The following is a guest post Written by Max. Enjoy!
So you have hit that point where you want to buy a new or used car, and are looking into methods to saving. Cars can be expensive; a new car’s average price can be up to $30,000. While used cars are less money, they can average around $13,000. Knowing what you can realistically afford is key to setting goals to hit. Simple math will tell you it’s as easy as spending less than you earn. However, It’s much easier said than done. Trying to save up a ten thousand dollars can be a very tough task. Setting out a plan on paper will help you be disciplined and consistent with your savings. When saving for a car there are a few things to consider beyond price. From insurance, to gas money and maintenance, the price of the car from the dealership is not the only price you will incur. Below are three steps you can take to save up for all of these costs.
Track your Expenses
This is step one. You must make note of how much you are spending each week, and on what. There are some cool phone apps like Mint that help you track all of your credit card purchases and divides them up into categories, and gives you averages. I have found that this is one of the more useful ways for me to plot out my monthly expenses. Once I figure out where I am spending my money, in which areas, I move on to step 2.
Cutting out what is Unnecessary
So now I’m at a point where I see what I spend on gas, groceries, restaurants, bars. I spend about 20% of my income on food. This number is a little bit higher than what I would like to spend. Ideally, I would like to spend around 15% or 10%. I think those are realistic goals for next month. So, on my fridge, or on a post-it-note on my desk I will write, “Spend less money going out to eat” and “Reduce weekly supermarket shopping by a few items.” These quick reminders will keep me in check, and do help me be more aware of my spending. In the iPhone iOS 9 you can even set location based reminders. This means when you walk into the grocery store, you can get a pop-up that says “Spend less than you regularly do!” I find this feature particularly helpful.
Review Each Month
Cutting out unnecessary spending is essential towards saving money. But you may not be cutting out enough, or from the right areas in your life. Things like going out to eat, drinks, or even gas money can quickly add up. Each month you need to review your savings and plot out to see if you are on track to save enough. If you set a timeline like 12 months, you must evaluate if you continue to save at that level, where your projected savings are. This will help you revise your budget and your savings. Reforming your strategy and making tweaks each month will help you reach your goal. Feedback is the most important step in actually achieving your goals.
