A car is a modern world necessity no matter what the critics have to say. However, most people don’t have enough money in cash for such an expensive purchase. Average buyers have to save up to afford a new vehicle or borrow money from a bank and deal with monthly payments. Either way, they are forced to experience budget cuts and manage their finances to be able to allocate several hundred dollars a month for the purchase of a new car. However, if you make a conscious effort to plan your monthly expenses and start saving up for a car way before the need for a new, reliable vehicle emerges, you will be able to gather enough money in the most painless way. The following tips will help you save up for a down payment and compile a plan for covering monthly payments in a way that these additional expenses don’t make your budget collapse.
1. Decide on a vehicle to save up for
Obviously, the first thing you need to do to start planning your savings is to determine how much money you need to save. The prices for cars, especially used ones, often fluctuate depending on the number of years they’ve been in use, their rarity and the selling condition, but those changes have a minor influence on your saving goal. So, feel free to explore the market and take the current prices for the most suitable vehicles as a reference point. At the same time, be quite realistic about your needs and possibilities.
2. Determine your price limits and monthly saving goals
Make sure that you may afford the vehicle you’re considering for purchase without limiting your family’s budget too much and sacrificing your basic needs. In order to determine which vehicle you may afford, you will need to decide how soon you want/need to buy a new car, how much money you would like to save up for that matter, how much money you will have to borrow and how much you will have to spend each month in repayments. An auto loan calculator will help you do the math.
After that, try to last through a couple of ‘trial months’. For instance, if you determined that you will have to spend about $300 dollars in monthly car loan payments and you want to save up a bit for a down payment, try to save $300-$400 a month to experience the effects of this new financial burden before you fully commit to it. This experiment will help you determine the price range more accurately and save up for a car at the same time.
3. Don’t forget about insurance and maintenance
When planning your next vehicle purchase and saving up money for it, don’t forget to include insurance payments and maintenance expenses into your financial plan. If you already own a car, don’t assume that the new sum will be the same as the amount of money you spend on your current vehicle’s insurance and upkeep.
Reach out to an experienced mechanic from your local auto repair shop to gather honest information about the desired vehicle and how much it will cost you when it comes to maintenance. Use that information to determine if the chosen car is for you and prepare your finances for its appearance in your garage.
4. Savings should be mandatory
When saving up for a car or any other expensive purchase, the first thing you need to do after receiving your paycheck is to put money for it away and forget about it. It’s better to ask your bank or payroll department to transfer a certain amount of money to the savings account automatically and keep them out of reach.
This way, your car savings will kind of happen on its own and you won’t be tempted to spend your ‘car money’ on something else. You will soon learn to leave without that money and plan your budget in accordance with the decreased income. Furthermore, the deposit interest paid will add up, and you will save up for a car sooner than expected.
5. Start spending less
Turn financial minimalism into an integral part of your lifestyle. Well, that’s easier said than done, right? But, if you manage to cut your expenses, you will be able to contribute to your car deposit more and afford a better vehicle. Cutting monthly spending is a totally doable undertaking, especially taking into account the availability of numerous ways to save money without feeling too restricted. To save up for a car, you can:
- limit your clothes shopping and buy items at consignment stores/thrift stores;
- approach grocery shopping in a smart way and start meal planning – you will eat more healthy, spend less money to save up more for a new car and waste less food;
- avoid buying expensive alcoholic cocktails when going out with friends;
- start paying attention to supermarket deals and coupons;
- quit your Starbucks addiction and start making your own delicious (and far less expensive) coffee at home;
- avoid spontaneous shopping;
- explore drugstore makeup and skin care (believe me, there’s a lot of great stuff outside Sephora);
- cancel your gym membership (let’s be honest, you barely use it anyways) and start working out at home/in a park;
- control your household energy consumption to reduce bills;
- if you’re a bookworm, save money on buying books by hitting your local library or purchasing newest publications online – it’s often cheaper;
- research free entertainment opportunities in your local area;
- find a side job – you will only benefit from a few hours of babysitting or dog walking on the weekends.
With the numerous saving opportunities and approaches, it’s necessary to make sure that the new vehicle you want so much is worth the effort. As much as a well-functioning car is a necessity, don’t beat yourself up if you can’t put away as much money as you need this month. Be open to more affordable vehicles and leave a request on HireRush.com to ask a mechanic to come over to the dealership to test the technical condition of cars under the consideration not to spend a fortune on a faulty automobile.
