How to Save Money for your First Car? – Your first car is something you will remember for the rest of your life. You’ll recall the manufacturer, model, color, and even the name you gave it. Those four wheels gave you independence. The open road allows you to be independent and go wherever you want, whenever you want.
Many of us go to a drive-through within a few days of getting our first car and order some fries and a burger from the menu. We could gather our friends for a road trip or drive to our favorite destination with that breathtaking view. All while selecting which songs we want to hear on the sound system. That first vehicle we have is unique.
Let’s look at how to save for your first car.
Ways to save for your first car
Getting a driver’s license is a milestone in one’s life. Most first-time drivers are eager to get behind the wheel of their family’s hand-me-down car and enjoy the freedom of the open road. However, after a while, every new driver begins to fantasize about what their first car will be. The quest to save for your first car is unavoidable for many people. That major step requires time, patience, and financial planning.
Typically, it takes 1-2 years to accumulate enough capital to properly invest in your first car. Here are a few critical considerations to help you get there.
Avoid overspending on Credit
Credit cards present a Catch-22 situation for first-time car buyers. Although a high credit score is required to obtain proper financing, most financial experts would advise you to limit your credit card spending while saving.
The more debt you have, the more difficult it will be to save for your first car.
Get familiar with the Automotive Industry
Many first-time car buyers are unfamiliar with all of the available options. Some may argue that there are too many options, ranging from electric vehicles to compacts. Do the following research before committing to a specific make or model. Learn about fuel economy, interest rates, safety innovation, and vehicle depreciation. All of these factors influence the type of car you should drive and buy.
Open a fixed savings account
First and foremost, establish a secure location for storing your funds. I advise you to open a fixed savings account with strict restrictions on when and how you can access your savings.
Why? You could inquire. The goal of a fixed savings account is to keep your money out of reach at all times. This means that if you have an upcoming vacation, birthday party, or social event, you will be less inclined to withdraw from this account.
Consider the cost of Gas and Car Insurance
While saving sufficient money for your first car may appear to be a daunting task, there are additional costs to consider.
Purchasing a vehicle is similar to purchasing a home or taking out a loan. It is an investment with accumulating costs. Before you sign on the dotted line, look into car insurance rates and consider putting money aside for future gas expenses.
Make a plan to save for your first car.
Determine your objective first. Do you want to purchase a new car? You’ll need to save a lot of money.
Most loans require a 20% down payment. So, if you want to buy an average car for around $30,000, you’ll need at least $6,000.
This is also purely based on the sticker price. Don’t forget that when purchasing a new car, you’ll also need to pay dealer fees, which can quickly add up to $1,000 if you’re not careful, as well as taxes, delivery fees, and a variety of other fees.
You can’t just go by what’s written on the window sticker or what’s available online.
Begin small when planning for your first car. When you’re starting out in life, don’t obsess over having the most expensive make or model. For example, if you’re a single person on a fixed income, you’ll want a car that fits your needs.
To begin, you do not need to save for a family-size SUV.
Remember, this is only the first of many cars you will most likely own in your lifetime. Set a monthly savings goal that you can live with and hold yourself responsible for it.
When it comes time to save for your first car, planning ahead will help you make the right decisions. Life can sometimes get in the way and keep you from reaching your goal. It’s critical not to let setbacks distract you from the bigger picture during these times.
You’ll find a way to keep your savings growing, whether you have to get a part-time job, get creative on Etsy, or start selling old furniture on OfferUp. When you get behind the wheel of your first car, you’ll be grateful for all of your preparation. There is no stress, only pure enjoyment for the journey ahead.
This article might help you to save some extra cash: What should you do with that creative mind?
How did you save money for your first car? Please share your experience in the comments section.