Tips & Strategies to Save for Your Next Vehicle

Buying a vehicle can cost you some serious cash these days. Car prices are up more than 21% since the start of 2020 and, according to Kelley Blue Book, by the end of 2023 Americans paid more than $44,000 for the average new non-luxury car. So, if you have your sights set on buying a new car, truck or SUV, the sooner you start saving, the better. Houston Federal Credit Union is here to get you started with the best tips and strategies to help you save for your next vehicle.

Figure Out What You Can Truly Afford

Before you create your savings plan, you’ll need to make sure the vehicle you have your eye on will fit into your budget. An auto loan calculator can help you estimate what the monthly payments will add up to once you factor in the down payment, taxes and interest.

Besides the auto loan payment, there are other related expenses that will hit your wallet when you purchase a newer vehicle. Since the vehicle you buy will have a higher value than your current vehicle, your insurance rate is bound to go up. Keep in mind that certain types of cars cost more to insure than others and the difference in your rate could be more than you expect, so it’s a good idea to get an insurance quote and consider it when making your savings plan.

Routine maintenance and unexpected repairs should also be part of your car budget. Typical repairs like oil changes and new tires can come with a heftier price tag on some models of cars and vehicles. You should tally up these costs with your other expenses so you can see how they will impact your overall monthly budget.

Set Yourself Up for Success

Now that you have a budget, you’re ready to put your savings plan into action. If you open a savings account dedicated to putting money away for your new vehicle, you’re likely to save more consistently and avoid the temptation to spend the money on other things. A regular personal savings account will work but if your plan is more long term, go for a high yield savings account like a Money Market Account or a Certificate Account. These types of accounts offer higher interest rates than most traditional savings accounts so you can earn even more on your deposits.

Another way to make saving for your vehicle successful is to schedule a transfer in Online Banking that automatically moves money from your checking account to your savings account after each payday. This way, the money will be safely stashed away before you get a chance to spend it, and eventually you won’t even miss it.

Find Ways to Cut Everyday Spending

Making small changes in your daily spending habits can really make a difference in how much you’re able to save each month. A few simple adjustments will help you reach your goal faster, and you’ll be hitting the road in your new vehicle before you know it. Here are a few easy ways to save money on everyday spending:

Look out for sneaky subscription and membership fees
Most of us have done it. You sign up for a streaming subscription to watch one show and once you finish the season, you forget all about that monthly charge you’re paying. So, take a few minutes to evaluate which streaming services you’re paying for and cancel anything you can live without. You may also be able to cancel a gym membership or other membership you don’t use regularly. This tip alone could save you hundreds or even thousands of dollars annually.
Make coffee at home
Picking up a coffee on the way to work is convenient but those few dollars you spend each morning tally up to a good chunk of change by the end of the year. If you switch to making coffee at home every day, you can save over $700 a year according to one source. So, grab yourself a travel mug and start brewing your morning joe at home.
Bring your lunch to work
Sure, the deli down the street from your office makes an amazing pastrami on rye but buying yourself a tasty lunch out every day is a pricey treat. Americans spend around $3,000 each year on buying lunches instead of making at home. So, pack yourself a sandwich for lunch and watch your savings balance grow.
Make your next vacation a staycation
Most people love going on vacation, but trading one week away on a beach for a staycation will save you a bundle of money that can travel right to your savings account. The average vacation costs for one person in the U.S. is about $1,900 but there are plenty of ways to enjoy a week off work close to home that are much cheaper. Try hiking or biking at a new spot, go on a local camping trip or work on a craft project. The money you save will be worth it.
Shop for your groceries at discount or bulk stores
It’s no secret that grocery prices have gone sky high in recent years. According to the USDA, U.S. food prices rose by 25 percent from 2019 to 2023. To save some dough, try shopping at discount stores like Aldi or Costco to stretch your dollars as far as possible.

Start Saving Today

If buying a new vehicle is on the horizon, the sooner you start saving, the better. To start saving today, contact us at Houston Federal Credit Union today or visit one of our branches in Texas or South Carolina.