With the average car now costing £12,000 in the UK, saving up for this purchase is no easy feat. Loans can help you get the car you really want without having to pay the total cost upfront, but with this option, you’ll end up paying interest on your loan repayments, so there are pros and cons. In any case, whether you want to buy a car outright or pay a large deposit, you’ll need to save a significant amount of money. Saving money is a necessary but difficult task, so what are the best ways to save money for a new car?
Open an ISA:
Perhaps the best way to save money is to open a savings account. In the UK, you can get an ISA – an individual savings account – to save a certain amount of money each year. ISAs are great for saving money because the interest you earn is tax-free. Additionally, you don’t need to save up a large sum of money to get started as you can open some ISAs with just £1. This makes it easy to start saving money for big purchases like a new car.
If you want to invest in your child’s future and help them save enough money for a car once they’re an adult, then you can open a Junior ISA account. The money in this junior ISA account belongs to your child and can be accessed by them once they turn 18. This service is offered by companies such as Wealthify, and by opening a junior ISA account from Wealthify, you can save up to £9000 each year for your child’s future. This will give them a head start so they can afford important purchases like their first car.
Set saving goals
When trying to save money, it’s important to have a solid understanding of your current financial situation so you can set appropriate saving goals. There’s no point saying you’ll save a certain amount per month if this simply isn’t possible for you! Likewise, not committing to a decent amount of savings per month may make it harder for you to keep track of your money and build up your savings in good time.
Therefore, you should start tracking your incoming and outgoing payments so you can decide how much money is reasonable for you to save each week or month. By comparing this to the cost of the car you want, you can work out how long it will take you to save the right amount of money.
Cut down on expenses
When you’re keeping track of your finances, you may be able to see areas where you could cut down on your spending. For example, you could decide to avoid buying new clothes and getting takeaways while you’re trying to save up for a new car. This will allow you to increase the amount of money you set aside each month, meaning that you can purchase your new car sooner.
Saving money can be tough, especially if you need to save up for a big purchase like a new car, which is why you need to keep track of your spending and set saving goals. Opening an ISA for yourself or your child is also a fantastic way to save money for the future and ensure that you have enough set aside for large purchases or emergencies.
