If you're trying to save up a few thousand bucks for a new car — or a used car that is at least new to you — it helps to have a plan that keeps you disciplined and on schedule if unexpected expenses pop up.
If you're looking to purchase a vehicle, here's how to get your finances in order.
Step 1: Calculate your desired car payment.
If you don't want a car loan at all, the answer here is "zero." Skip to Step 2.
But for those who can't pay in full or who don't mind a car payment, start by calculating how much you can afford to pay out each month.
Make sure you leave some wiggle room for maintenance, such as oil changes or new tires, of course, or any change in insurance costs. While a car payment is perhaps the biggest single expense here, it surely isn't the only one.
Step 2: Calculate how much you need down.
Again, if you're paying in full then the answer is "everything." Now skip to Step 3.
For those looking at a monthly car payment, a host of Internet tools can help calculate how much you need down at the time of purchase. For example, a 2014 Chevy Cruze compact sedan starts at $18,345 with shipping.
The Auto Loan Calculator on Cars.com is a good one, because it allows you to easily customize fields including trade-in value, sales tax and loan terms to get a more accurate estimate. Bank of America also has a nice affordability tool that starts with the monthly payment instead of the sticker price of the car. This allows you to start with your budget instead of guessing on how much vehicle you can afford and working backward.
You can do an Internet search and find a host of others. But spend a few minutes testing different down payments and payment terms, and you'll quickly see how that affects your monthly expenses — and how much car you can ultimately afford.
Step 3: Decide when you want (or need) the car.
Once you know how much you can afford to spend, including down payments and monthly loan installments, the final element is timing.
Just remember that the sooner you want the car — or if your old wheels are unreliable, the sooner you need a car — the faster you'll have to save up the cash.
Don't be unrealistic or impatient here. For instance, if you only take home $4,000 a month but need a $5,000 down payment for the car you want and insist on buying that car next week … well, it isn't going to happen.
The obvious way to find a more affordable car is simply to look for a cheaper one. But delaying your purchase by a few months to build up more savings can also make a difference on your finances.
Step 4: Make savings mandatory.
Now we arrive at the hard part: sticking to the plan and saving what you need, by the time you need it.
The best way to meet a savings goal is to take out the guesswork and make it automatic, rather than debating every single purchase you make. It's not only less temptation this way, but also less stress.
Let's say, for round numbers, you need to save $5,000 in the next five months. If you have a direct-deposit paycheck, simply tell your payroll department that you want $500 sent to your savings account every two weeks, with the rest sent to checking as usual.
That way the savings happens on its own — and best of all, there's no risk you'll accidentally eat into those savings when you write a check for the electric bill or when you swipe your debit card at Chipotle. Some banks may even allow you another separate account free of charge if you even want to keep the car fund separate from your rainy day savings account.
If you don't have direct deposit, then you have to do it the old fashioned way: Either make a trip to the bank yourself or deposit $250 into a "car jar" on the dresser every Thursday after you get paid.
And save it first thing, before some reason to spend it pops up.
Think of this method as a kind of withholding, like the money set aside for health insurance or taxes. If you never know you have it and learn to live on a budget without it, the savings happen on their own.
Step 5: Save, but don't punish yourself.
Even if your savings are building "automatically," keeping your emotions in check across this process is easier said than done.
There's the guilt that comes with spending too much on something when you should be pinching pennies. There's frustration from having to say "no" to other things we want. And, of course, there's the fear that you won't save enough and will always be behind.
It's crucial to be realistic about what you can spend, and make a good plan … but after you have a structure in place, it's also important to relax.
If savings becomes a daily or hourly battle to pinch pennies, you can seriously stress yourself out — not to mention your spouse or children.
So, remember that while cutting out your twice-daily Starbucks run is a great way to save cash, it is perfectly acceptable to treat yourself to an iced mocha every week or two in order to keep your spirits up. Or, if you wind up skipping a beach vacation this year, it's OK to settle for a day trip to a campground with the kids instead.
Giving up luxuries shouldn't mean killing simple pleasures, too.
The bottom line is that saving money shouldn't feel like punishment. If it does, you're less likely to be successful at it.