Getting a new car follows a different path from buying used. Normal saving strategies won’t cut it when saving for a new car. Instead, potential buyers will have to get creative with how they manage their current finances. The good news is that once the money is saved, there are a lot of cars to choose from.
Look At Your Income To Spending Ratio
Your spending should never exceed the amount of money that you make. When it does, that will instantly explain why you’re always in the hole. Little things like late fees on overdue bills add up to your overall spending. Make a simple chart that separates your income, bills, savings and casual spending. These are the four building blocks of your finances. With all of the numbers side by side, it should be much easier to live within your means while saving. Eliminate anything that puts you over your current budget. And if you don’t have a budget, make one!
Eliminate Overspending By Using Cash
When using credit or debit cards it becomes common to zone out when making purchases. The convenience is great, but it isn’t for everyone. When you have problems with overspending, consider moving to a cash setup. You are less likely to overspend when dealing with cash, and it allows you to take leftover change and put it in a jar. It may seem silly, but seeing that jar fill up over time is a big boost to morale. When it gets full, you may have over a hundred dollars in it- just from pocket change. For a good challenge, choose a large jar. The bigger the jar, the more satisfied you’ll be when it is filled.
Find Creative Ways To Save
Coupons, getting refinanced for your home at a lower rate and checking out bill programs. Some bills will give you a discount for being in school and having a .edu email. Others will increase your billing for the year so that you spend an expected amount each month instead of a random amount. All of these programs are available already, so why not take advantage of them? Look at every receipt you get, they will usually have a coupon printed on the back or offer free stuff. All of this seems small, but the way it really helps is with the big picture. Save with the little things and there will be a giant payoff in a few weeks, sometimes months.
Automate Your Savings
It can be tempting to regulate the amount of money that goes into a savings account. When starting out a savings account and set a goal, stick to it. If the plan is to take one hundred dollars out of each check, then don’t cut down on that number. Doing so will affect your year-end goals for saving, and make it much harder to get a new car. To get around this problem, automate the way you handle savings. Make sure that your checking account and savings account are with the same bank. Set up a split payment through your place of work so that the money comes out on its own. Now you don’t have to deal with potential cannibalization of your savings and it will continue to grow.
Credit Unions Are A Hidden Treasure
Banking with a credit union offers users a lot of flexibility in the way they manage money. There are plenty of programs in place that are consumer friendly, even when getting a new account. The requirements are not that much different from a bank, and many businesses market their involvement with specific credit unions. So how does this help you? A credit union is smaller than a bigger bank so has consumer-friendly auto loan rates. When you factor that in with the rest of their services, it works out well for everyone involved. Credit unions also handle the financing of real estate and other lending services. When you get to the point of searching for low auto loan rates, make sure to add a credit union to your list of potential lenders.
Sell Stuff You Don’t Need
This counts as another small task that gives you big gains. Little things around the house that are never used can be sold for money. Take that money and put it into your savings account for an instant boost. Electronics are the easiest to get rid of, followed by appliances. Getting rid of a product that wastes energy and replacing it with an energy efficient model is always recommended. The amount you sell the old model for will offset some (or all) of the cost of the new model. Check with your home insurance and make sure that they offer reimbursement of some kind when appliances break. If you are coming out of pocket every time something breaks around the home, then that means the insurance company isn’t that good. Go with a company that covers as much of the cost of a replacement as possible. If you’re lucky, good fortune will land you with a company that covers 100% of the replacement costs.
Getting Everything At Once Is A Trap
Save money on the car you want by not going for the super deluxe model with extra trim and spinning rims. If you don’t plan on using satellite radio, then decline the upgrade if it saves money. Extras on a new car can end up adding thousands to the price. By getting rid of the fluff, you’ll have less money to save before buying your new car. Remember, you can always get the upgrades later.
There are a lot of lessons to be learned when saving for a new car. Apply these lessons to other parts of your life so that you gain a fresh perspective. A few baby steps make a huge difference when buying a brand-new automobile. Without hitting your finances hard all at once, you secure the future health of your new purchase.