35 Ways to Save for a Car or Another Major Purchase
An Important Goal
Saving to buy a car is a major undertaking, but success is perfectly possible with a bit of planning and effort. Three strategies can be used to build up a car fund: saving regularly and as soon as you receive your paycheck, spending less and putting the savings in the car fund, and finding ways to earn extra money.
Before you start your savings plan, you should decide on the type of car to purchase. To help you make a choice, think about the price and features of the cars that interest you. Also think about the potential costs involved after you've bought a car. For example, how much will the car insurance cost? How much gas does the car use? Does the car have a reputation for reliability and low repair costs? Maintenance and repair costs for a used car are especially important to consider.
You also need to consider how you will pay for the car. Will you pay cash or are you going to make a down payment followed by monthly installments? How large will the payments be and how long will they need to be made?
Once you have a car and a purchase method in mind, you can decide how much you'lł need to save each month or in each pay period in order to buy the car. Here are thirty-five tips that will help you save for a car or another major purchase.
1. Decide on the amount that you will place in your car fund from each paycheck and the amount that you will place in your emergency fund. Even while saving for a car you need to keep building up an emergency fund. Your don’t want to spend all your savings on a car and then be faced with an emergency which you can’t pay for.
2. Your bank may offer the option to automatically transfer money from your checking account to your savings account at regular intervals. If this option isn’t available, transfer money into your car account and your emergency fund as soon as you deposit your paycheck in the bank.
3. Try to set up separate savings accounts for your car fund and your emergency fund. If you have only one savings account, set up a table with pen and paper, a worksheet in a spreadsheet program, or a file in budgeting software to separate your savings into different “virtual” accounts.
4. At the end of every day, empty all the change except for a dollar (or other predetermined amount) out of your wallet.
5. Buy coin collectors at a dollar store and fill them with coins from your wallet. As soon as the coin collectors are full deposit the money in your car account.
6. Never think that it’s not worth saving a few pennies! Pennies saved regularly will add up to make dollars.
Spend Less While Shopping
7. Find extra money to add to your car account by spending less. Put the money that you would usually spend into your car account.
8. Stop bad habits like smoking and buying junk food and consider limiting alcohol consumption. These changes could save a significant amount of money and may improve your health, too.
9. Make your meals at home instead of eating in restaurants or buying prepared meals.
10. Buy nutritious but cheaper food. For example, have more beans for protein instead of meat.
11. Don’t buy "designer" coffee. Make coffee and tea at home. Buy plain varieties of the beverages, which are cheaper than flavored kinds.
12. Take advantage of coupons to buy cheaper groceries, cosmetics, and toiletries. Make sure that when you use a coupon you are purchasing something that you would have bought anyway. Don't buy an item just because you have a coupon for it! The same idea applies to two-for-one purchases. Only buy the products if they will be useful.
More Shopping Tips
13. Use the savings cards or point cards that are offered by some stores, as long as the cards are free. As with coupons, make sure that you don’t buy something that you don’t really need just because a card saves you money on the item.
14. Save flyers from community newspapers and buy items that that you need when they are on sale.
15. Buy drug store brands of medications like vitamin supplements and anti-histamines. If you read the ingredients carefully, you’ll often find that the cheaper drug store brand product has exactly the same ingredients in exactly the same concentrations as the more expensive name brand product. Store brands of packaged foods and cleaning products may also be cheaper than the name brand products.
16. Experimenting with the latest cosmetics can be very expensive. Stick with one set of cosmetics that you like, preferably a store brand or an inexpensive name brand.
Spend Less on Entertainment and Communication
17. If you have access to the Internet, do you really need a newspaper subscription? Many newspapers have websites that show the latest news and information. Some public libraries subscribe to a website that puts newspapers from around the world on the Internet on the same day that they’re published. You can read these newspapers from the comfort of your own home if you are a member of the library.
18. Take advantage of your local public library for free education and entertainment. Printed newspapers and magazines, books, CDs, DVDs, and Internet access are available. Your local library may provide free access to online music databases, as mine does. Some libraries allow their members to "borrow" ebooks by downloading them at home. In my public library, after a specific time frame the ebooks will no longer open and are said to have been "returned" to the library. The library allows the books to be read on a portable electronic device as well as a computer. Classic ebooks can be downloaded from many Internet sites for free and never expire.
19. Downgrade your cable television package, especially if it includes many stations that don’t interest you, or cancel your cable plan.
20. Use freeware or open source programs on your computer instead of buying expensive software.
21. Don’t buy an expensive cell phone plan, or don’t renew your contract if you already have one. Instead, choose a cheaper plan or use your phone on a prepaid plan.
22. Think about whether you still need a landline for phone calls if you have a cell phone.
23. Use free options like Skype for some or all of your long-distance communications.
The video below contains some good tips for spending less money. However, I think the section about drinking at home before a special event in order to save money could be improved. First, it's important to stress that a person should avoid drinking alcohol before driving. Secondly, it's a good idea to limit alcohol consumption at any time in order to save money and maintain health.
Saving Tips and Tricks
Spend Less on Exercise and Energy Consumption
24. If you travel by public transit, buy passes or fare saver tickets to save money. Walk to your destination whenever possible. Walking is free and can be a great form of exercise.
25. Cancel your gym membership and choose less expensive ways to exercise.
26. Reduce energy costs in your home by turning off lights that aren’t needed, using energy-efficient light bulbs, and using cold water in clothes washing machines. Consider turning down the thermostat at night and when you will be away from your home for a long time (unless there are people or pets that must be kept warm in the home).
Unplugging certain electronic devices when they're not being used saves energy and money. Some devices shouldn't be repeatedly plugged in and then unplugged, however. Do some research to discover which of your devices can be safely unplugged.
Questions to Ask Yourself Before Making a Purchase
Earn More Money
27. Hold a yard sale and sell anything that you don’t use or don’t need. Consider selling items on Craigslist.
28. If you have space in your home, consider taking in a boarder.
29. If you have the time, get a part-time job such as babysitting or newspaper delivery. If you have a special skill, you may be able to teach evening classes, offer academic tutoring services, or teach a musical instrument.
30. Explore online earning opportunities, but do so carefully. You should check whether the website that is offering you money in return for part-time work has a good reputation. You should also determine whether an extra offline project is likely to earn you more money over a specified time frame than the online one.
31. Save and file all receipts carefully for your tax return. Read your tax information booklet carefully to ensure that you get all of the tax refund that you are entitled to. Also remember to recycle bottles, cans, and juice boxes to get your deposit returned. These strategies return money that you've already paid rather than enabling you to earn new money, but they're still important.
Use Psychology to Help You Save Money
32. Post a photo of your future car in a prominent place, or post inspirational quotes about saving where you will frequently see them.
33. Consider making saving and frugal living part of a new lifestyle.
34. Find less expensive but still satisfying purchases and activities to replace your old habits so that you don’t feel deprived. If you don't do this, your saving strategy may be unsuccessful in the long term.
35. If the thought of permanently eliminating designer coffee or another treat from your life makes you miserable, then don’t do it. Instead, limit your luxury coffee or treat to once a week (or once a month for more expensive purchases) and make it a special event. Enjoy the ambiance of your favorite coffee shop, socialize with friends, and go for a walk in a pleasant and interesting area afterwards.
Congratulations—You've Bought Your Car! Now What?
Why go back to your former, more expensive lifestyle now that you’re used to saving? You can continue to save for another major purchase, for a vacation, or to add to your emergency or retirement funds, for example. A frugal lifestyle can be very satisfying if it's well planned.
Questions & Answers
© 2011 Linda Crampton