Maintaining a car isn’t cheap, and many of us would love to spend our money on things that have nothing to do with spark plugs, oil changes or engine coolant. But let’s face it, owning a car isn’t all fun and games — we all know that somewhere down the line, that car is going to costs us, both mentally and financially. But what if you could take some of the guesswork out of budgeting for long-term car costs?
Purchasing an extended warranty now can protect you later in the event that unforeseen vehicle repairs arise. According to AAA, the average car maintenance, tire and repair costs amount to $99 per month. Outlining a long-term financial budget for taking care of your vehicle can help you avoid these out-of-pocket expenses and allow you to set aside money every month for car expenses (because we all know they’re bound to happen at some point or another).
From finding the true cost of ownership to sorting through car warranty plans, here are five ways to budget for long-term car maintenance costs.
1. Stop Spending Without Saving
Spending money without any concern for the rest of your budget can kill your finances fast. That’s why it’s important to create a budget so that you can save money for the expected, as well as the unexpected. Creating a budget means planning for important things as well as leisurely expenses, like going out to eat or going to the movies. If you budget the right way, you can do everything you need to do and what you want to do. So stop spending every penny you make and start saving.
2. Use What You Know
If you’ve had your vehicle for a while and you’ve been keeping it up by getting regular oil changes, changing the filters and rotating and balancing your tires, find the receipts and tally up exactly how much it cost you to maintain your car over the last year. Look for receipts from auto shops, credit card statements and bank statements, and determine how much it might cost you to keep it another year. Once you know, you can factor that number into your budget so you’re not completely in the dark when it comes to how much you’ll be spending on your car.
3. Figure Out the Cost of Ownership
If you haven’t owned your car for that long or you didn’t save any receipts from your trips to the auto shop, don’t worry. You can still figure out the cost of ownership by using a tool like Edmunds Inc. True Cost to Own Calculator, which allows you to select the make, model, year and style of your car. The calculator will break down the cost of owning a certain car over the span of five years, including expenses like depreciation, taxes and fees, gas, insurance, repairs and maintenance.
With a snapshot like this, you can easily break down your expected expenses by month and allocate a certain amount of your income to cover those expenses. Budgeting like this can put you ahead of the curve and help you avoid the headache of trying to scrape together cash for an expensive repair you didn’t prepare for.
4. Create an Account Just for Car Expenses
Before you save for anything else, save at least 10 to 15 percent of your income and put it away for a rainy day into an emergency fund. This can help offset expensive car repairs and keep you from going broke just to keep your car on the road. You can also create an additional fund separate from your emergency fund and call it your Car Maintenance Fund. Use it only for car-related expenses and make sure there’s always money in it because you never know when a part will need replacing.
5. Purchase an Extended Warranty
When your car’s warranty runs out, maintenance costs can pile up pretty quickly. That’s why you should seriously consider purchasing an extended warranty to help you keep car maintenance costs somewhat predictable. That way, you can budget for other important things like rent or mortgage, insurance and other reoccurring bills. Car warranty plans can save you thousands of dollars in repair bills and cover things like oil changes, free tire rotations and 24/7 roadside assistance, including free towing, lockout service and fuel delivery. You also get the added benefit of rental car reimbursement with certain carry warranty plans.
Budgeting for long-term vehicle maintenance costs doesn’t have to be difficult, especially with the right extended warranty plan and a fine-tuned budget. If you want your car to last for the long haul, but don’t want to go bankrupt doing it, start budgeting using the above tips and find yourself an affordable extended warranty or car warranty plan to help you save thousands every year on unavoidable car repairs and maintenance costs.
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