In a world where you are constantly being surprised or surprised, buying a car is not one of those expenses that we can easily or smoothly incorporate into our existing budget. To reduce unnecessary stress and ensure that your mind is clear about making such an important decision, we want to make sure you are given some sensible steps to save for an effective purchase. Use a combination of these tips to save on your new wheelset and everything that the new car includes.
Set a comfortable budget
Many people start to think about the car they want and the amount of money they actually want to spend. This isn’t necessarily a bad thing, but there are plenty of instances where the car you want may not fit our budget as hoped. Assess your current spending to responsibly narrow your focus ahead of time. Do a thorough search for the cars that interest you – this will allow you to measure the total amount of the car.
Alternatively, you can evaluate your current budget and consider how much of your total income (percentage or dollar amount) you want to spend on a car payment each month. Starting out this way will allow you to level your mind (and pockets) before you get swept away. If you decide on a type of car but know the cost will be a little higher than your budget allows, you can focus on increasing your down payment amount to relieve your monthly budget.
Determine a deposit amount
There are plenty of calculators and resources online that you can use to determine which number works best. It is recommended that you save at least 10% on a used vehicle and 20% on a brand new car. While this is not set in stone, remember that the more cash you have upfront, the better you can qualify for a lower interest rate – which makes your monthly payments palatable.
Create a savings plan and stick with it
While this may not be everyone’s favorite part of the car buying process, it is the most important! Dedicate yourself and make a commitment to save an additional amount on this car purchase. You have the option of opening a new savings account entirely dedicated to your car. That way, you’ll have a very clear picture of how much you’ve accumulated over time with no further distractions. Creating an automated system for storing can not only increase your confidence, it can also guarantee that you won’t lose traction as you save. If you want to reach your savings goal faster, using a side business to generate additional money can help with this process. Within the Mint app, you have the freedom to create a savings goal entirely dedicated to your new journey.
From the app:
- Open the app and select This month from the menu below.
- Scroll down to Your goals.
- Choose Create goal In this case, this is your first Mint destination. If you already have at least one goal, choose See everything, then Create a new goal.
- Pick the goal that works best for you, enter how much money you want to set aside each month, and answer any other questions.
- Choose Create goal. You can start tracking your progress!
It really is that simple. While there is nothing wrong with using a system or method that you typically have to budget for, Mint has created a way to see and track your progress in real time.
Budget for all possible expenses
Often overlooked, new cars guarantee absolutely new expenses. Car insurance increases based on the coverage that is required for a newly purchased vehicle. This can also be used as an opportunity to look for the best car insurance rates. Don’t forget to consider increased maintenance fees or service packages offered during the car purchase process.
If possible, trade your current car
While the value of your current car may not be able to cover the cost of the new and shiny car, look around and see who offers the best trade-in value for your vehicle. Selling the car or valuable parts is also an option for older models. Negotiation is the name of the game – do what you have, work for you!
Tighten your discretionary spending
Another important point that none of us really care – limit unnecessary wiping! Take a look at your previous bank statements and find some ways you can cut your spending. This can mean doing a little more shopping or dining out so that those funds can be used towards your new purchase. If you have to skip a few brunches or shopping trips to ease the worry about buying a new car, it’s definitely worth it. You will be surprised how much money you can actually save in a relatively short amount of time if you know where your money is being spent.
Stay strong and be patient
In a very instantaneous world, we often lack the patience to keep things up completely. How many of us have started saving and the discipline has quickly deteriorated? Or do you start very excited and let your emotions get in the way? We may all have been guilty, but luckily we don’t need to live or let our last financial mistake define us. The commitment to save capacity is a daily commitment accompanied by daily sacrifices. Try your best to counter the urge to arbitrarily speed up this process. When we are hasty in our decisions, we tend to spend more than we’d like, which can have negative, long-term effects.
Review your savings goal and make sure it is visible often. Do you have the freedom to buy a car today? Absolutely. Will there be good and bad consequences? Without doubt. To avoid the buyer’s remorse, use this time as preparation to save upfront so that you can truly enjoy your new purchase without regrets.
Marsha Barnes (16 posts)
Marsha Barnes is a financial guru with over 20 years of experience striving to empower women worldwide to be financially successful. Financial literacy and literacy are a passion of Marsha and provide clients with practical information that builds their general confidence in their personal finances.