Saving money requires top-tier discipline, especially after stepping into the real world after college. Buying your first car is always an achievement you will forever be proud of, especially when you know you saved up just enough to buy one. This post will discuss six of the most common ways of saving money to buy your first ride.
1. Determine the type of Car You Want to Purchase
As you probably know, the pricing of cars varies. Therefore, knowing what type of car you want will help you determine how much money you need. To do this, you must first figure out your reasons to help you decide which type of car you need.
For instance, if you need a vehicle to get you from point A to point B, you should go for a small car or a sedan. Furthermore, if you already have children, you will need a larger vehicle such as an SUV. If you have already secured a job, perhaps one that involves plenty of handy work, it would be best to go for a pickup.
2. Consider the Ongoing Care Costs
Before purchasing a car, consider the cost of maintaining and owning the vehicle. The last thing you need is to own a car and not have enough money to service it or pay for ongoing expenses. Some of the costs of maintaining a car are servicing, repairs, insurance, car registration, gas, and toll station charges. It is also essential to know that you will need to change out the car tires and purchase a new battery every 3-5 years. That means you need to budget for these future expenses.
3. Reduce Your Spending
If you want to save more in a shorter duration, consider cutting down on your expenses. Refrain from buying items you do not need, such as the latest fashions and newest electronic gadgets. It would help if you realized that saving money requires a lot of sacrifices.
Some common money-saving tips for college students may include making your meals rather than eating out. If you need a book, you may opt for an e-book instead; if you need a new playlist, it will help download single songs instead of purchasing an entire album. Finally, and most addictive, is to avoid impulse buying.
4. Make a budget
After reducing your spending to only the essentials, you must make a budget and stick to it. To create a budget, consider your income, expenses, and how much you can save each week. Depending on your income, it may take you about 1-3 years to save up just enough for your first ride. In addition, consider inflation rates. Due to inflation, the cost of the car may go up by 2-4% each year. Therefore, revise your budget often and make adjustments.
Alternatively, you may consider taking out a loan to purchase the car. If this works for you, you need at least 20% of the vehicle’s purchase price as a deposit, and the bank will top up the rest for you. However, it is critical to know that factors such as credit score also affect the auto loan.
5. Open a savings account
A high-interest savings account is an excellent idea if you plan on purchasing a car. If you do not already have one, you should visit your nearest financial institution and seek assistance. You should then make deposits into the account regularly. Further, you may consider opening a term deposit account where you will receive a fixed return rate for a specified period. This period can be from a month to a maximum of 5 years. This can be a significant boost towards purchasing the vehicle.
6. Earn more money
Multiple sources of revenue will help a great deal in acquiring the funds for purchasing the car. For college graduates, aside from your main job, you can consider babysitting a friend’s child or tutoring. Additionally, holding a garage sale for some of the things you no longer need could also help.
After purchasing the vehicle, you may want to purchase accessories such as all-weather mats, and car organizers, or make upgrades such as replacing the shifter boot for a leather option. These types of upgrades are great as they offer practical solutions that keep dust, dirt, and other debris from contaminating the shifter resulting in a better performing vehicle.
Wrapping Up
Often, you may lose focus and start saving less or spending what you already saved up. In this case, get a photo of the car you want and use it as your wallpaper. This will keep the morale high and the savings even higher.
