So you're looking to buy a car?
Well, the next step is to make a plan and if you’re looking for the best way to save money for a car, you have come to the right place. We want to give you as much advice as possible in preparing to achieve your goals. We are an investment app on an educational mission to help you on your path to financial freedom and want to guide you each step of the way.
Tips on saving money for a car
Let’s get started
You probably know that cars are quite expensive and vary greatly in price, quality and size. With the average cost of a car in the United States being around $35,000 (CNBC), you need more money than ever to buy a car. Before we get into the nitty gritty, you must first determine what car suits you and your needs best and then start building a plan, factoring the following few things into account.
Needs vs. Wants
Determine the difference between your needs and wants. What can you sacrifice today for that new car? For example, if coffee costs you $10 a day, you might try buying your own coffee and making it at home. Little by little, your savings add up, making it easier for you to save fast. You might have to be frugal for a while, but remember this: that feeling of driving in the warm wind will always trump a $5 latte.
Automate your savings
Automate your savings by allocating a portion of your income to a savings account. Make it is easier to save by allowing your paycheck to go directly to your account, rather than you having to manually do it. At Loved, we have the advantage of automating your investments granting you the ability to invest and grow that money exponentially. By removing that mental block, you unknowingly force yourself to live within your means. This woman doubled her savings balance in 2018 by automating her savings and she didn’t even know it!
Start saving for that down-payment
The more money you save for a down-payment, the less the financial burden will be in the future as paying more now means paying less in interest and protecting yourself for paying more for what the car is worth. This gives you the freedom to pay for your other obligations sooner, reducing your overall debt.
In a nutshell, saving money for a car is no easy task. And when planning out how your payment will work, be honest with yourself and remember that things like gas, insurance and maintenance don’t come free. And with the average price of a car in the US rising, finding a good, cheaper car might be tough.
Don’t worry though. If you are willing to educate yourself on the financial markets and put that extra money to work, you could reap the benefits much faster than your typical, low-interest savings account. With investing there is inherent risk and that’s why Loved educates you while allowing you to invest in many different stocks and ETF’s, giving you the potential benefit of diversification. And like we said, you can automate your investments, giving you a better chance of success as you average your entry price!