So, you see the car you want. Maybe you’ve even test driven it. You’ve read the reviews, you’ve saved pics of it online, and you’ve told your friends all about it. You can even smell that nice new interior. It’s going to be yours. But how are you going to save up for the down payment, the monthly payments, and all of the related expenses like fuel and insurance?
When it’s time to buy a car, you have to be confident not only that you are getting the right car but also that you have the finances to make it happen. You may have to make sacrifices or cut down on unnecessary expenses in order to roll off the lot in that shiny new vehicle. Here are some tips that will help you save.
Make a Real Budget—And Stick To It
At its most basic, creating a budget is about figuring out what we need and how much we have to spend to make it all happen. But that's not the whole picture. We also have to have a disciplined approach, much like going on a diet. It is going to take concrete choices, cutting back on certain things, and the willpower to make the plan a reality. Committing to those principles is the first step. Next is the actual formation of the budget. Here’s how to do it:
- Take an honest look at your life and decide what you need. This will include things like shelter and food. Obviously, food is essential because you need it to live, but there are a lot of ways to cut costs and still meet your family's nutritional needs. We'll give you some tips later on in this article. Unless you work from home, you'll also need to add in the cost of getting to and from work.
- Notice that we aren’t including clothing in this list of necessities. Can you get by with the clothes you already have? If not, how long can you go without having to buy new clothes? Ask yourself these types of questions to identify where you can make room in your budget.
- You will have to include water, gas, electricity, and any other utility bills such as your cell phone and Internet service. We’re going to assume you can’t live without the Internet, which is the case for most people nowadays. But notice we did not include cable television. Do you need it, or could a streaming service suffice?
- Make sure that your budget accounts for any other bills that you may have. This category is different for everyone, and it could include expenses like student loans, medical bills, insurance payments, and association dues. If you're paying too much for insurance on your current car, check out our online quote form to see how we can help you save money.
- Identify the cost of visiting family members and driving your children (if you have any) to school and other activities. Include those in the budget. If you have pets, add in the cost of their care and pet insurance, as well.
- Once you have your list of necessities and the cost associated with each one, take another look to see if there is anything else you can cut back on. What results may look like a rather Spartan lifestyle, but keeping your goal in mind will make those sacrifices seem much smaller.
- After you've reduced your expenses as much as possible, add them up to get your minimum expense number. Subtract that from your income and the result is how much is left over; your car savings and all of your non-essential expenses will have to come out of this amount. This is a good time to make sure that the car payment that you expect to take on fits comfortably within this range, and that you can afford to insure the new car. You can get a quote even before you purchase it so you can be prepared and add that to your budget.
The best way to save money for a car is to fully commit to making lifestyle changes until you reach your savings goal. You may need to have some honest conversations with family or friends who will be impacted by your new choices. If you let them know how important your new car savings plan is to you, they'll be much less likely to tempt you to spend unnecessary money. Let's take a look at some adjustments you can make that will have a big impact on your bank balance.
Cut Back on Going Out
Approximately how much do you spend each time you go out? You’re probably not too sure. You can check your bank statement or your credit card statement to see what you spent on a particular day or evening in order to get an idea. You might be surprised to find that the cost of one night out can equal the amount you pay for an entire month of car insurance. Think about how many times you go out each month, on average. If you were to cut back on 75% of your going out, you might be able to save hundreds of dollar each month.
Cut Back on Food Expenses
One of the best tips for saving on a car is to adjust your spending on food. Most people spend more money on food than they do on clothing and entertainment, and the biggest culprits are workday lunches. Grabbing a quick lunch is likely going to run you around $12. That times five days a week is $60, or $240 a month. To save money, you can commit to making your lunch each day. If you have a sandwich, the loaf of bread for the entire week will only run around $3—maybe even less. The meat and other toppings will be another $5-$10. Add a bag of chips from a dollar store for a buck, get some free water from a fountain, and you’re good to go. Depending on what you select, your lunch for the entire week could cost about as much as going out for one meal. You could save around $200 a month this way and put that towards your car fund.
And that’s just lunch. You can see even more savings by cutting back on your dinner spending, especially if you tend to get pricey takeout. If you don't know how to cook, now is the perfect time to learn to make a few inexpensive meals that are healthy and delicious. There are plenty of resources online if you need recipes or video tutorials. Try buying foods you like in bulk and picking up cheap, healthy staples like beans to maximize your grocery budget. If you're a carnivore, you can save serious cash by planning your recipes around whichever meats are on sale at your store that week.
Automatically Transfer Money into a Savings Account
Every time you get paid, think of a portion of your paycheck as being dedicated to your future car. Then have that money automatically transferred from your checking account to your savings account each pay period. If it’s automatic, you won’t see or feel the transaction.
Whether you are saving up to buy a car with cash or just to make a big down payment, following these tips will help you reach your goal. It will definitely take some sacrifices, but they will all be worth it when you get in that car, inhale the new car smell, start it up, and take it home.
