Saving Up for Your First Car after Graduation
You’ve finally graduated and are looking for a new or used car instead of relying on family, friends, or public transportation to get you from point A to point B. Buying a car can be an exciting time. With so many makes and models, you begin to think about your dream car.
Unfortunately, coming right out of high school or college means that you probably don’t have enough money to afford the full price of your dream car, so you need to save. Hopefully, those summer jobs or jobs you worked at on campus can help you figure out how many hours to work in order to aggressively save for your future car.
There are several things to keep in mind before saving for a car, and we have created a comprehensive list of the most important considerations:
Make a Budget
Take a good look at your expenses and consider creating a budget. You’ll be able to see where your money goes each month, which can help you cut down on unnecessary expenses. There are dozens of apps that allow you to create and customize your budget. You can even connect your bank accounts, current loans, and credit cards to the apps for more accuracy.
Pay Yourself First
Having a savings account can truly help you save money for your first car. On every pay day, put a percentage of your paycheck in your savings account before doing anything else. This will help to get you in the habit of saving money before you spend it on other expenses or frivolous purchases.
What Kind of Car Do You Need?
If you get a lot of snow during the winter, do you need that sports car? If you don’t plan on driving long distances every day, do you need that SUV? Also, consider the required safety features that your future car should have: airbags, antilock brakes (ABS), traction control, electronic stability control (ESC), and safety-belt features. Also, there are new accident avoidance systems that assist drivers in avoiding hitting cars while parking and looking out for pedestrians that may sneak up on you.
What’s Your Credit Score?
Knowing your credit score is a big part of the car buying process. If your credit score is below a 600, then you will be paying a higher monthly payment and overall interest on your car than someone with a better credit score. If your credit score is 700 and up, it is more likely that you’ll pay a lower monthly payment than someone with a lower credit score.
It isn’t a requirement to make a down payment for a car. However, it helps lower the cost of your monthly payments. If you’re working a summer job in high school or have a job lined up after your college graduation, consider putting a portion of each paycheck into your savings account each payday. Those small portions will add up over time and help you save up for the down payment of your car. This is even more helpful when buying used cars because your monthly payment will be even lower than the original amount without the down payment.
Accounting for Your Other Expenses
What other bills do you have pay in addition to your future car note? Think about expenses you may not have even considered, like Netflix, Apple Music, Spotify Premium, and Hulu. What about rent and utilities? Student loans? All these bills can add up to a hefty amount if you forget about them. If you’re worried about this, make a list of all of your additional expenses and see where you can cut back. Do you really need that Netflix upgrade that lets you watch movies on more than one device?
Accounting for Other Car Related Expenses
Your car note won’t be the only car expense that you’ll have to pay every month. Consider the cost of gas, auto insurance, and other maintenance costs or repairs. You might not want that high of a note if you can’t account for the other expenses that are included in owning a car.
Chris Wesner is an attorney at the Chris Wesner Law Office, LLC in Dayton, Ohio, and surrounding communities. His practice areas include bankruptcy, criminal defense, estate planning, and personal injury.