Saving money can be difficult for first-time car buyers. You might not have considered all of the costs involved with buying a vehicle, which can cause you to be a bit short in the savings fund for your new car. It is important to have funds set aside, whether you are buying a new car or if you are hoping to improve the one you have with added extras.
When you research “certified car dealerships near me”, you will find prices for the certified pre-owned vehicles, which will help you to start saving based on the price that suits your budget. If you have already chosen one of these pre-owned vehicles, it is always a good idea to have savings set aside for anything unexpected. Not sure where to start? Below are some top tips on how to set aside a rainy day fund for your car.
Start with a simple monthly budget
In order to start saving, you will need to start by drawing up a monthly budget. This should include all of your expenses, such as rent, cell phone bills, groceries and debit orders. You will better be able to track your spending using this, including luxury and leisure spending such as dinners and movies with friends.
Once you know how much money you are spending each month, you will better be able to set aside money each month for a rainy day or emergency fund. If you do not have many expenses, then you will be able to put aside a larger amount each month. For example, if you are earning a basic salary but live with your parents, you might be able to put aside at least 30 percent of your earnings for your car fund.
How much should you put aside?
Once you have drawn up a budget, you will need to think about how much you should put aside each month. This does depend on your personal circumstances and salary, but, ideally, you should be putting at least R500 per month into your rainy day fund. If you earn a higher salary, aim for R500 per week.
Putting aside a small amount might seem like a better idea, but it might mean that your fund does not amount to very much. You should look at an amount that falls in the middle, which makes R500 a good number. This will not eat into your salary or expenses and will enable you to pay for a lot of small fixes that might occur while you own your car. However, be sure to set aside a realistic amount that you will be able to afford each month. If you have your sights set on a Mercedes Benz but earn a starting salary, you need to reassess your priorities.
Understand the purpose of the fund
Once you have drawn up your budget, you will need to think of all of the reasons why you want and need to save money. Understanding the purpose of the fund will help to stop you from dipping into it for unnecessary purchases such as shoes, clothing or lunches with friends.
A rainy day fund for your car is strictly for unforeseen events or times when you have to maintain or repair your car out of warranty. Keep a list of all of the reasons why you are saving this money in your purse or on your wall so that whenever you want to use it for something other than its purpose, you will stop and think. You should try to set a goal for your rainy day fund too, such as being able to buy new tyres within 18 months.
Decide where the funds should go
Any fund that is going to be used for emergencies should be kept in an account that is easy to access and will payout within 24 hours. This means that you should not put your money into an account that only allows you access after two weeks or one month. In South Africa, this is known as a “32-day call account” and is offered by many banks.
You could choose to have an attached savings pocket on your check account or take out a separate savings account for your funds. Speak to your bank about what the best solution is based on your current finances and account with them. It is not wise to keep large amounts of cash on you or hidden away as someone might try to take them from you or you might forget where you have put it and lose all of your savings.
Rainy days no more
Owning a car means that you have to be more responsible with your money. You also need to have funds that you can use when an emergency arises, such as a punctured tyre or a broken windshield. Not having this money will make these situations very expensive, meaning that you will be short of money for a month or two.