Saving for your first car can seem like a daunting task, especially since it will probably be the most expensive purchase you’ve ever made. If you’re working a low-wage job, the prospect of saving enough money is intimidating, but with some patience and dedication, you’ll have your new ride before you know it. Consider these five tips to saving for your first car.
1. Open a savings account: Opening a separate account for your new car fund has several benefits:
- You can easily see your savings progress when you check your bank balance.
- Since the money is in a separate account, you’ll be less tempted to spend it on everyday purchases.
- Savings accounts typically offer better annual percentage yield rates, meaning that your money will earn more interest in a savings account than in a traditional checking account.
- If your savings account is electronically linked to your checking account, you can easily move funds from your main account to your car fund.
If you already have a checking account, ask a banker about opening a separate savings account. You may even be able to do so through your bank’s website.
2.Make a budget: It’s difficult to save effectively unless you accurately budget your income. Start by determining your total monthly income. Then, create a list of monthly expenses, such as your mobile phone or internet bill. For expenses that vary month-to-month, such as dining out, going to the movies or buying new clothes, be realistic about how much you are willing to spend and exceed that amount. Make sure that after all of your expenses are accounted for, you have money left over for savings.
3. Contribute part of every paycheck to your savings account: Once your budget is laid out, determine how much of every paycheck you can afford to save toward your first car. Make sure you stay disciplined, and contribute even when money is tight. To give your savings effort a boost, put any windfall income, such as birthday money or a tax return, toward your savings. If you’re diligent about saving, you should be able to calculate how long it will take to buy your first car.
4. Get additional income: If you have one part-time job, consider picking up a second during the weekends. You’d be surprised how quickly you can save when you have the extra income. And don’t limit your options to part-time jobs. There are plenty of ways to make extra money, such as selling items you no longer need on websites like eBay or craigslist, offering music lessons, or using other skills you may have to supplement your income.
Consider additional costs: Don’t forget that cars cost more than the sticker price. You’ll also have to factor in the price of car insurance, gas and regular maintenance. To find coverage for your first car, compare car insurance ratings and online insurance quotes, then decide which provider offers the protection you need at the best price.
Author: Dale Cooper
Sponsored content was created and provided by Nationwide Insurance.
