A car is an expensive item you cannot just wake up one day and buy. You have to check your finances and see if you are in a position to buy it. If you cannot afford it outright, it is advisable to come up with a saving plan. Here are some helpful tips you need to consider if you want to save for the car well.
Open a Savings Account
Don’t keep the money under your mattress. Go to your bank and ask them to open for you a savings account. Most savings accounts are free to open and do not require a lot of documentation. You can choose to ignore the bank and open an account with a credit union. The good thing about credit unions is that they do not have any fees like banks. Once you have the account, instruct your employer to send a fixed amount from your salary every month to the account via direct deposit.
Come Up With a Monthly Budget
You can only save for a car if you spend less than you earn. All your short and long-term financial goals revolve around your monthly budget. Make sure your budget allows you to save. You can adjust the budget to cut down on things you don’t need so that you get more money left. Things like TV cables, Wi-Fi and monthly vacations are luxurious. You can easily scrape them off your budget and channel the money towards your car savings account.
Determine the Desired Payment for the Car
You need to calculate how much the car will cost. Knowing the value of the car you want to buy will enable you come up with a robust saving plan. Divide the price of the car with the number of months you plan to save. For example, if you want to save for a car worth $10,000 for one year, it means your monthly savings should not be less than $833. It is advisable you leave some room for additional expenses such as oil changes, new tires and insurance. You can always go for free car insurance quotes to determine how much you will pay for the model you are planning to buy.
A car costs thousands of dollars. This amount can take you years to raise if your sources of income are limited. You can make the saving more effective and faster by working extra hours to bring home more money. There are many quick jobs you can do to get more money. You can take advantage of the available overtimes, become become a Lyft driver, babysit, do catering or deliver pizzas during weekends. You can also take advantage of numerous opportunities available online. For instance, you can become an online coach, blogger or a marketer at Craigslist. All these activities can give you a considerable amount of money for your savings account.
Sometimes we don’t save just because we lack the motivation to do so. You could always trick yourself to get the motivation. Take some time and consider the beautiful things you could do with a car. Think about the breath-taking road trips you could have and the cool places you could travel to.
Save Less for Retirement
All 401(k) matches stop at 6 percent. This means that you can comfortably direct your contributions towards saving for the car after reaching this mark. However, talk with your HR department first to see if it is okay to stop the matches to avoid penalties.
Ask for Support
Do not struggle with a strict saving plan yourself. You can always talk to your family members to let them know that you are saving for a car. Doing this will not only give you the energy to save, but it will also prevent awkward situations where a friend or family member constantly invites you to go shopping every weekend.