate automatic contributions from your chequing account.
- You’ll be able to easily track your progress towards your savings goal—which is even easier with Tangerine’s Goals feature.
- You can turn on roundup savings features, or use Recipes to automate additional savings in Tangerine.
- Naming your account makes it ever so slightly less tempting to dip into the funds for unrelated spending, since you know you’re taking it away from your big goal.
Enjoy your big spending, guilt-free
Once you have a plan in place to save up for a big expense, and you know you’re getting solid rewards in exchange for spending you’re going to be doing, the only thing left to do is to enjoy the process! It can be a hard switch from saving up a ton of money for your goal to spending money on the same goal, but trust me: you’ve earned it.
And that’s true even if, like me, you need to remind yourself “You planned for this! It’s fine! You have the money!” every time you swipe your credit card.