There are few items more costly in life than buying a car or a home. Prudent saving before you make a large down-payment of cash is not only sensible, it’s a necessity, especially if you are a first time car or home buyer.
Save before you buy
You may not be able to buy a car outright, but even if you take out a loan to fund its purchase, it’s still advisable to save as much as you can beforehand, because purchasing a car is never the only cost associated with successfully getting yourself on the road. Insurance can be costly, especially if you are in your late teens or early 20s, when insurance costs can be higher. Then there are also vehicle licensing costs, driver’s license costs, transfer fees (for second hand cars) and of course, gas.
It can be difficult to obtain a mortgage from banks, especially if you are looking to fund the majority of your purchase by a mortgage. Saving is therefore critical to the success of your purchase, not only to cover the deposit required by the bank, but also to cover Government stamp duty, legal fees and real estate agent fees.
When just starting out, your first major purchase is likely to be a car. You may not have a significant amount of income coming in, but neither are you likely to have big financial expenses either (such as a large mortgage or school fees). This is the time to save and watch your money grow in time, before you make the next step to actually make a big purchase.
Start by assessing how much you earn versus how much you spend on a regular basis. Doing so you can establish a budget you can live by. The budget should include a modest amount of savings every month, no matter if you are hoping to buy a house, a car, a jet ski or a bicycle.
Saving isn’t just for the young, however. Saving on a regular basis makes sound financial sense whatever your age, and the sooner you begin, the greater the savings in the long run. If you have a car or home in mind, it’s always a good idea to create a personal savings plan. This will give you a realistic timeframe to save as much as you can to put towards your car, home or whatever your end goal is. Actually write down your financial goals and how you are going to achieve them and make sure you refer back to it on a regular basis so you can assure your savings are on the right track.