In this article, I will disclose everything regarding how to save for a car as a teenager. Did you fail to try to convince your parents to get you a car? Or, do you just want to save for a car without involving your parents. Notwithstanding the situation, this guide is the material you require.
The advantage of saving and owning a car as a teenager is that it brings early exposure to automobiles. When you eventually become an adult, you would have been conversant with cars. Therefore, it becomes relatively easy for you to decide on what car to acquire as an adult.
Indeed, the adults around you would advise against saving for a car. They understand the cost of managing a car and would not want you to bear such a responsibility. But if you have a stable source of income and valid reasons, saving for a car is a brilliant move.
Here we go on how to save up money for a car as a teenager!
How to Save for a Car as a Teenager
In this section, I will drill you on the basics of saving for a car as a teenager. Below are the steps regarding how to save for a car as a teenager:
Know Your Target
Of course, you have to figure out a target amount you can afford to dole out in a car. When you know the amount of money to spend, you will know precisely how to structure your savings. First, begin by uncovering whether you need a used or a new car. If you can afford to save for a new car as a teenager, brilliant, otherwise, settle for a fairly used car.
If you would prefer a new car, prepare to make a large down payment. If you only afford a small down payment for a new, your monthly payment might become outrageous. Also, note that you may not enjoy up to a 3% interest rate because your credit history may not be excellent.
Plan Towards the Target
When you conclude on the target savings, you need to figure out ways to achieve the goal. As you already know, you can’t save if you have no source of earning. So, what do you do in this case? Consider a part-time job offer that you will be comfortable with other engagements such as schooling.
You have to find out about the minimum wage of your jurisdiction or state because it varies in each state. Moreover, if you reside in the suburb, you can’t expect a considerable wage to be able to save for the car.
You should involve yourself in small jobs like retail, deliveries, food services, etc. Do note that the earlier you begin, the better. At 13, you can start involving yourself in part-time activities that will fetch some cash monthly. If you can earn up to $400 monthly, you can put $300 aside. Besides, your parents or guardians are there to provide your basic needs like food.
Regarding how to save money for a car at 16 and how to save money for a car at 17, you should employ discipline. The same principle applies when you turn 18 and 19. As your age increases, your saving power should also increase. How do you increase your saving power as a teenager? The answer is to involve yourself in a higher paying activity.
Identify Profitable Opportunities Near You
Regarding how to save up for a car as a teenager, you need money to save and hit the target. If you relax and expect money to flow in magically, you won’t meet up. So, you have to work things out for money to arrive. How? Of course, you have to look out for opportunities near you.
During the holidays, involve yourself in activities that will fetch money within the neighborhood. Inform your parents of your zeal to gather some cash and seek their advice.
Some of the activities that will bring money instantly are dog walking, babysitting, online freelancing (writing, graphics design, etc.), home tutorials for kids, etc. You can develop a proper schedule that lets you combine multiple jobs for more money.
Discipline Yourself
Discipline matters especially concerning how to save up for a car at 18. At 16, you may have a few things to think about, but at 18+, so many engagements will come up.
Thus, requiring that you spend. It will tickle you to spend some money, but you just have to keep your calm. If it is difficult for you to manage your savings, ask a responsible adult to do so on your behalf.
Better still, you can open a savings account that accumulates interest over time. Save at least half of your regular earnings and keep off the account. It is better to spend the money you have in hand than to spend from your savings.
You can further discipline yourself by not being a regular at the movies. If you need a gaming console, audio player, etc. during this period, opt for used ones.
You should check out Dave Ramsey’s Generation Change or Foundations in Personal Finance to encourage your saving attitude.
Hasten Your Savings
You might end up spending your savings on different purposes if you do not hasten the process. Once you hit 60% of the target for a car, sell off old stuff you no longer value and save the money. You may sell some old clothes, gaming consoles, toys, etc. You are now an adult and you do not require much of the toys any longer.
Ask your parents and neighbors for paid tasks at leisure and get some money. You could shear their flowers, water the garden, mow the lawn, or even wash the car. With this, you will earn some money for your savings. Moreover, you can request monetary gifts from older cousins, uncles, and aunts.
When you hit 80% of your savings, understand that every dime matter at this point. Thus, no more unnecessary expenses. You can disengage yourself from financial engagements that demand money from you at the moment.
Finalize Your Savings
Lastly, on how to save up money for a car as a teenager, revisit your savings holder. If you have excess savings for the vehicle of your choice, do not spend the surplus. You will need money for registrations and buying some new stuff for your vehicle.
Now, you need the teenage guide for buying a car. Follow the guide properly and land yourself a nice car from your savings.
What a Teenager Can Do for Money to Save for a Car
There are numerous opportunities for you to take up as a teen and save for a car. Below are the notable opportunities you can engage yourself to boost your savings.
Dog-Walking
Within your neighborhood, residents are willing to pay for you to walk their dogs. Finding such homes is easy; simply look out for the neighbors that own dog(s). Offer to walk the dog at a low cost and you will be paid.
Babysitting
If you have neighbors with children, offer to look after them. Schedule your time and get yourself working. Do not go for neighbors that reside too far from your home.
Yard Work
You can mow the lawns in your neighborhood for money. You can as well offer to shear the flowers for extra cash during the holiday or any free hour.
Golf Course Job
If you reside near a golf course, check in for a job opportunity.
Online Tasks
You can complete online surveys and earn with just a few clicks from your mobile phone. If you possess graphic, coding, and writing skills, you can sign-up for marketplaces like Fiverr and Upwork.
There are a lot more opportunities teens can indulge themselves for money to save for a car. I will gladly be of assistance if you seek more money-generating ideas.
What to Consider While Saving for a Car as a Teenager
About how to save for a car as a teenager, you have things to put into consideration. The following are what you should consider while saving for a new car as a teenager.
Can You Afford to Pay Full Cash Upfront?
You can save a significant amount of money by paying full cost upfront. The dealership might further provide room for you to negotiate a discount to lessen the price of the car.
What is the State of Your Credit History?
It could be challenging to set up for car financing, especially with the car dealership. Preferably, you can opt for an insurance company, a credit union, or your bank. You may require your parents or relatives to present their employment history and credit history before you consign a loan. It will not come easy as you would have to convince your parents. Nevertheless, it is a god bet concerning how to save money for a car as a teenager.
Can You Afford a 20% Down Payment?
It can be challenging to finance for a car you are saving for as a teenager except you afford about 20% down payment. Understand that the more down payment you provide, the lesser the monthly payments you would make. For example, if $15,000 is the principal payment, and you make a down payment of $5,000, you are left with $10,000. So, if you can save enough for a down payment, you can expect to have less money to pay off.
What Would Be Your Monthly Payment?
Regarding, how to save up for a car as a teenager, the thumb rule for determining your potential monthly payment is:
Monthly payment of $25 for each $1,000 loan
It is advisable to avoid the repayment period that stretches further than 48 months. You will end up paying more interest than necessary. You can use the rate calculator for autos to estimate your monthly payment.
FAQs
How Much Should a Teenager Spend on Their First Car
A teenager should spend between $3,000 and $7,000 on their first car. Nonetheless, there is no speculated amount of money a teenager should save for spending on a car. So, you are not crazy about whatever you want to save for a car. Regarding the question, “how much should a teenager spend on their first car”, no amount is too outrageous or little. So far you can afford the car with a go-ahead from parents or responsible adults, you are good to go.
How Can I Save for a Car at 15?
You can save for a car at 15 by indulging in petty earning activities like washing neighbors’ cars, cleaning the house, running errands, making deliveries, etc. However, ensure that, however way you will earn must balance with school activities. It is advisable to indulge in paid tasks only after school hours or during the holidays. Do not boycott classes for the sake of saving money for a car; it is needless.
What Car Should a 16-Year-Old Get?
The ideal car for a 16-year-old must be fuel-efficient, cheap to maintain, low-speed, and straightforward, which is usually a Toyota Corolla within your budget.
Final Thought
Knowing how to save for a car as a teenager is a knowledge every teen should be acquitted with. Whether you are 16, 17, or 18 years of age, saving up for your first car is not always easy. A lot of self-discipline and determination must set in to achieve the target. Make yourself conversant with the thumb rule that you should never borrow from your savings.
Ultimately, working on how to save money for a car at 16 is a pathway towards greater responsibilities. Once you acquire the vehicle, make sure to involve yourself in earning activities permanently. Do not overly depend on your parents to maintain the car, especially if they do not consent for the car.
Bernard is the lead driver and force behind his Big Dog Garage Race Team. He is the General Manager and Chief Mechanic of Jay Leno’s Garage. Bernard and his crew of seven are responsible for all repairs, restoration and fabrication of Jay’s incredible automobile and motorcycle collection.
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