If you think about it, saving money is simple: spend less on luxuries and put more money away. However, it never really is as simple as it sounds, and even though we know what we need to do to save, it doesn’t usually work out like that.
If you need to save up several thousand dollars for a big expense, there are a few ways to do this. I have talked about saving for a big purchase before, and you can read about that here, but today we are going to focus on saving for a car!
Work out what you can afford
If you are lucky enough to be able to buy a car outright, then this isn’t something you will really need to worry about – apart from what car you can afford! However, the majority of us here in America will need to take out a car loan, and before we do this, we will need to sit down and do some serious calculations about what can afford each month.
Decide when you want, or need, to buy a new car
After calculating how much you can afford each month and the cost of a down payment, you will need to give yourself a timescale to work with. If buying a new car is an urgent matter, such as your current vehicle being written off or is on its last legs, then you aren’t going to be giving yourself very long to save up for it. Naturally, the longer you give yourself to save the easier it will be, but sometimes we are not blessed with time!
Try to be realistic here, and to keep frustration at bay. If you are on a low-income, it is going to take much longer to save than if you are earning lots of money. Remember that sacrifices may have to be made here, and public transport is available if your current car has kicked the bucket!
Make saving a priority
Now, this is the most difficult part of all! After you have sat down and assessed your finances, it is time to actually do the saving! You will need to cut back on luxuries, cancel that gym membership you never use and set up a direct debit to your savings account. By doing this, you will be saving automatically without even thinking about it. If you don’t have the ability to set up a direct debit, you will need to put money aside the old-fashioned way: by either heading down to the bank and withdrawing money, or putting cash into a savings jar in your home.
It is still possible for people to get a car loan with bad credit and no cosigner, so don’t panic if you have made some bad decisions in the past; you will still be able to buy yourself a new car!
When you are working out this budget, it is important to factor in the initial down payment that you will need to pay upfront, as well as any extra expenses that cars come with. These include, but are not limited to, oil changes, new tires, and car insurance.