When you hear the words “dream car”, you might immediately be thinking of cars that are beyond your reach – the kind that you’d have to be a billionaire to have. When you run through that list, you begin to think about the more affordable kind of dream car.
A dream car is one that you feel is the right fit for your needs and fits your personality. A car being a huge financial goal means having to save up for it, or figuring out other ways to get the money for it that doesn’t involve a loan – if that’s your preference. If you’ve been looking for money-saving tips to help you save for your dream car, you’ve come to the right place.
It’s one thing to start saving, and it’s another to constantly put away money every payday. When you’re saving for a car, you’ll want to plot out how much you need to put away every month in order to reach the goal of the downpayment or the full payment.
This doesn’t mean that you should divert other savings to put towards the car. You’ll want to set aside an emergency fund. Consider automating your savings so that the money is out of your reach and you’re beyond the temptation to spend any of it.
Set up separate savings accounts for your car fund and your emergency fund, as a means of keeping both sets of savings completely separate.
At some point, you fall for lifestyle inflation. You pay extra to have specialty coffee, or have food delivered. If you want to make the most out of your money with the goal of saving for a car, you’ll need to curb some of your spending habits.
Buy the same kind of beans that go into your coffee and make it yourself. Cooking your own food can be as satisfying as if you ordered out with the added bonus of you learning to make your favorites.
Stick to the budget
You can easily work out how much disposable cash you have every month with budget tracking apps, or a spreadsheet on Excel. Once you’ve got your budget down, stick to it. Sticking to a budget is easier said than done given that there will always be temptations to spend.
It’s in this case that you’ll want to have a money buffer, designate money for your fun fund, or your just-in-case money (that’s completely different from your emergency fund).
Find the right financing
While the goal for most car purchases is to be able to buy it with cash, sometimes a dream car can only come to fruition with the right auto loan. Research the auto loans that may be available to you, including repayment terms, interest rates, and possible freebies.
Since these will differ, it will be a question of what you want the loan to come with: lower interest rates, a year’s worth of car insurance, among others.
Comparing these auto loans will also allow you to figure out exactly how much you need to save as your downpayment. Keep in mind that the higher your downpayment is, the lower your monthly fees will be.
Given how huge a financial goal buying a car is, you’ll need to get any other financial obligations out of the way. This means that you need to pay off debts you have, and get all your documents in order – not to mention learn how to drive.
The only real way to have that car cross over into your reality is to have a solid financial plan, and an even more solid discipline and follow-through.
With a goal to help Filipinos lead healthier financial lives, Moneymax regularly publishes tips and tricks on personal finance and lifestyle, among many other topics. For more finance-related news and articles, follow Moneymax on Linkedin.