Budgeting For Car Repairs To Keep You Moving
When it comes to budgets, most of us feel uncertain about creating one. Others of us may have no problem creating one, but we can never seem to follow it. I am going to be honest, a budget only works if you stick to it. That is why It is important that you create a budget that you are going to be able to maintain. You can create a budget for all types of reasons.
While it is a good idea to create a comprehensive budget, you may need to focus your budget on specific needs. Those needs may be budgeting for car repairs or reducing credit card debt. I found that the more I understand about budgeting made it easier for me to actually sit down and create one. Continue reading to find out more about budgeting for car repairs.
Can I Create a Budget Just For Car Repairs?
There are many different types of budgets. There are so many that you could easily become overwhelmed. My suggestion for creating a budget is to understand your ultimate goal. You cannot decide the path to take for your budget, if you do not know what you want to achieve. Since this article is about budgeting for car repairs, I am going to focus on a budget that helps you plan and save for something specific, such as car repairs.
Saving For a Specific Item
You must determine how much money you need to spend. If you are budgeting for car repairs, you must decide if you want to save for a specific repair that you know is coming, or if you want to have money set aside for any repairs that may occur. Depending on which of the two it is, that indicates how long you have to save money. For example, if you know that you need to have a costly repair in the next few months, you may only have three months to save.
Once you know how much you need to save and how long you have to do so, you are better able to determine how much you should save per month. This also helps guide how much spending you need to cut. After you do this, you need to look critically at where you can cut spending. There are quite a few ways that you can cut spending that you may not have considered. I will discuss that further later in this article.
Should I Buy a New Car Or Repair My Old One?
Deciding if you should continue to repair your existing car or buy a new one is partly a numbers game. One of the first things you should do is find the estimated value of your car before you make any repairs. There are many sites where you can find this information. Keep in mind, if the repairs of your car cost $1,000, that may not add $1,000 to the value of your vehicle. It also depends on the condition of your car and the mileage of your vehicle. The repairs may add half of the cost of them to the value of your vehicle.
If the repairs cost more than your vehicle is worth, you may not want to continue to put money into your car. If you are constantly having to repair your vehicle, it also may not be worth it to you to repair the vehicle. The constant repairs may also be adding stress to your life which also makes them not worth it. If you are considering purchasing a new car soon anyway, it also may not be worth it to you to have it repaired.
Now you should make the decision if you should be budgeting for car repairs or budgeting for a down payment. If your vehicle can last a few more months without the repairs, you can save the money you were going to use on the repairs and save as much as you can for the next few months. You can combine that saved money plus the trade-in value for your vehicle and you may have a decent down payment for a different car.
What Is A Budget?
You find yourself in a position where you do not know much about budgeting. You may not want to admit it because it embarrasses you. Do not be embarrassed. If you are not taught how and why to budget, how would you know anything about it. Here is your opportunity to find out all the information you need about creating a budget.
Definition of Budget
It is important for you to fully understand the definition of a budget if you would like to create one of your own. A budget is understanding your total income and total expenses and being able to balance the two. Having a budget gives you an understanding of where you are spending your money and how much you are spending.
List Your Expenses
If you have not listed out all the places you spend money each month, then you probably have no clue the items on which you are spending money. The easiest way to do this is to list all income in one column. This should include all of your income, which includes child support, wages, and interest payments. After listing all of your expenses, you should add up all expenses together and get a total.
In the next column, list all of your expenses. You must list all expenses and not leave one out. All you have to do is list all expenses, do not worry about anything else at this point. Simply write them down. Once you have written them all down, then you should add them all together. Now, you have a total figure of all of your expenses.
Then you subtract the total of your expenses from your total income. The goal is to have a positive number, but if you do not, that means you are spending more than you earn. This means you are currently not in a position to save any money. If you are interested in budgeting for car repairs, then you need to begin cutting your spending.
What Is the 50/20/30 Rule?
I mentioned one type of a budget above and I will take a few moments to explain a different one. This one is called the 50/20/30 budget. Now keep in mind with this budget, it does not matter how much money you make because this is based on percentages.
When you look at your budget, 50 percent of the money you bring home with your income, goes to the items you need. Then you should take 30 percent of your income and put it towards the items you want. After that, you have 20 percent left and that should go to your savings. The 50/20/30 percent rule is a great budget to get you started and meet your goals, no matter what they are.
The Envelope Saving Method
A great tip to help you get used to the idea of budgeting is to use cash in envelopes. First, put your money in savings when you are paid, then pay your bills and then the money you have budgeted to spend on your wants you should put in an envelope. You can spend that money until it is gone. Once it is gone, you have no money left to spend for the rest of the month. When you are budgeting for car repairs, you may have to put a little more money in your savings account. If you know that you are saving for something specific, you should put more money aside in your savings account.
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The First Step Is Taking Control
While a budget is mainly balancing the difference between your income and expenses, the first step is you making up your mind to take control of your budget. When you build a budget, it is important that you start from the right place. Creating a budget gives you a way to change the way you are spending money and cut your bills. It just makes good financial sense to have a working budget. A budget gives you a better way to understand the money you bring into your home. It also gives you a better understanding of how you are spending your money each month.
Why We Need a Budget?
There are a large number of websites that can provide you assistance to create a budget. Not only will they provide you forms that help you create a budget, but they also provide you many budgeting tips. With all of this information just a click away, there is no reason why you should not use it. I know many of us see a budget as a form of control and it prevents you from buying the items you want.
However, that is not the case at all. A budget actually puts you in control. It is difficult to begin budgeting for car repairs if you do not have a clear understanding of your true expenses. You probably spend more money than you realize each month. You probably spend money on items that you do not even realize. To gain an understanding of what that means for your overall monthly spending, you need to see it in a budget.
The most challenging part is gathering all the information on what you are spending money on. Once you have all that documented, it is much easier to create a budget.
How Do I Gather Information?
I have talked a lot about listing out all of your expenses, but how do you go about capturing that information? How do you know that you are not missing any of your expenses? Those are all important questions that you should answer when beginning to create your budget. It does not matter if you are trying to create a simple budget or budgeting for car repairs, you should make sure you keep your budget goals in mind.
Look at Your Bill Receipts
One of the ways you can gather all the information you need is to look at the bills you have paid over the past few months. You can look at your bank statement and write down all the bills you have paid. This helps to make sure that you are not forgetting any of the bills you pay. It can be easy to forget a bill, especially if you have bills that are automatically paid.
Using a bank statement is a great way to track all of the bills you pay per month, but there are other bills. Those are the bills that are the most important for you to remember because they do not show up as part of your regular bills. These are the expenses that you pay for incidentals that you want, but may not need. You should also make sure that you do not forget the donations that you make. When you are creating a list of expenses, you have to make sure that you capture every single one of those expenses.
How Do I Prioritize?
Once you list all of your expenses, you need to put them into categories. It is important that you understand where your expenses fall in order of need. You should create categories with headings that include items that are Must-Haves, Important, Nice To Have, and Misc. You should also create a category for Unknown Expenses.
Various Categories of Expenses
Once you create each of these categories, you should put each of your expenses into a category. Every expense should have a place to go, so you have to decide on a category. Even when you are budgeting for car repairs, you should start with your existing expenses and then put them into a category.
This may be something you already know, but I will say it, just in case. Items such as mortgage/rent, car payment, loan payments, and minimum credit card balances are must-haves. Items such as food, clothing, and utilities are important.
Once you have your expenses in categories, you should rank the items in each category. You should put them in order of what is the most important item in the category. You should go through each category and prioritize everything. This may help you make quick decisions about items that you do not need. These items may be in your Misc or Nice to Have categories. It is possible that as you move through your prioritization, you may discover that you rethought how important an item is or is not.
Why Do I Have To Make Tough Choices?
I am not going to sugar coat this for you, but you are going to have to make some hard decisions. An even harder truth for you to accept is that these decisions are going to be emotional ones. That is what tends to make them so hard. But, when it comes to budgeting, you usually have to make tough choices. That is the core of creating a budget; making tough choices.
Cut Your Spending
When you are trying to create a savings budget, or budgeting for car repairs, you may have to make some difficult decisions about what is really important. Most of the time, you cannot change the amount of money you earn. The best way to create any savings for yourself is to reduce your spending. That is where tough choices have to be made.
I know I have said it several times in this section, but tough choices must be made. I keep saying it because I want you to understand that while the act of creating a budget is easy, maintaining it can often be hard. This is when you have to remember why you created your budget in the first place. This is when you need to remember what is important.
How Do I Reduce Spending?
You have gotten to a point where you have decided that you want to create a budget. You know why you want to create it and how much money you want to save. You also have accepted that you must reduce your spending in order to save more money. If you are like most of us, you have decided that you want to reduce your debt, increase overall savings, and emergency savings. In addition to that, you may have something specific, such as a car repairment for which you want to save. That is quite a list, but with the right mindset and budget, you can achieve it all.
Start by Making Cuts in the Least Important Category
You have created your categories and ranked the expenses in each one. Now is it time to see if you can cut expenses within each category. I would start with the least important category, the misc one. Is there anything in that category that you can cut immediately without having too much heartburn or concern over? Are there items, like a gym membership, for which you are paying that you are not using? If so, cancel it.
Do you have any other subscription services that you are not using? Cancel those also. Those are some quick ways to save that may not impact your life at all. If you were not using them, you probably will not notice once you cancel them. It does not matter if you are saving or budgeting for car repairs, these are some quick ways to cut expenses.
What Other Ways Can I Cut Expenses?
When budgeting for car repairs, you may need to see more significant savings, so you have to make some more cuts. Another somewhat painless way to cut expenses and save money is eating out. You are probably going to be surprised when you see how much money you spend per month eating out. I mean all occurrences, which include breakfast, lunch, dinner, coffee, and snacks.
If you go to happy hour, that counts as eating out, too, even if you are not eating anything. Take a look at how often you buy some type of food or drink out per month and reduce it. When I did this with my budget, I found that I purchased some food item, mainly coffee, out every day of the month. It was unreal how much money I was spending. I am willing to bet you will find the same thing for yourself.
It may be too much of an impact to cut those occurrences out completely, so reduce the number by half. You must be sure to include coffee trips, and snacks from the vending machine. Yes, I am sorry to tell you but they all count. Cut them in half and see what happens. I believe you will be surprised by the amount of money you save. Once you see the savings, it might encourage you to make more reductions to how much you eat out.
How Do I Save Money?
I have mentioned a few times that the best way to save money is to cut expenses. If you follow the simple steps I outlined above, you are well on your way to saving money. There are some other ways that you can save money. The first way is to bring in more income. Have you considered finding a side, or part-time, job? Perhaps you cannot get a part-time job that takes you out of the house, but there could be other ways to make money.
Sell Some of Your Old Things
You could sell items that you have around the house. If you are like most people, you have items laying around that house that you do not use. You may even have some things that you purchased and they are still in the boxes. I am slightly embarrassed to admit I have some items in my garage that have never been opened. You know how it goes, you see the item in the store and you think you just have to have it. You bring it home and it sits in a corner of your room for a few months. Eventually, you walk over to it and pick it up and wonder what in the world were you thinking?
Instead of continuing to store those items in your garage, sell them. There are many websites available on which you can sell items. Some websites sell specific items such as books or kids clothes. There are resale websites for high-end clothing and electronic items. There are also generic websites on which you can sell just about anything. It is a quick and easy way to make some extra money which could go a long way towards budgeting for car repairs.
Other Ways To Save Money
Bringing in extra income is great but what if you cannot make that happen? There are other ways you can cut down on the money you pay in bills. There are some extreme ways such as moving to a home where you spend less money a month for rent. You can also change your auto insurance so that you are only paying for liability instead of full coverage insurance. Again, these are extreme ways to reduce spending.
Reduce the Temperature
There are some other ways such as changing the temperature on your thermostat. If you simply change your thermostat by 2 degrees, you can save hundreds of dollars a year.
In the winter, decrease the temperature and in the summer, increase it by just a couple of degrees and you will see drastic savings in your heating bill.
It may not be a noticeable difference to you in your house.
Save on Electricity
You can save money on your electricity bill by switching all of your lightbulbs over to energy-efficient ones. You can also make sure that all of your electronics are unplugged when you are not using them.
It may seem silly since they are not using power if they are turned off. That is not quite the case. Any electronics that are plugged in are using some amount of power. Unplugging that equipment ensures that there is no use of electricity.
Making these small changes can help you significantly while you are budgeting for car repairs.
Open a Savings Account
Finally, another great option is to open a savings account. Not only will you save money, but you will also learn how to manage your money.
Conclusion
I have talked a lot about general budgeting, including budgeting for car repairs in this article. I have mentioned the challenges that go along with creating a budget and I want to remind you that it is not always easy to stick to a budget. However, if you keep your end goal in mind, that can help you stay the course when it gets challenging. You have to get your mind in the right place when you are creating a budget. If you do not do it for the right reasons, you may not be able to stick to it.