Nothing says “freedom” quite like conquering the open road. When you picture yourself cruising down the highway, do you see yourself in a particular vehicle? The key to getting your dream is a solid saving and credit building strategy.
We can help! Use these 5 tips to start saving for your dream car today.
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Build a Household Budget
Do you have a household budget? If not, it’s time to sit down with all of your credit cards and bank statements and create a household budget.
Start by calculating how much money you have coming in each month after taxes. Then, subtract your fixed expenses — these are expenses that you must pay each month, like your rent, mortgage, insurance and more. Finally, see how much money you have left over and decide how much you can afford to save each month.
Divide the rest of your money into set categories and limit your spending in each. For example, you may limit yourself to spending $70 each week on groceries and $30 on a weekly date night. Once you finish your budget, start living by it — and start saving!
Commit to Saving Consistently
Are you the type of saver who’s prone to impulse shopping? If so, you’ll need to buckle down and resist temptation to stay on course to save for your dream car. It’ll be worth it!
Make saving a little easier by opening a savings or investment account to hold your vehicle fund. Consider a low-risk SteadyIncome portfolio from MoneyLion, and you may even get that car a little sooner! It’s a a fully managed portfolio, where MoneyLion invests for you to help your money grow. Soon you can even set up Auto Invest to tuck away money every week or month automatically. When you consistently set aside your funds, you’re less to spend it before you’re ready to buy what you really want. Vroom vroom.
Raise Your Credit Score
You might need some form of financing to pay for your vehicle. A higher credit score makes it easier to get a loan and will give you access to lower interest rates, which will save you money over time.
Check your credit score when you start saving for a car. If your FICO credit score is less than 740, you might want to take some time to raise your numbers before you apply for financing. Here are a few ways you can raise your credit score over time.
- Use a credit builder loan from MoneyLion (70% of loan takers raise their score by over 30 points in the first 60 days)
- Always pay any loan and credit card bills on time.
- Don’t use more than 20% of your total available credit.
- Avoid “maxing out” your credit cards.
- Pay down any outstanding debt you currently have.
- Avoid applying for new lines of credit at least a few months before you buy your dream car.
Increase Your Income
We know — this one’s a little easier said than done. However, raising your income doesn’t have to mean picking up a second job and working 80 hours a week. In the on-demand “gig economy,” it’s never been easier to pick up some extra cash on your off hours. Here are a few ideas to get you started, and get more here.
- Drive for a ridesharing service like Uber or Lyft.
- Deliver food with a third-party service like DoorDash or UberEats.
- Sell old clothing you no longer wear on a secondhand site like Poshmark or eBay.
- Walk dogs, pet sit or house sit for busy travelers and business professionals.
- Offer after-school lessons or tutoring for children.
Shop Smarter — Buy Used
You can save thousands of dollars when you buy your dream car used. New vehicles begin to lose value immediately after you drive them off the lot. A used version of your dream car can help you drive off the lot sooner. Keep your eyes on local listings and online dealership websites — and be ready to negotiate if you see that your dream car is up for grabs.
Dead-set on buying a new car? The time of year can influence how much you pay. Wait until the end of the year rolls around to shop for a current model. This is when showrooms prepare to bring in next year’s models and space is at a premium. If you shop for a new car in October, November or December, you’ll likely find that sales associates are more willing to strike a deal to meet their annual quotas.
Drive Toward Healthier Finances
Whether you’re saving for the car of your dreams or the vacation of a lifetime, your bank should support your financial goals — not take a cut of your cash. At MoneyLion, we believe in delivering a premium checking experience without the price tag. That’s why we’ve ditched the service, overdraft and ATM fees that other banks charge you to make the most of your money.
To learn more about saving for the future, check out our learning center.