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Tips on Saving Money for Your First Car
Making a first time car purchase is a big milestone in one's life, not to mention a major financial move! Though many of us would be tempted to borrow all funds needed to purchase this first car, auto loans are not entirely necessary if one manages to save for the car ahead of time.
Even if you realize that it would be impossible to purchase an entire car with money you have saved, you can still save up for a car so that you have to borrow less when you do take out a lona. This will save you from having to pay more in interest over time, and will also give you instant equity in your new car!
Here are some easy tips on saving up for your very first vehicle. Utilize them and you'll find that saving for your frist car is hardly a formidable task at all!
Determine Your Budget
Before you start daydreaming about getting a specific type of car, it is important to consider what kind of budget you are working with. How much extra income do you have left over at the end of every month that could go towards savings now and, if needed, auto loan payments after you buy your car? Do you have any money saved already that could go toward purchasing a vehicle? If you are a teenager and this is your first car, is one of your parents willing to help you out with some of the car's cost? If you are willing to get an auto loan, how much money are you willing (or will be able) to borrow?
Consider these factors, and also decide on the time frame you will allow for saving money. If you want to buy a car in one year, you will be more constrained in your budget than if you plan on buying a car in two years.
Once you have thought about these things, you will have a better idea of what kind of car you can afford.
Decide on a Type of Car
Having determined your budget, it will be much easier (not to mention more practical) to pick out a car or several different types of cars that you will plan on purchasing.
If you found that your budget is rather generous and that you have plenty of time to save / someone rather wealthy to pitch in / a lot of extra income coming in every month, go for the shiny new car you really want! If you realize, however, that you are a bit more constrained than you would like to be, research used cars and more moderately priced models.
Picking out a type of car you want to buy helps you have a more solid goal towards which you can work. Contributing to a fun for the generic concept of a "car" can be rather dull. Saving up for a teal Austin-Healey 100, however, is much more exciting- fun even!
Create Savings Goals and a Time Frame
Now that you know what kind of car you want to buy as well as have a solid understanding of what your budget is, you will know how much you need to save every month.
Be sure to calculate the amount you need to save on a regular basis, and create goals such as "I am going to save $300 every month, or I am going to make sure I have $5,000 saved up by the end of the year. Each goal should include a real number or percentage of what you want to spend on your future car, and a real date.
Making these solid goals makes it much easier to track whether or not you are meeting any success with your savings.
Make Savings as Automatic as Possible
Making the process of saving money for your first car as automatic as possible makes the saving process much less of a hassle.
There are several ways to make it easier - you can set up an automatic transfer from checking to savings every month, use a debit card that deposits a little bit of money into a savings account with every purchase, or even funnel all of your earnings from one job (e.g. a part time job while in high school) or an on-the-side job (e.g. freelance writing, or even income from HubPages articles!) into your car fund.
Making a sort of 'rule' about how your money will be saved means you won't have the hassle of thinking about saving and feeling bad about all of the fun things you could be doing with your earnings right away.
Reward Yourself for Keeping on Track
When you reach one of your savings goals (and there should be several small ones leading up to your purchase), you should do something fun to celebrate. This reward does not have to be big or expensive; what matters most is that you acknowledge your hard work and reinforce your good behavior.
If you do not make the savings process rewarding in some respect, it will be much harder to stay disciplined!
I hope that you find these tips to be helpful as you begin saving up for your first car. Enjoy the process, and enjoy the car you end up buying, too!