Budgeting

Want a New Car? Here’s How to Budget for It!

f you need to replace your car or have not got one and need one, then paying for it can be tricky. Cars tend to always be rather expensive, whether you are buying new and second hand and you therefore will need to think about how you are going to pay for it. Whether you want to pay for it with cash outright or borrow money, you will need to find the money each month either to save up towards it or to pay off the loan. Therefore, it is worth thinking about how you will budget for it.

Look at current status

To start with you need to take a look at your current financial status. This can be hard as you may not want to face up to how well you are managing your household finances. However, it is important and you might even be pleasantly surprised. In order to figure out how you can budget you need to be aware of how money is moving in your accounts right now. Therefore, get together statements for all of your bank accounts and you can take a look. See how much money you have coming in regularly and note that down. Then see what bills you have to pay and what other things you buy and make a note of that as well. This should help you to see whether you tend to have enough money normally to pay for everything or whether you struggle.

See where savings can be made

This step is the most important. You need to have a look at everything that you buy and see whether you really need it. This might sound harsh but it does not mean you have to stop buying everything that you like, but you need categorise your spending. You will have regular payments, like rent or mortgage, utilities, insurance that you have to pay. These need to be separated from the things that you do not have to buy such as holidays, evenings out, eating out, apps, music and other hobbies. It is worth remembering at this stage that you will not have to give them up forever but if you stop buying them for a little while then you will be more easily able to afford the car that you want.

You should be able to see how much you can potentially reduce your spending and this will help you to see how much you can put aside for a car. You can then work out what type of car you can afford or if you have a specific car in mind, how long you will have to save before you can afford it.

It is worth also looking at the items that you will still have to pay for and see whether you can spend less on them. By comparing prices you will be able to see how much you might be able to save if you switched to a different supplier. This could be quite a significant amount and if you do it with a number of things then these savings could add up. This can be a really good way to cut your spending too as it takes very little time to research and organise and you will not notice any difference once you have switched.

Keep motivated

It is not always easy to stay motivated. You can feel like you are being deprived of things and it could be difficult to cut down what you are spending. You may feel that you ate going without all of your favourite things. It is at this stage when you need to remind yourself of why you are putting yourself through this. Think about your goal, which is paying for the car and this should help to spur you on. It may feel unfair that you are struggling so much to buy a car, but many other people do the same thing. Even people with loads of money may cut back their spending so that they can afford a car. They may still give up holidays, evenings out and things like this so that they can buy one, but they will just be buying a dearer one and therefore giving up more expensive things. The sense of accomplishment, once you have succeeded is really great and you will feel that it is worth it once you have paid for the car. It will hopefully also mean that you get into better spending habits and so once the car is paid for you can use your new-found saving skills to save up for other things or put some money into a savings account for when you need it. You may want to go back to buying some things, but some areas where you are saving money you may want to continue with and you will then have more available for other things.

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