How to Create Your Own Layaway Program

To avoid paying interest on a purchase you can choose a layaway plan instead of charging it to your credit card.

Layaway plans are usually associated with stores like Walmart and KMart. These stores allow you to put items on layaway, which means they are kept at the store reserved for you and you make monthly or weekly payments until the items are paid for and you can then take them home. These programs are great for people who do not want to charge items to credit cards. They offer an interest-free way of buying products without going into debt. You can create your own layaway plan to save up for large purchases like a new computer, car or even the down payment on a home.

Instructions

1. Calculate how much you will need saved for the large purchase. Research the price of the item and take the average of the prices you find.

2. Calculate how long you have to save the money before you need to purchase the item. Some items are time sensitive. For example, if you are saving for a new car and your current car has very high mileage and is having mechanical problems, you will have less time to save for a new one than if your car has under 100,000 miles and is in good working order.

3. Divide the amount you need saved by the number of months you have to save the money. If you would prefer to put a certain amount of money every week instead of every month multiply the number of months by four and divide the amount you need saved by the result. The result of your calculations will be the amount you must put aside every month or every week to reach your savings goal.

4. Decide on a safe place. Some people will spend money if it is easily accessible. To avoid being tempted to spend the money, open up a separate savings account with your bank, not linked to a debit card. You can also get a bank security box and every week or month put cash into the box where it will be safe.

5. Start saving. Whether you open a new savings account for the purpose or get a bank security, do not remove any of the money until you have all the money saved for the purchase. Think of the amount of money you are putting away like a payment on a loan or bill that you cannot get back.

Tips & Warnings

• If you decide to keep cash at home as a method of saving in your layaway plan keep it in a safe or secure location.

References

• Teen Consumer: Layaway Plans
• Consumer Reports: Back to the Future With Layaway Plans