On paper, saving money is simple – spend less and put away more. But even though we know exactly what we need to do in order to save, most of us struggle to cut back on the luxuries and live a simpler life.
If you need to save up several thousand dollars for a new van, car, or even a few hundred for a second-hand model, it will help if you have a plan of action that will keep you on track, even if unexpected bills or expenses pop up.
Calculate your desired car payment
If you can afford to pay for a car outright, then this isn’t something that you will need to worry about, apart from needing to save enough to buy for the car in the first place, of course! However, there are many people out there who can’t pay for a car in full and don’t mind taking out a car loan – for these people, you will need to work out how much you can afford to pay out each month. Remember that it is still possible to get auto loans with bad credit, so don’t think that bad mistakes made in your youth will keep you from buying a car, just do some research into who can help!
Be sure to factor in some wiggle room for oil changes, new tires, general car maintenance and insurance costs. While paying for your car loan may be the biggest outgoing here, it definitely isn’t the only one!
Decide when you want, or need, a new car
When you have worked out how much you can afford to spend, as well as the initial down-payment, you’ll need to work out when you need a new car. If your existing one is unreliable and on its last legs, it is likely that you will need to buy a new vehicle sooner rather than later. Of course, the longer you give yourself to save, the easier it will be to accumulate the cash to buy a car.
Try not to be unrealistic or impatient here – if you earn $4000 a month and need $5000 for a down payment on your car, you’re not going to be able to that within one paycheck. By delaying a purchase and waiting to buy, you will do wonders for your finances!
Make saving mandatory
Now we’re at the hard part: sticking to your plan to save a certain amount of money by a certain time. The best way to do this is to set it up so that you automatically save without any effort. To do this, simply set up a direct debit from your bank account to your savings account on the same day you get paid. This will stop temptation and will ensure that money is put away without you even needing to think about it.
If you can’t do this, you’ll have to do it the old fashioned way by either popping into the bank to put money in a different account or by putting cash in a “car jar” at home.