While purchasing a new car has many perks, it’s also outside of most people’s budget. As of March 2023, the average new car in the United States costs over $48,000. Regardless of if you’re looking at new or used models when buying a car, it’s essential to understand how to save for a car.
This process can seem complicated at first, but it’s easier than most people anticipate. We’ve compiled key tips to help you get started on the right track. Let’s look at the most important smart money tactics.
1. Stay Disciplined
This is one of the most important tips to consider. If you don’t stay disciplined, you can quickly undo all of your hard work. For example, imagine you managed to save a few hundred dollars per week for a handful of months.
You then splurge on a vacation and spend over $2,000. You’ll want to avoid situations like these at all costs.
2. Cook Food at Home
Many people would be surprised at how much money they can save by cooking at home. Eating out quickly adds up, especially if you do so regularly. Let’s assume you always visit a restaurant on your lunch break during your workday.
You spend an average of $15 every time you do so. If you work five days per week, that’s $75 spent each week.
This equates to $300 per month and over $3,000 per year. Instead, you could spend $15 preparing food that will last multiple meals. You also have much more flexibility regarding ingredients, allowing you to improve the taste and nutritional value.
3. Pick up a Side Hustle
You might be in a situation where you’ve eliminated as many costs as possible. At this point, you’ll need to increase your income.
However, asking for a raise isn’t always possible. Picking up a side hustle can be a great way to bolster your savings account.
If you choose this path, aim for a low-stress option you can leverage for a few hours each week. It’s not uncommon for people to find ways to monetize their hobbies.
For instance, you might have a large number of handyman skills from work you’ve done in the past. Scheduling a few jobs per month in your downtime can expedite how quickly you save money.
4. Automate Your Savings
Automating your savings will force you to tighten your budget. This functions by automatically routing money from your checking account to your savings account each month.
For instance, you might choose to send $200 from your paycheck to your savings as soon as it reaches your checking account. Since you won’t have access to this money in your checking account, you’ll be less likely to spend it.
Only save what you can afford to, though. Otherwise, you might feel pressured to maintain a poor quality of life.
5. Set a Realistic Timeline
It’s imperative to set a realistic timeline for the car you wish to purchase. It’s often impractical to save thousands of dollars in only a few months. Similarly, you might not be able to save enough money for a vehicle that’s well outside your price range.
It’s best to give you more time than you expect to need. Contingencies often arise, and unexpected expenses can derail your efforts. Even something as simple as an emergency dental visit could set you back thousands of dollars.
Once you determine your timeline, you can then establish how much money you need to save each month. If you want to ensure you reach your goals sooner rather than later, aim to save more per month than you establish.
6. Negotiate the Price
Don’t overlook the potential to negotiate the price of cars for sale. Many dealers are willing to lower the sticker price. Some are less accommodating than others, and you might need to go back and forth with them before they budge.
Use all the leverage you have to argue your asking price. Someone with an amazing credit score who’s willing to purchase the car immediately can likely negotiate the price lower. The same can be said for someone who’s trading in a previous vehicle.
It’s in your best interest to find dealerships that can work with you. Places like BMW of SLO in California are great examples. This can substantially reduce the amount you need to borrow for car financing, as well.
If they don’t seem willing to listen to you, continue your search elsewhere. There’s no point in paying thousands of dollars more than you should for a car.
7. Don’t Neglect Maintenance Costs
It’s imperative that you properly budget for maintenance costs when owning a car. You’ll need regular oil changes, and your car might need work done on occasion.
This is especially true for used models. There’s no set number you should spend on car maintenance, but it’s generally a small percentage of its total value.
If you purchase a $30,000 car, for example, you might spend 3% per year on maintenance. This amounts to around $900. The last thing you want is to buy a car and not be able to afford the problems you encounter.
8. Sell Other Assets
Selling your assets is an amazing way to jump-start the car-buying process. Chances are you have something lying around you no longer use that you could sell.
Common examples include collectibles, furniture, old computers, and even an old vehicle. Regardless of what you sell, though, consider whether you’ll need it in the future.
Some people experience intense remorse years after they sell something that isn’t easily replaced. For example, you might have a set of vintage baseball cards that were given to you by a family member. While you could sell these cards for a lot of money, you might wish you had kept them for their sentimental value.
Leverage These Smart Money Tactics
The smart money tactics in this list will ensure you streamline saving for a car. They’ll also help you do so in a comfortable, sustainable way. Before you know it, you’ll get the keys to a vehicle that can improve your quality of life without stretching your budget.
Looking for other useful financial tips that can help you out in the future? Check out the rest of our blog for articles like this one you can learn from.