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How to Make a Household Budget to Prep for a Car

How to Make a Household Budget to Prep for a Car

Car loans, like most things in life require preparation if you’re to get the best out of them. Part of that comes down to the application itself but partly also comes down to affordability, having savings and a decent down payment. All those elements can be created using a budget.

 

We asked our Vineland auto loans team to outline how and why to create a household budget to help you prepare for your next car loan.

 

Create a household budget

 

We recommend household budgets a lot on our blog, and for good reason. It helps you assess where you are and shows you in black and white where and how you spend your money.

 

It’s the cornerstone of fiscal management and something we recommend everyone create.

 

Here’s how.

 

Create your budget spreadsheet

 

Use a free spreadsheet program or your favourite office program to create your household budget.

 

Set one column up as income and a second as outgoings. Add a third for debt if you have any.

 

Add all your household income into the income column and set a total at the bottom.

 

Add all your household outgoings into the outgoings column and set a total at the bottom. Include all debt payments in your outgoings.

 

Add all your debt in the third column, most expensive at the top and set a total at the bottom. Add the interest rate as a percentage next to each debt so you know which is the most expensive.

 

Subtract your outgoings from your income to calculate your disposable income each month. This is how much you have to play with.

 

Allocate savings

 

Everyone needs an emergency fund and if you don’t have one already, now is a good time to build one.

 

If you have disposable income left each month, set aside a reasonable amount to put away for an emergency fund. Set up an automatic payment into a savings account so you don’t forget.

 

Set aside another portion of that disposable income for a down payment. Use the same savings account and note amounts on your budget or use a different account.

 

If you don’t have disposable income

 

If you don’t have money left over after outgoings, you can use your budget to identify savings.

 

It is much easier to see exactly where you’re spending your money now it’s on a spreadsheet so you should be able to see where to save. Subscriptions you don’t use, gym memberships you don’t use, cable subscriptions you hardly utilize and other expenses.

 

We all have areas where we can cut back.

 

You have two main options:

 

Cut back a reasonable amount you can cope with for the long term. Or, much more severe cutbacks you can sustain for 3-6 months where you can pay down debt to even things out or save for that car loan down payment.

 

Whichever you choose, identify the areas where you can cut back and do it.

 

Just remember, a budget and cutbacks are supposed to be flexible. Stick to them as much as possible, but don’t beat yourself up if you decide to take the family out to dinner or go on vacation.

 

Life is still for living after all!

 

Once you have your down payment saved, come see our team. We’ll be happy to help.

 

We will use all our skill and experience to deliver the lowest possible Vineland auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

 

Categories: Auto Loan

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