Owning your dream car is the second most significant investment after getting that dream home. However, in Singapore, the dream becomes seemingly unachievable due the extremely high prices of cars.
The cost of a car in Singapore is roughly six times the price in the US. On top of it, the other expenses like fuel, maintenance, insurance make it all the more expensive.
For you to own a dream car, you need a definitive action plan and start saving up in the right way and at the right time.
Here are four ways to save for your dream car in 2020:
#1 Work your way backwards
The most useful strategy to save for your dream car in 2020 is to work your way backwards. Begin with deciding on a dream car as the goal, and then start going back from there.
Once you know which car you want and how much you’d pay, you can start looking around at financing options.
Work out how much is needed down payments and how much the loan instalments will be.
When you know the amount, start saving towards it practically. You can work out how much you need to put aside each month to reach that figure for the dream car in 2019.
Your expenses should reduce, and your savings should increase. You can use many financing apps and tools to make these calculations.
One useful trick is to follow the 50/30/20 rule when it comes to budgeting. In this rule, 50% goes to needs, 30% to wants, and 10% to savings. Make the 30% go towards your dream car.
These tools help in all aspects – starting from comparing cars and costs to determining the amount that needs to be saved each month to reach the goal in 2020.
#2 Hold off for a year
This is an excellent way to save for your dream car in 2020. If you own a car currently, make sure that you have paid off the loan and it is free of expenses.
Instead of selling that car right now, it is ideal to wait for a year.
During the one year, you can continue accumulating the amount that you would have otherwise paid as the monthly instalment.
For instance, if the dream car will cost you S$400 per month as a monthly instalment, you must save the equivalent amount for a year.
It will help you save S$4,800 in a year. This amount can be added to the trade-in value of the old car and together, it brings you much closer to your dream car in 2020.
#3 Create a savings account, plan your saving goals and stick to it
The most significant way to save for your dream car in 2019 is to have a savings goal. After considering the amount that needs to be accumulated, a savings goal needs to be set. From there, you need to keep track with a savings plan.
The savings plan should be actionable, with a strict budget.
Limit your expenses in such a way that each month the savings goal is met. Reduce your expenditure and making saving mandatory.
The most effective way to do that is to put the money in the savings account as soon as you receive your paycheque. By doing this, you make your savings a priority.
Spend some time looking for a savings account with a higher interest rate. The interest you earn on these savings will help you save for your dream car.
#4 Explore the used luxury car market
If you don’t want to break the bank, you always have the option of looking at used luxury cars. Buying a ‘good as new’, secondhand luxury car saves you thousands of dollars in the long-run.
Bottom line, owning a dream car in 2020 is not necessarily going to be smooth, but it is not that difficult either if you use correct approach to saving.
*The advice offered in this column is intended for informational purposes only and not intended to replace or substitute for any professional, financial, legal, or other professional advice. If you have specific concerns or a situation in which you require professional help, you should consult with an appropriately trained and qualified adviser.