How to Save for a Car Using This Checklist

Making more money is easier said than done, but that doesn’t stop us from daydreaming about things we’d like to buy or experiences we want to invest in. As for the things we really need—like a car—saving up funds can feel a bit like pulling teeth. Knowing how to save for a car with a handy checklist can streamline the process.

A step-by-step list to help you save for a car

If you’re new to organizing your finances, check out this list for a breakdown of what to do to stockpile your cash for a new ride.

Calculate the initial cost of the car

The initial cost of the car includes the down payment and the first three months of paying for your vehicle. Whether you’re buying or leasing, you’ll still have a monthly fee. This is the first sum of money you’ll use to create your budget to save for a car.

PRO TIP: While you’re shopping for a car, see if you can find deals on down payments to reduce your initial cost.

Determine your monthly costs following the down payment

Besides the monthly fee for your vehicle, you’ll need to budget for the cost of gas and regular maintenance like oil changes. If you already drive, you can use your existing expenses to help you budget for this. Otherwise, you can look at averages in your area or ask friends and family who live near you.

If you really want to get precise, you can calculate your monthly commute and extracurricular mileage to figure out your gas.

Figure out the lifetime cost of owning to save for a car

The lifetime cost of a car should go into your long-term budgeting plan. As cars get older, maintenance becomes more expensive. In this category, you’ll also want to calculate the price of interest rates over your payment term and insurance costs for the lifetime of your ownership.

Once you have all your costs in place, set a monthly savings goal

Add all these balances up and figure out how many months it will realistically take you to reach that goal. You can up the ante by reducing the amount of months and saving more each month—or you can take it slower.  

Find out your existing car’s trade in value to help you save for a car

If you already own a vehicle, you may be able to get a good chunk of change to combat your new or used car purchase. As of mid-year 2021, used cars are extremely valuable. This is thanks in large part to the semiconductor shortage that’s halting production on many new models.

See if you can save in your discretionary spending and essentials

Most people will tell you that tightening up your discretionary spending is the only way to save money. While it’s an important part, it’s just that—part. But how do you tighten up the essentials while you’re at it?

One option is using a comparison tool like Gabi, which literally means “get a better insurance.” All in all, comparing your essentials to see where you can cut costs (without losing out on what you need) is a smart move.