How to save money to buy a car or another thing you have in mind? We share seven ideas to save money for buying a new car or used auto. Remember that in addition to money for purchasing the car, you also need extra cash for potential repairs, maintenance, and closing costs. This article has your back and covers them all.
1. Create a Budget for Buying a New Car
We know that the new and nice cars aren't cheap. But this doesn't mean you have to spend more than you can afford to get a fancy car. You should create a budget for the car and try to stick to it.
Start by considering both your income and what you can realistically afford. If you can only afford a $200 per month payment for the car, don't buy a vehicle that will cost you $600 a month; otherwise, you get in trouble.
The first step in how to save money to buy a car is creating a budget for it. Track everything you've purchased over the past three months to understand how much money you could be saving.
Identify two or three categories you can reduce or eliminate your spending. You don't need to cut your necessary expenditures, just ones you could live without, for example, discretionary fitness or traveling.
2. How to Save Money to Buy a Car by Reducing Current Costs
Once you have a budget for your new car, it's time to check your largest monthly expenses. What fields do you spend most of your money in? Answering this question will help to reduce spending in some areas.
Most people have enormous spending in some specific areas; for example, housing, food, travel. If you're all serious about buying a new car, you can make some changes to your lifestyle in a way you can save more money. In the food area, for example, you can likely cut back on in these ways:
Create a shopping list before you go to the store;
Buy low-cost nutrient-dense foods;
If you eat out, go to happy hour;
Use coupons and savings apps;
Pack meals to go;
And finally, stop eating out.
You also can separate all non-essential purchases and identify the recurring monthly purchases like streaming services, fitness memberships, and beauty treatments once you've looked at your spending habits.
If you want to save for a new car, then cancel your subscriptions. You can sign back up once you've purchased the vehicle and have more room in your budget. Subscriptions don't have a significant impact on your life, but a new car can!
3. Defer Investments and Saving for Retirement
How to save money to buy a car with tax deferral? This idea might not be right for everyone. Still, if your priority is to buy a new car as soon as possible, you can temporarily stop contributing to retirement funds and investments.
You can postpone taxes on any income you make on the money in your tax-deferred accounts. It means your money is growing each year without having to remove any funds to pay tax. If you use a Traditional IRA, you would eventually have to pay the taxes on the income deferred.
Then consider precisely how much money you have saved and how much time you will have to catch up on the fund after you're ready to start contributing to investments. This way, you can understand if this option is right for you.
4. How to Save Money to Buy a Car by Asking for a Raise
This idea is probably the easiest way to raise your income. In many cases, if you can make a case for it, your manager will give you a raise. Try to get more money for the work you already do, before you take on more work.
Asking your boss or employer for a raise can be challenging, so much so that some people wait for months before asking for a raise they deserve. The truth is, there's nothing wrong with asking for a raise that reflects the hard work that you do.
Asking for a promotion is another option for raising your salary. The most important part of asking for a promotion is preparing ahead of time. When you make the ask, you'll need to prove that you're ready for the next step.
5. Start a Business or Get a Part-Time Job
Start a business you can run on the side of your full-time job. Your own business's benefit is you can retain a higher percentage of the profits and control your workload and schedule. Eventually, you not only can buy a car but also have a business for yourself.
There are different types of businesses that cost nothing to start. But if starting your own business feels too much risk or too much responsibility, you can get a part-time job. Working a few nights and weekends help you boost your savings for a car faster.
Find a part-time job that has some downtime and allows you to work on other tasks. Some security or reception jobs will let you work on other things, like your own business, during your downtime on the clock. Search job boards for part-time, freelance, or contract work to take on temporarily.
6. How to Save Money to Buy a Car by Taking Advantage of Free Money
Put your saved money to work and let it grow on its own. But what does it mean to put money to work, and how can you do it? There's no simple answer or a single way to do it. Almost everyone can find one way to put their money to work. For example:
Put your regular purchases on a credit card with reward points. Pay off your balance entirely every month and transfer the rewards into your savings account.
Use high-interest savings account through an online bank or credit union. Some bank accounts will offer up to 2% interest.
If you can put away money for a long time, it will grow slowly at first, but it grows faster over a period. It is precisely that method that allows people who save a lot of money when they're younger to become incredibly wealthy when they're older.
If you haven't already thought about it and now want to start and try free money for buying a car, you may get less money, but if you have it as a long-term plan for the future, you will be amazed how much it works for you without any effort.
7. Ask for a Loan or Gift from Family or Friends
Ask family or friends for a gift or a loan if you are comfortable. Choose the right moment and place so you can have a productive conversation in a setting with no immediate interruptions.
If a friend wants to give you a gift for a holiday or birthday, ask for cash as a gift for your future car. Of course, if you think that an expensive gift is too much for you, then it's better to decline the gift or return it. It would help if you did not accept something that you consider a burden in the future.
You can also use the P2P method. Peer-to-peer or P2P lending is a financing method that enables you to lend and borrow money without using an institution as an intermediary. Check this method to see if it's suitable for your situation if you want to know how to save money to buy a car and you’re serious about it.
With P2P, borrowers receive financing from individual investors willing to lend their own money for an agreed interest rate. The two link up via an online peer-to-peer platform. Borrowers show their profiles on P2P sites, where investors can assess them to determine whether they would want to risk extending a loan to that person.
If you want to know how to save money to buy a car for yourself, you should dig more into living expenses. Aside from saving money for a down payment, you'll need to consider some other financial factors as well.
This article covers seven ideas on how to save money to buy a used car with some little changes in your lifestyle. Review these tips, and if you have any other experience saving more money, please share with us. Also don't miss our other blog on 7 important tips to buy a used car.