How to Save Up for a New Car

May 4th, 2018
Saving for a New Car

Saving for a New Car There are two “big” purchases people generally make: their house and their car. Houses typically cost more than $100,000, while cars may range between $15,000 and $60,000 depending on what you want.

What are some tips for saving up to buy a new car?

Set a Budget

First, consider a “realistic price” that you can truly afford. Oftentimes, people want to buy a vehicle that’s out of their price range, and they end up buying something they can’t truly afford. Long story short: this doesn’t work out well in the end. Therefore, if you can be realistic about your budget and your wants/needs, then you can pick a price point that makes sense. For instance, if you’ve already saved some money toward the purchase of a new car and you’re also actively saving money right now, pick an amount to spend on the new vehicle and realize that you’ll probably need to put 20% down on a brand new one or 10% on a used one if you plan to finance your purchase over time.

Decide What is Most Important

Next, make a list of your wants versus your needs. For example, you might need “great gas mileage” (especially with rising gas prices) and you might want a “rear spoiler.” Generally, look for a vehicle that meets your needs, and if you can get some or all of the wants for the right price, consider yourself lucky. A great way to budget for the purchase is to take your monthly income and divvy it up: 50% to needs, 30% to wants and 20% to savings and/or debt repayment(s). Remember to add the cost of car insurance to your overall budget– insurance typically costs between $500 and $1,200 per year for a vehicle.

Trim at the Margins

In order to save for your big purchase, start cutting out small purchases from your daily life. Instead of paying $4 for a coffee at Starbucks, use the coffee machine provided at work and make your own. When you go through the supermarket checkout line, don’t get that $2 candy bar on a whim. If you shop online, only buy true bargains, rather than buying anything and everything you **think** you want. Have a garage sale or list items on craigslist to sell. Charge people for your services such as tutoring, babysitting, or cutting hair.

Devote a Savings Account to Your Purchase

Finally, set up a savings account devoted to the big purchase. That way the money is separate from other purposes. You might also want to set up “automatic transfers” to this account to ensure money goes into it from, say, your weekly paychecks.

Looking to buy a vehicle? George Kell Motors in Newport, Arkansas, has some great deals. Contact George Kell Motors  at 870-495-2620 for more information.

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