6 Habits that Can Help You Save for Your First Car

Buying a car for the first time is a major milestone. Cars, like houses, are assets that require substantial spending because they deliver high usability in the long run. With your own car, you no longer have to worry about the long queues you usually face on your daily commute. And with heightened mobility, you get to enjoy more flexibility for road travel, be it to your office or a nearby beach resort.

Of course, buying the car itself is the hard part. Unless you have the means to purchase a vehicle out of pocket, you will need extra funds to make your purchase. As such, many people apply for bank financing or take out loans to make a down payment for their vehicles. First-timers can also choose to secure a car loan Philippines-based financial institutions that offer assistance to those new to vehicle purchasing.

But even with borrowed funds, saving up for a car can be tedious. You can make the burden of payments (and repayments) a bit lighter with a few best practices. Whether you intend to pay for your car through installments or right off the bat, you can apply some good saving habits to prevent financial headaches and get you closer to your goal. Read on for tips to help you buy the car of your dreams.

Monitor the Prices of Additional Expenses

If you want to become a vehicle owner, you need to be aware of the miscellaneous expenses that come with owning a car. For one, fuel and parking rent are common recurring expenses that can take up a chunk of your funds. On top of that, you need to cover other expenses such as maintenance, insurance, and fees related to registration and taxes.

While you don’t have control over these costs, having an idea of the relevant expenses will help you set a budget for buying and maintaining your first car and create cost-efficient strategies. For example, you can narrow down your vehicle options to low-maintenance cars that don’t require frequent—and pricey—check-ups. Or, you can check out car insurance options with ample coverage and flexible payments that won’t hurt your pocket.

Open a Separate Savings Account and Fund It Regularly

Most people already have a savings account, but for those who are dead set on buying a car, it would help to have a separate account for that specific purpose. That way, you can properly visualize your car fund and avoid dipping into this pool of finances. It would be ideal to set a target savings goal and determine the specific amount you plan to funnel into your car fund. How often you fund your account depends on your source of income, but a good starting point would be a monthly contribution.

Auto-Debit Your Savings

One way to simplify the task of making regular contributions is by setting up an auto-debit arrangement with your bank. Most banks already have an auto-debit feature, which allows the bank to automatically transfer a portion of your funds to one of your other accounts. If you intend to put P2,000 into your car fund every two weeks, you can turn on auto-debit and tweak the schedule and amount to be transferred to your savings account. Before you know it, you’ve already saved up enough to afford a standard sedan.

As mentioned earlier, the amount that you will regularly funnel into your car fund depends on your income stream. Setting up a large sum as your regular contribution is often unrealistic, but breaking that up into several smaller amounts can make saving more manageable. It would be best to scale down your contributions and pay only an amount you’re comfortable with.

Avoid Unnecessary Spending

Buying big-ticket items such as cars requires a certain amount of sacrifice. While it’s true that you should reward yourself from time to time, reckless spending will only bring you farther away from your goal. With this, you may want to cut down on your unnecessary expenses and focus on your life’s bare necessities.

When budget planning, make a thorough assessment of your daily expenses to determine those you can do without. Maybe you can skip the gym membership for a while. Or maybe you can dine out less frequently and cook your own meals instead. These changes may be small, but they add up to significant savings that will help you quicken the pace of purchasing your car.

Consider Your Investment Options

Investments are an increasingly popular way for people to get passive income. If you haven’t done so yet, you should consider the investment options in the market that are low-risk yet deliver reasonable returns. Most financial institutions are working to democratize investments, so now is a great time to check out investment strategies that can help fund your first car.

Investments like cryptocurrency and stock trading can give you big returns, but that usually comes with a corresponding level of risk. As such, you may want to consider short- and medium-term savings with lower levels of risk. These include money market funds, time deposits, and unit investment trust funds (UITFs) or equity funds.

Have a Side Hustle or Business

If your current source of income is not enough to fund a car in the foreseeable future, you may want to consider having more options for earning money. For instance, you can get a side hustle or get a freelance gig to supplement your income. A lot of online job boards advertise openings for various types of freelance work, from English tutoring to graphic design.

If you have an entrepreneurial spirit, you can start your own business. It doesn’t have to be a full-force operation: your business can be as simple as selling baked goods or participating in buy-and-sell online marketplaces. Having additional income streams will help you secure extra funds that you can control, ultimately getting you closer to the driver’s seat.

Before You Speed Off

Truth be told, saving up for a car is often easier said than done. There are times when your car fund has to take a backseat in favor of more pressing needs. There’s also the possibility that you will get tired of saving a portion of your salary for an unachievable goal. Hurdles like these are unavoidable, but you can stay prepared through smart practices such as budget planning, finding additional sources of income, and reassessing your spending habits to save a bit more. At the end of the day, it’s your determination, discipline, and willingness to make adjustments that will help you get the car you want and deserve.