4 Strategies to Reach Your Car Savings Goal

Need to save for a car but don’t know where to start? Frankly, saving money nowadays is not so easy. With high inflation costs and exorbitant living expenses, buyers are not so smitten with splurging. However, those who need a new vehicle in their life can start planning the right way with these 4 strategies. Take a moment to briefly read our top tips for expediting your savings goal.

4 strategies for reaching your car savings goal

Earlier this year Kelley Blue Book reported that the average price for a new car topped $47,000. This is almost unimaginable considering the standard price for a vehicle was $37,876 back in 2020. Though a lot has changed in the last two years, one thing we didn’t expect is for average car price to be more comparable to an entry-level luxury car. Let’s face it, nearly a $10,000 increase over a two year period is every buyers worst nightmare.

With high costs at stake, it’s time to strategize and make the best use of your time and money. Here are the 4 main strategies for reaching your car savings goal before you end up head deep in financial debt:

List your savings goal

In order to make a sizable down payment on a vehicle, you’ll first have to assess how much you need to save each month. A good rule of thumb is to write out your goals so you can stay on track. For most new cars, you’ll want at least 20% in savings to reduce the probability of being upside down on your loan later on. If you’re interest in a used or pre-owned vehicle, we suggest making a down payment of 10% or more.

Having these percentages in mind will help you to easily determine how much you really need to save each month. For example, let’s say you plan to buy a compact SUV in 2023. With the average price of these models ranging between $21,000-24,000 (depending on trims & upgrades), you’ll need to save a minimum of $4,200-$4,500. Also keep in mind dealer fees, insurance, registration fees, and sales tax will be added on.

Overall, listing your saving goals and breaking down the amounts you need to save are key to setting aside money fast.

Put your savings in a separate account

One way new car buyers often get overwhelmed is that they have all their savings in one bank account. Many drivers are saving for a house and other common life expenses at the same time they are shopping for a new car. Therefore, consider creating a designated account specifically for your future vehicle. It will be easier to track your progress over a period of time. On top of that, you’ll be less likely to take money out of the account when you see how close you are getting to your car savings goal.

Make savings automatic

When you get your paycheck on a Friday, it can be hard to let go of some extra cash. The best way to ensure your savings account is getting filled is to set up automatic transfers with your bank. Simply make it so a certain amount of payment is deposited directly into your car savings account each time you’re paid. That way you don’t have to think twice about stashing the money away. In addition, you’ll be less tempted to be inconsistent with your savings goal. Although life happens, it’s always best to stay on target.

Limit your excess spending

Figure out ways to reach your savings goal faster. Cancel unnecessary subscriptions. Sign up for a more economical gym. Limit your time out with friends to once a week. At the end of the day, you have to decide what is more important to you in the moment. If saving for a new car will add great value to your life, you’ll need to figure out a way to obtain a 20% down payment.

Even though different strategies work for different people, one of the top ways to speed up the saving process is by creating a budget. It doesn’t have to be scrupulous, but a budget will help all potential car buyers maintain their monthly expenses. Once you’ve determined where you can cut corners on spending, you’ll soon see that a lot of discretionary purchases are not worth the setback.

Remember:

• Write down your savings goal
• Create a designated savings account
• Make payments automatic
• Create a reasonable budget