Are you thinking of gifting a new car to someone you love for the holidays? How to save up for a car without loans, without getting into debt and without working 24 hours a day without rest? Is it possible to save up for a car with a salary of $300-$500? Can a student save up for a car? Of course, the answer to all these questions will be yes if you know how to save money and manage your own money wisely. Why do we recommend that you save money for a car, and not take an auto loan? Because we are against any addictions, including money from the bank! In order to save up for a car, you only need the desire to do it and some patience, but at the same time you will remain 100% free in your choice (to buy a car or postpone its purchase), and you will not have to live in debt.
I want to buy a car for someone as a surprise gift: what should I do?
Immediately, we would like to note that if you want to save up for a car, you will need to give up some of the usual expenses, learn to live economically and control your finances. If you do everything right, then in the end you will definitely be able to surprise someone you love with a new car.
First, set the correct goal!
First of all, you need to determine the desired model as accurately as possible. Of course, almost every car enthusiast would like to buy a cool Porsche or another luxury car, but psychologists strongly recommend keeping in mind not only such a global dream but also a more real one (the closest one at the moment). First of all, you should strive for this very real goal, in which case you will protect yourself from disappointment due to failure. Goals like “I want to buy a car for my wife” are not enough; it should be as specific as possible. Look at the advertisements for the sale of cars on websites, make visits to car dealerships, check out all the suitable options. Based on the results of such an analysis, you need to define yourself as clearly as possible – which vehicle you want to gift to someone you love: make, model, modification, equipment, technical characteristics, and also color.
Decide how much you are ready to spend on a car
At this stage, you need to determine the approximate cost of a car you want to buy. As many auto experts recommend, you’d better buy a car that is within your income range over a period of 8 months to a year. For example, you earn $350 a month. Then you can afford a car with a price of $3500 ($350 multiplied by 10 months). Is your monthly salary $700? Then you can safely choose a car worth $7000.
Start saving money for a car
The most difficult stage begins – saving money for a car. Of course, you can choose an alternative, at first glance, simpler way – take an auto loan or borrow money from friends. But we think this is not the most reasonable decision. Therefore, we advise you to save money for a car, and not take an auto loan. We recommend that you follow some simple tips.
- Calculate your mandatory monthly expenses: payments for utilities, payment for kindergarten services, spending on public transport, mobile communications and the Internet;
- Within a certain period (say, half a month), record all expenses for food;
- Take a careful look at your own wardrobe and note for yourself what items you need to purchase over the coming year. Calculate in your mind or on paper their approximate price. The resulting amount of money must be divided by 12 (the number of months in a year);
- Leave a specific amount of money for recreation and entertainment. After all, if you completely abandon the latter, this can cause depression, as well as discord in family relationships;
- 3-5% of monthly income should be immediately set aside for unforeseen expenses;
- Now you know your main monthly expenses. After receiving your next wages, immediately distribute it into 5 envelopes: envelope 1 – utilities, internet, public transport, etc; envelope 2 – clothes; envelope 3 – entertainment, recreation; envelope 4 – unforeseen expenses; envelope 5 – food costs;
- The remaining amount should be set aside. You will put it off in order to finally save up for a car.
How much should you save from your salary to buy a car?
As practice shows, you can save about 10-20% of your income only by optimizing your expenses. The money set aside for the purchase of a car can be deposited in a bank. So they will have monthly “interest”, which will quickly bring you closer to your cherished dream.
Important advice! To save up for a car, you should set aside part of the money not only from wages but also from all other income received, if any. This can be an advance payment, bonuses, etc. The main thing here is the principle “every penny counts”. At the same time, you need to determine a fixed minimum amount that you will send monthly to the piggy bank for the future car. You can save more of this amount.
After a couple of months, review your own spending again. Maybe they can be reduced by lowering expenses, for example, on entertainment. Or maybe you will be able to spend at least $10 less on food per week? But $10 a week is already $270 a year! Not a bad savings on food, isn’t it? And if this money is on the deposit, then interest will also gather. When planning to save money for a car, you can save in other ways, for example, by paying water bills by reducing water consumption or by purchasing more budgetary household appliances instead of expensive ones.
Following the proposed instructions, you are likely to be able to save up for a car even with a small salary and without compromising the quality of your life. It is only important to set a goal correctly and stop spending finances on all sorts of nonsense.
How to save money for a car and not lose it
In our opinion, the best place to store money set aside for buying a car is a bank deposit. Currently, different banks offer a lot of very convenient options: deposits for a short period, for a small amount, with the possibility of preliminary withdrawal and without it.
How to save up for a car if you are a student – personal experience and motivation
I bought my first car (Volkswagen) in 2011, being a 20-year-old fourth-year student of a technical university in Woburn MA. I managed to save up for the first car in 3 years (from September 2008 to September 2011), postponing part of the scholarship (it was increased, about $100) and money earned remotely on copywriting. At that time, the car cost me about $2000. If you divide $2000 by 3 years (or 36 months), you get less than $55 a month. I saved about the same amount for a car every month. I did not keep all my savings in the bank, on deposit. I set myself the goal of saving for a car, I tried to keep about a third of my savings on deposit. This way of saving money allowed me to buy a car of my dream!