The cost of running a car is increasing every year. Despite that, do you always find yourself struggling to pay for your car insurance or tax, or end up paying monthly which costs you more in the long run? I know used to! I never remembered until it was on top of me and I’d have to scrape through until payday again. That had to change. I use such a simple method that I can’t believe I hadn’t thought of it sooner.
This strategy can be used for managing Christmas budgets and paying for luxury items, but in this example I’ll be using the mundane, but necessary evil, the cost of running a car.
If you’re lucky enough to have a brand new car, or a leased car, this might not apply to you, but for the rest of us, the costs of running a car can creep up out of the blue, at the same time, every year! How does that happen? Some of the annual expenses that we need to account for include:
- Tyres (check BlackCircles for prices)
- Breakdown cover
- Unexpected repairs
Just take a look back through last years bank statements or receipts and make a running total on how much you’ve had to pay just to keep your car running and on the road! Shocking right?!
So now you have a full idea of how much that’s all going to cost, and can see that’s it’s not something you’d want to pay for all in one go. How about if we split that up? What if we split it into a random number of payments? Maybe 12? I hope you can see where I’m going with this. It’s so simple.
Add up all of your annual expenses, even round the cost up to the nearest £10, divide it by 12 and put that amount somewhere safe each month ready for those inconvenient moments.
To make things easier. I’ve created this simple calculator to help you find out your annual car related outgoings.
What I’d recommend that you do is setup a separate savings account for your car savings and create a new standing order of your desired amount to go from your current account to your new “Car Savings Account”. I bank online with Lloyds and it’s so easy to do with them!
When those unexpected, expected payments rear their head, you can transfer the payment back to your current account to pay for them.
What about fuel? That’s another car related necessity obviously, but we’ll deal with that in a slightly different way over here.
TL;DR – Manage the Cost of Running a Car
- Add together last year’s cost of running a car
- Divide them by 12
- Create a new savings account
- Create a standing order for your monthly amount to your new account
- Withdraw/transfer money when required.