Saving up for a new car isn't an easy task. There are many hurdles to overcome. Sometimes life gets in the way, and a brand-new vehicle just isn't a priority. Having said that, if you're determined and you won't let anything or anyone get in your way, then saving up the cash for a shiny new car isn't only possible—it's inevitable. In that light, we give you ten practical tips to help you achieve your goal.
Start a savings account
Do you dream of a sporty sedan like the Honda Civic Type R? Or maybe a hybrid crossover like the Toyota Corolla Cross? Whatever your dream car is, you have to have the foresight to save up as early as today.
If you don't have a savings account, now would be a good time to open one. You need somewhere to store your hard-earned cash, and stashing it under your bed won't do. If you have an existing savings account, opening another one that's specific to your new goal could be good. Having a proper channel to put your savings into can help crystallize your vision, and it would do wonders in giving you the right mindset necessary to save up for a new car.
Automate your savings
Opening a savings account may not be enough if you want to buy a new car as soon as possible. You have to make it so that you don't even think about the money coming into your account. Most banks offer an auto-debit feature wherein they automatically take a set amount from one of your accounts to another.
Cut back on expenses
Saving up for any massive purchase requires sacrifice. New cars cost anywhere from under a million to several million pesos. You're not doing yourself any favors if you continue to spend like there's no tomorrow. Try to cut back on unnecessary purchases. Take a good, hard look in the mirror and find out what's essential in your day-to-day life. You may find that your nonessential spending can add up to more cash than you realize.
Set up a budget
Creating a monthly, weekly, or daily budget could be an effective way to ensure you don't go overboard with your spending habits. Doing this can help you see if your cash flow works for you or against you. Like we've mentioned before, limit your nonessential spending. Try budgeting your income for a bit, and you might be surprised at how much money you can be saving up instead.
Consider short to medium-term investments
While this is in no way professional investment advice, if you don't see yourself buying a car anytime soon, your savings might be better off with a short or medium-term investment. Things like government bonds, money market accounts, and mutual funds can all multiply your investment a great deal. However, always exercise caution when entering an investment, and only invest what you can afford to lose. Do your research and choose your ventures wisely.
Start a side hustle or small business
Your current income might not be enough for a brand new car. If that's the case, consider getting into a side hustle or starting a small business. Most people who can afford to buy expensive things have multiple income streams. The profit you earn outside your primary source of income, however small it may be, can help you save up for a new car.
Enlist family members or friends
Sometimes, you can't do it alone, and that's perfectly fine. If you're okay with shared ownership, or more than one person will be using the car, then you could enlist family and friends to pitch in on your purchase. Even if you won't get to call it all yours, you would still get to enjoy a new car nonetheless.
Decide if you want to buy with cash or financing
Deciding between a cash or financing purchase is a significant step. It can change your whole savings strategy, so it's worth doing right. Buying with cash is cheaper in the long run, but you won't get to drive the car today. Purchasing a vehicle with an installment plan means you get to take it home right away, even if you don't have the full retail price on hand. The clear disadvantage of financing is the interest rate, which can vary, but all put a significant amount on top of the cash price. You'll have to weigh the pros and cons yourself.
Consider selling your current car
Another way to get closer to your dream car is to sell your current one. Whatever make and model you drive, selling it can boost your savings and bring you one step closer to driving a new vehicle out of the dealership lot. If you decide to sell your car, look to time it as the final piece of the puzzle, unless you want to walk or take public transport to work.
Consider buying a second-hand car
If all else fails, you can always fall back on a cheaper and more practical solution—a second-hand car. There's no shame in buying a used car, especially if it's in relatively good condition. New cars lose about 10% of their value the moment they leave the dealership, so even if you buy a late-model used car, you'd still be getting it for cheaper than the full price.