How to Save For a New Car (for Teens)
Start early., Set a savings goal., Account for your other expenses., Consider the price of the car., Add in inflation., Determine a savings schedule.
Step-by-Step Guide
-
Step 1: Start early.
It’s never too early to start saving money.
If you think you might want to buy your own car, start putting aside birthday money and earnings from summer jobs.
The earlier you start, the more you can potentially save by the time you are old enough to drive.Consider the age at which you can get a driver’s license.
There’s no sense in purchasing a car before you can legally drive it, so establish your timeline based on when you can actually drive the car you buy. -
Step 2: Set a savings goal.
Come up with a number that will cover your car purchase, along with tax, licensing and registration fees.
Think about how realistic this number is.
You may want to save $30,000 so you can buy a brand new car.
But if you give yourself a year to make that money, you will likely not meet that goal.
At the bare minimum, your savings goal should equal an appropriate down payment amount.
Typically, this is 20% of the total cost of the car.If you are planning to take out a loan to buy your car, have at least 20% of the total price ready to pay in cash as a down payment.
You will also need a co-signer on a loan; your parent or guardian will need to guarantee the loan. , If you are responsible for paying for leisure activities, new clothes, and so on, consider how much money you need or want to spend on these things every month.
Factor these expenses into your overall savings plan, subtracting them from the total possible amount you can save. , As you start saving for a car, you should consider the price of the car that you want.
If you want to buy a brand new car, a sports car or a high-end model, you will have to save considerably more money than a more practical, inexpensive or used car.
The price of a car doesn’t end when you purchase the car.
Take into consideration other factors like car insurance, reliability and gas mileage, which will add to the ongoing maintenance price of the car. , As you are looking to set your savings goal, remember that you are looking to buy a car in 2-3 years, not right away.
Think about how prices may go up due to inflation.
Add about 2% to 4% more to the total savings goal that you establish., Calculate how much money you will need to make in order to save your goal in the amount of time you are giving yourself.
For example, if you want to save $6,000 in 2 years, you need to save approximately $250 every month, or about $60 per week.
Make a schedule for often you will put money away.
Will it be every week or every month? Do you plan to save birthday or holiday money? -
Step 3: Account for your other expenses.
-
Step 4: Consider the price of the car.
-
Step 5: Add in inflation.
-
Step 6: Determine a savings schedule.
Detailed Guide
It’s never too early to start saving money.
If you think you might want to buy your own car, start putting aside birthday money and earnings from summer jobs.
The earlier you start, the more you can potentially save by the time you are old enough to drive.Consider the age at which you can get a driver’s license.
There’s no sense in purchasing a car before you can legally drive it, so establish your timeline based on when you can actually drive the car you buy.
Come up with a number that will cover your car purchase, along with tax, licensing and registration fees.
Think about how realistic this number is.
You may want to save $30,000 so you can buy a brand new car.
But if you give yourself a year to make that money, you will likely not meet that goal.
At the bare minimum, your savings goal should equal an appropriate down payment amount.
Typically, this is 20% of the total cost of the car.If you are planning to take out a loan to buy your car, have at least 20% of the total price ready to pay in cash as a down payment.
You will also need a co-signer on a loan; your parent or guardian will need to guarantee the loan. , If you are responsible for paying for leisure activities, new clothes, and so on, consider how much money you need or want to spend on these things every month.
Factor these expenses into your overall savings plan, subtracting them from the total possible amount you can save. , As you start saving for a car, you should consider the price of the car that you want.
If you want to buy a brand new car, a sports car or a high-end model, you will have to save considerably more money than a more practical, inexpensive or used car.
The price of a car doesn’t end when you purchase the car.
Take into consideration other factors like car insurance, reliability and gas mileage, which will add to the ongoing maintenance price of the car. , As you are looking to set your savings goal, remember that you are looking to buy a car in 2-3 years, not right away.
Think about how prices may go up due to inflation.
Add about 2% to 4% more to the total savings goal that you establish., Calculate how much money you will need to make in order to save your goal in the amount of time you are giving yourself.
For example, if you want to save $6,000 in 2 years, you need to save approximately $250 every month, or about $60 per week.
Make a schedule for often you will put money away.
Will it be every week or every month? Do you plan to save birthday or holiday money?
About the Author
Larry Taylor
Committed to making organization accessible and understandable for everyone.
Rate This Guide
How helpful was this guide? Click to rate: