Buying a new or used car with a loan seems to be the norm these days, but what if you were to save a decent amount before buying the car?
Here are a few tips that will help you save for a good down payment, or simply get your loan paid off sooner.
There are several different strategies that can be used when trying to save up for a large purchase.
Below are tips that can stem off onto other large purchases, and items that the majority of will buy a few times in our lives.
When you buy a car, you should think about the type of car you want to purchase. Do you want a car that is all about practicality, or do you prefer something more luxurious? After you've decided that, you should think about maintenance costs and how much you'll be paying for the car besides the actual car payment. A luxury car is going to have much higher insurance than a car that is bought for practicality.
After you've decided that, you need to think about how you'll pay for the day. Figure out how long the monthly payments will be and how long it'll take.
Now that we've gotten the important stuff taken care of, we now need to figure out how we're going to save for the car. Here are 7 tips to get you saving big money, which equals bigger down payment and less interest.
1. Schedule Regular Transfers Through Your Bank Account
Did you know you can automatically transfer a set amount of money to your bank account?
For example, I transfer $200-$500 into my bank account every week. It helps saving so I don't have to think about putting any money into my savings.
2. Use Digit to Save Without Thinking
I've been using Digit for months to save money. Digit will take money out of your bank account in small increments, always leaving you enough to pay off bills, so you'll never go negative.
The amounts it'll take out varies, but for my experience, they would take out anything between $3-$5 a day.
You can get text updates (which I recommend) so you can see how much you've saved. You can also text them and let them know if you want to pause or end your account.
It's super easy to use. Sign up here.
3. Set a Savings Goal
When you have an amount in your head, it makes it a lot easier.
Just like any goal, you want to have a concrete plan of how you're getting there, and what your goal is. Just telling yourself you're going to save money simply isn't enough.
4. Get Financial Advice
Getting financial advice before buying a car is one of the smartest things you can do.
Buying a car is one of the hugest purchases a person will make in their life, which means you need to do it correctly. You should get advice from people who have been in the same situation as you.
5. Turn it into a Game
Going back to #2, set a savings goal, but along with that, you should turn it into a game so it's fun and exciting. Say you're saving $1000 (though I'd say go higher!), write down on a paper: $100, $200, $300, $400, and so on. Every time you get to that total, scratch out the number.
It'll be motivating to see you're getting closer and closer to your goal, and we all love some competition.
6. Save Your Change
Any time you get coins back, put them into a coin jar. This is great for middle school students or high school students that are getting ready to get their first car.
I bought my car in high school and paid it off a year after finishing high school, and the car wasn't cheap. Save save save!
7. 50+ Ways to Save Money
I recently wrote a post on 50+ Ways to Save Money, which my readers have been loving. I listed a bunch of jobs and side hustles that are doable for anyone and don't take long to make money from at all.
Saving up for a car might seem cumbersome at first, but it's the smart route to go when purchasing a car. The bigger your down payment is, the faster you can pay off your car, and not have to worry about a car bill every month. How much you pay each month is up to you, how much interest you want to pay, and other factors.
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What are some other ways to save up for a car?