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6 Necessary Steps When Budgeting for a Car

Sticking to a budget is not easy. Many people try to save a little extra, but things come up that seem irresistible at the time. However, the benefits of saving to buy a shiny new car are well worth the struggle. Here are 6 necessary steps to help you meet that coveted goal.

6. Crunch the Numbers

 car 6 Necessary Steps When Budgeting for a Car

Image via Flickr by Tax Credits

The first step in setting up your budget lies deciding how much you can spend on the car. If you plan to finance the car, decide how much you want to put down to avoid paying high interest rates. Generally, financial experts recommend paying at least 20 to 50 percent of the total cost as a down payment to a dealer like Hoffman Nissan. That may seem overwhelming, but there are ways to cut back and save money without feeling deprived.

5. Make a Plan

Once you know how much you need to save, it’s time to sit down and draw up your plan of action. Compile several months of credit card bills, pay stubs, bank account statements, and other bills, such as mortgage or rent payment, utilities, and any others. Calculate how much you need for basic living necessities and budget for some extra things that come up now and then, such as medical bills or automobile registration.

4. Directly Deposit to Savings

Once you decide how much you’ll be able to save each month toward your car, you may think about having that amount automatically deposited into a savings or other account. If it goes into your checking account, it’s much more difficult to save, whereas if you never see it, you’re less likely to spend.

3. Cut Out Costly Habits

Some habits are very expensive, such as alcohol or tobacco. If you smoke one pack of cigarettes weekly, you could save about $300 in one year by quitting. If you eat out often, or commute to work, look at how you can cut costs in that department. Eating lunch out adds up: you might spend over $2000 in a year on a daily $8 lunch. Even bringing your lunch just twice a week could save about $800 per year. Gas prices are high as well, so find a friend and take turns driving, or look into public transportation.

2. Card vs. Cash

Some budget experts encourage using cash instead of a card for extra expenses. It’s much easier to swipe a credit or debit card without thinking about how it will affect your finances. When you pay in cash, seeing the money leave your wallet serves as a reminder. When you’re out shopping and find a pair of shoes that you just can’t resist, you can check your cash supply and see if it’s in the budget.

1. Talk With Your Family

Another important tip when budgeting is to ensure all household members are on the same page. If you’re willing to forego luxuries but your partner isn’t, you won’t get very far. Work together to make a budget that you can both stick to, and then give encouragement and reminders if one of you isn’t making it work.

Saving is tough, but the payout is worth the temporary struggle. You’ll certainly feel the benefits of saving your hard-earned cash when your family is cruising around in a brand new car.

Author Bio:

Allie Muelleck graduated from BYU in 2009 with a BA in English, editing emphasis. She enjoys writing, reading, running, and playing with her cat.

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