Although, saving sounds simple enough, we all know it’s not as easy as it sounds. Having a savings plan and sticking to it is the easiest way to save up for the new or used car you are working towards. Using these simple steps, a new car could be right around the corning.
Step 1 – Calculate your desired car payment
If you don’t plan to get a car loan at all, this answer would be “zero” so skip this step and move onto step 3.
But for those you do plan to get a loan, you need to start by calculating how much you can afford to pay each month. This amount needs to be realistic but also with wiggle room for added costs such as maintenance for oil changes or new tires, as well as changes in things like insurance and gas.
Step 2 – Calculate how much you need for a down payment
Again, if you are planning to pay in full, this doesn’t apply. Skip and move on to the next step.
For those that are planning a monthly payment, there are a ton of online tools that will help you calculate how much to plan for a down payment. Many loan calculators offer options for trade-in value, sales tax and loan terms to help you get the most accurate estimate. Using the tool, spend some time trying out different down payments and terms. From there, you can see how these changes affect your monthly payments.
Step 3 – Decide when you want or need the car
Once you have planned your budget, including down payment and monthly payments, it’s time to think about timing. Just remember, the sooner you need the car, the faster you will need to save. It is very important to be realistic here. If you need a $5000 down payment but only bring home $4000 a week, you aren’t going to be able to purchase the car next week. If you need the car quickly, think about a more affordable option, otherwise, delaying your purchase by a few months to increase your savings is probably a good option.
Step 4 – Make savings mandatory
Having a plan is the easy part, but sticking to it is a little trickier. To make saving a little easier, make it automatic. Set it up with your payroll department or bank to have a specific dollar amount of each check sent directly to your savings account.
By having this setup automatically there’s no risk that you’ll accidentally spend what you should be saving. If you don’t have direct deposits or you can’t set it up automatically through your bank, you’ll have to save the old fashion way. Making a trip to the bank to transfer the money or place money in a “car fund” jar after each check. But don’t wait, you don’t want to accidentally spend this money before you’ve put it away.
Step 5 – Save, but don’t punish yourself
Even if you have your savings set to happen “automatically” it can still be tough to budget. It is easy to feel guilty for buying something when you should be saving or frustrated when you can’t buy other items you want. Or even the fear that you won’t be able to save what you need.
It’s important to be realistic in your savings and to have a good plan. But even with a plan, things happen, relax and just do what you can.