Owning a car is a big financial responsibility. Many drivers focus on the cost of buying a car and need to consider the true cost of ownership. When you own a car, you should save money to cover unavoidable and potentially unexpected expenses. Here are five things you should save money for if you own a car.
1. Maintenance Costs
One of the best ways to protect your automotive investment is with regular maintenance. Skipping out on maintenance because you don’t have the money to cover the costs can snowball costs. It is best to be prepared to pay for maintenance instead of repairs. According to the National Highway Safety Institute, every year, millions of people are injured on American roadways, and about 33% of those injuries are due to unsafe equipment.
Regular maintenance ensures your vehicle’s performance and can reduce the risk of equipment failure. Save money out of every paycheck toward vehicle maintenance.
2. Accident Costs
You may be a safe driver, however, the risk of having an accident is still very high. The financial fallout from an accident can also be high. If you are injured in an accident, you may not be able to return to work right away. According to Bankrate, costs for a car accident with an injury that resulted in disability costs, on average, $101,000. In the case of a fatality, the average cost was $1,750,00. The potential for personal economic impact includes medical costs, wage loss, property damage, and administrative expense.
Accidents can be costly, even with full coverage. There is a waiting period between filing a claim and receiving payment. You should have money saved if you are impacted by a vehicle accident and unable to work. It can happen to you. PolicyAdvice says it happens to 130,000 people involved in truck accidents. Save money and be prepared for worst-case scenarios.
3. Unexpected Repairs
Proper maintenance reduces the risk of unexpected repairs but does not eliminate the risk. There is always the chance that your vehicle will need repairs. Every driver must have money saved just in case their vehicle needs repairs. A slush fund for repairs can reduce stress and ensure that needed repairs are done promptly.
If you depend on your vehicle to get back and forth to work, you must have money to repair it when needed. Earmark a few dollars a paycheck to cover repair costs
4. Taxes, Registration, Insurance, and Fees
In most states, vehicle registration is valid for one year. In some states, it is valid for two. In either case, it is a cost you will have to pay to keep your vehicle legally on the road. Putting money on the side every month to cover the cost of registration, insurance, taxes, and fees can make covering those expenses more budget-friendly. Registration costs vary depending on the book value of your vehicle and the state you live in.
You can’t avoid taxes and other costs, so it is best to prepare for them. Save for these recurring expenses.
5. Fuel, Parking, and Tolls
Other recurring expenses you will need to cover for your vehicle are fuel, parking, and toll costs. These everyday costs can add up quickly. Create a budget by tracking these costs for a month. Once you have tracked the costs, you can add those costs to your budget. Fuel and other daily costs for operating your vehicle can sneak up on you and throw your budget out of whack.
Owning a vehicle comes with a lot of hidden expenses. Adjusting your savings budget to reflect those expenses will keep your budget on track. Learn more money-saving tips today.