Budgeting for crucial family expenditures is the basis of rational financial decisions in any family.
Without sound budgeting, you risk exceeding your family’s living expenses and compromising your long-term financial goals.
That is why, before buying your next family car, it is important to have a budget to guide you towards making a reasonable and sustainable purchase.
Remember, your car’s financial plan should fully consider all available payment plans.
You could look into available car service contracts like Protect My Car plans to help with this decision.
Taking this approach will ensure you remain in control and avoid any possibility of impulse buying. Budgeting will prevent you from getting into unnecessary debt.
Below is an elaborate guide on how to effectively budget your next car.
Table of Contents
Why Do You Need a Car?
Knowing the purpose of your next car will determine the type of car you should be looking for and also reveal the urgency of its purchase.
Suppose you are getting a family car for ‘down the road’ vacations.
In that case, an SUV will most likely be a suitable purchase for you and your family, given its flexibility and space availability.
If you indeed decide to pick an SUV, how safe are the car seats for the children?
It would help if you looked for car seats fitted with car seat anchors.
You also want to be very particular with the car interior as well. How safe is it?
Also, with children in the picture, how easily and quickly can the interior material be wiped clean in case of random spillage?
Cargo space is also important for a family car.
You might want to get the salesman to show you a demo of all the available storage space before you make a choice.
Once you establish your specifications, see which aspect is more needful than the other and decide what you are willing to pay for based on your income.
Assess Your Income
A car purchase naturally costs a lump sum; looking at how you can spread your finances to meet this need is vital.
You can consider all the available budgeting strategies starting with measuring your available finances.
The widely accepted rule of thumb is that monthly installments for the car should not exceed 15% and 20% of your gross and net salary, respectively.
If you instead choose to pay a down payment, ensure it is not over 20% of the car’s purchase price.
Finally, if you qualify for a loan, repayment should not last above 48 months.
Can You Afford It?
To paint a picture, here is everything you might need to pay for during the car purchase: front payment, car deposit, monthly installments, annual payments, and renewals alongside covers and necessary repairs.
It is best if you pick a plan you can afford.
For instance, you can choose a well-suited affordable insurance plan.
You can also look into second-car options if available.
Also, leave the option open if you need to split the cost of the car with your partner to afford it.
To Sum Up
Cultivating the discipline of actively working on budgets as a family can be very rewarding.
All you need to recognize is that it takes work to stay on budget to pursue a financial family goal successfully.
Budgeting for your next family car will ensure you stay grounded in getting a car you need and can afford.
