Tuesday, 20 March 2012 3:40 PM
Buying a new car is a big financial commitment. In the current climate, when many people are managing their finances especially tightly every month, saving up to buy a new car could be tricky.
However, if by the end of 2012, getting a new motor is your main financial goal, there are some practical steps you could take to help you budget for the expense – and still make sure all your other monthly costs are covered too.
So let's take a look on how to get your finances on track for the car you want.
Draw up a budget
If you're putting money aside every month for a new car, it's important that you have a well-thought-out budget in place that will give you a realistic way of doing this – while also letting you keep on top of all your other monthly costs.
You could set up a budget with just a few simple steps:
1. Work out your monthly income (the amount that actually enters your account). You should include your salary, any benefits you receive, and any other money that's paid into your bank account on a regular basis.
2. Calculate your monthly outgoings. You should include all your essential living costs, e.g. rent/mortgage, food, bills, and anything else you regularly spend money on (make reasonable estimates if you can't always give exact amounts).
3. Subtract your monthly outgoings from your monthly income and you'll be left with your 'spare' cash. Some of this will probably go on luxuries like nights out or CDs – but whatever you have left over could then be safely put into a savings pot to go towards your new motor. This way, you should be confident that you're saving up the money you need while still keeping on top of all your other costs.
If you're concerned about accidentally spending the money you need for your essentials, you could decide to open a budgeting bank account, such as the one offered at thinkbanking.co.uk. This account divides your finances into separate accounts every month – one for all your bills, and one for your spending money – so you should be confident that all your essential costs are being taken care of every month.
Do you want to give your savings a boost?
Bear in mind that it's not just buying the car itself that you'll have to budget for. There are all kinds of maintenance and running costs you'll have to take into account too: fuel bills, insurance premiums, road tax, MOT/servicing costs, and any emergency repairs you may have to cover (if your car breaks down, for example).
If you feel your savings pot could do with a bit of a boost, there are ways you could maximise your income.
• Work some overtime every month in the office
• Sell some old items you no longer use, such as your CD collection or any collectible memorabilia you're no longer interested in
• Check if there are any benefits you're entitled to that you're not currently claiming.
Consider what car you're looking for
Do you really need a brand-new car? It may look 'flash' in the showroom, but will it really give you all the things you're really looking for – e.g. efficiency, value for money, low maintenance?
Looking at what 'used' cars are on the market could be a better option: you could save plenty of money, and you won't have to worry so much about the cost falling so rapidly once you're on the road as it would with a brand new model.