How to Save For a CarSaving Money
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Buying a car is a major financial decision, and it’s important to start preparing well in advance.
Unless you already have thousands (or tens of thousands) of dollars in disposable funds, you’ll need to save up gradually in order to make a down payment.
Keep in mind that every dollar you save in advance will be a dollar you don’t have to take out in credit.
While every situation is different, these eight steps should put you on the path toward efficiently saving for a car. Remember that making small, gradual changes tends to be more reliable than trying to optimize your entire approach to personal finance all at once.
1. Identify Your Budget
First, you’ll need to determine how much money you want to spend on your next vehicle.
This will give you something concrete to work toward and help you get an idea of how long it will take you to reach your goal.
Of course, you don’t necessarily need to save up the entire sticker price in order to buy a car.
How much you want to save for a down payment is ultimately up to you. With that being said, a smaller down payment isn’t always a good thing.
Higher down payments involve less risk for the dealer and therefore enable buyers to qualify for lower interest rates.
Even if you pay less (or nothing at all) on the day you buy the car, you could end up spending hundreds or thousands more than the purchase price over the term of the loan.
After making your down payment, you will have to continue making monthly payments toward your loan until you’ve paid off the entire balance.
Along with the down payment, how much money you can put toward those payments each month will put an upper limit on your budget.
2. Set a Timeline
Once you know how much you need to save, you can start to think about when you might achieve that goal.
If you need an extra $3,000, for example, you might try to save $250 per month and make the down payment after one year.
It’s important to be realistic when setting savings goals in order to give yourself something you can reasonably accomplish.
3. Use Shopkick
Shopkick is a powerful cash-back platform that enables users to earn rewards while shopping online and in physical stores.
There are also a handful of other ways to generate “kicks,” or points, including scanning the barcodes of specific products and walking into participating stores.
Using Shopkick while making other changes to your budget will help you reach your savings goal as quickly as possible.
In my Shopkick review, you’ll learn everything you need to know about how Shopkick works and how it can help you save money.
If you think Shopkick makes sense for you, use our referral code to get a $5 bonus using the invite code LOGAN. You’ll get the bonus if you create an account and make an in-store scan within seven days of signing up.
4. Get a Cash-Back Credit Card
Along with rewards platforms like Shopkick, cash-back credit cards are another way to generate more money for your car purchase.
A rewards credit card will enable you to earn cash on your everyday purchases, and you’ll often be able to earn those rewards at the same time that you take advantage of offers from Shopkick.
For example, the Citi Double Cash card offers a flat 2% back on all purchases, with no bonuses or additional rewards for any specific categories.
If you spend an average of $1,500 each month on purchases that you can make with a credit card, you’ll get $30 back per month simply by using a Citi Double Cash card.
5. Cancel Unwanted Subscriptions
For most Americans, monthly bills and subscription charges are a major part of their budget.
While these costs aren’t always avoidable, you may be able to reduce your spending by canceling the subscriptions you no longer need and negotiating the monthly bills you can’t avoid.
If you think you might be wasting money on monthly subscriptions, just go through your recent bank and credit card statements and make a note of each subscription you’re paying for.
Most digital services are billed monthly, so they should show up on every single statement.
From there, take a few minutes to cancel any subscriptions you’re no longer interested in.
Providers will continue to bill you automatically even if you don’t use their services, so it’s easy to forget how much you’re really spending on these plans.
6. Negotiate Lower Costs on Existing Bills
Bill negotiation is another straightforward, low-stress way to save money.
Most people think these costs are unavoidable, but service providers are often willing to negotiate with customers in order to keep them satisfied and avoid losing their business.
If you’re confident in your negotiation skills, you can simply contact your providers on your own and make your best pitch for a lower rate.
However, there are also a number of businesses that offer this service for either a flat rate or a cut of the ensuing savings.
Billshark is a popular money-saving platform that offers both bill negotiation and subscription canceling.
They’ll negotiate with your providers for you and take a 40% cut of all savings for up to 24 months.
With that payment structure, you won’t have to pay at all unless they’re able to save you money.
7. Bundle Services into One Payment
You may also be able to save by bundling plans instead of paying for them separately. Hulu, Disney+, and ESPN+, for example, are available in a bundle for one monthly payment of $13.99.
If you want access to all three, you should consolidate your accounts as soon as possible in order to minimize your expenses.
Similarly, other providers often bundle different services into one package.
For example, you might be able to save money by combining your internet and TV subscriptions, or by getting a bundle with both home and auto insurance instead of paying for each one separately.
8. Stay Committed to These Changes
Saving up for a car can feel like an unattainable goal, but you can get there by making a few simple changes and staying committed over time.
These eight tips will help you optimize your budget and reach your savings target as quickly and painlessly as possible.
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.