How to Save for a Car as a Teenager
Planning for your first car.
Turning 16 is especially sweet for one reason: driving. A driver’s license is your passport to friends’ houses, the movies or a late-night donut run. But without a car, you’re not going far. Maybe your parents plan to get you a car, but until the keys are in your hands, you don’t really know for sure. That’s why, if you want your own set of wheels to get around, you need to know how to save up for a car as a teenager.
Whether it’s new, used or a hand-me-down, a car is no small expense and saving for a car as a teenager isn’t going to be easy. With school, any extracurricular activities and a part-time job, you’ve got a lot going on, so scratching enough cash together to buy a car will probably take some time. With some simple savings tips and good spending habits, you can be cruising behind the wheel of your own ride soon.
Try looking at this savings journey as a road trip. It’s going to take a while, some interesting events will take place along the way, and in the end, you’ll arrive at your destination ready to enjoy your time there.
Know the destination
Your first step is to set a savings goal. Just like a road trip, you need to know where you’re going if you’re ever going to get there. When it comes to a car (or any other major purchase), it helps knowing what you’re saving for and how much you need. Do you want to buy a reliable used car? You’ll need a few thousand dollars. Want a newer ride? You may need a bit more cash for a down payment so your monthly payments are reasonable. These online tools can help you figure out how much you can expect to pay for the car you want—you’ll even be able to find potential financing options. Only then will you know of how much you should put away in savings.
Plan your route
Once your savings destination is set, you can start figuring out how you’ll get there. Obviously, if you want to save money, you need to have some money coming in. A part-time job is a reliable source of income if you can manage it with your schedule. Where you live could affect how much you’re making. The minimum wage varies from state to state, so find out how much you could expect to earn in a traditional part-time job like retail or food service. Whatever job you end up finding, it’s important to know what to do with the money coming in.
If you can start saving before turning 16, you could have save less per paycheck and have a bit more money to spend however you like. For example, if you’re 14 and put aside $300 per month for 2 years, you’ll have $7,200 to put toward a car by the time you’re old enough to drive.
But how do you save for a car at 16? Maybe you couldn’t find a job before or you didn’t start looking for one until you turned 16, but you can still save. You may just need to be more aggressive in your saving and put more of your paycheck toward your goal. If you save $600 month, you will have $4,800 in your account in just 8 months. You may not find the most glamorous car for that price, but you could certainly find a practical used car online.
Have a place to park your money
When you’re on a road trip, it’s easy to be tempted by tourist trap detours. You have to ask yourself if seeing the world’s largest ball of yarn is worth the delay to your destination. And you should ask yourself the same questions while saving. Is going to the movies every week worth having to wait another month or 2 to save enough for a car?
Consider opening a savings account dedicated to your savings goal. You could even name the account something like “My Future Ride” or “The Matt-mobile.” (Pro Tip: “Your Name”-mobile works no matter what your name is—even if it doesn’t rhyme with “bat”). You can avoid the temptation of dipping into your savings and getting off course by having your money in a safe place. That way your savings are ready when you are.
Rules of the road
You wouldn’t drive without knowing the basics—which lane is for passing or what those yield signs are for. Much like the rules of driving, the basics of saving may seem simple, but they could help you avoid big mistakes.
As mentioned before, a savings account can help you avoid the temptation of spending your money on something else. Once you put money in the account, consider it off limits. Then, if you’re earning a consistent paycheck, consider putting the same amount in your savings each payday—no matter what. For example, you could save $150 of every paycheck, whether the check is for $175 or for $500. That way, you’ll see consistent progress toward your final goal.
Another simple way to stay on the right path to reaching your savings goal is to spend smart. Instead of spending close to $20 at the movie theater, split the cost of a $5 movie rental with friends. Or maybe buy a used video game system instead of a new one. Also avoid impulse purchases. Just think, every dollar you spend on something else is a dollar not going toward your new car. Just making some slight adjustments to your spending behavior really help your savings grow.
Pick up speed
Once you start saving, you may be looking for more ways to put money away toward a car. Consider selling some things you won’t miss. A gaming system you haven’t played in a year, clothes you may not wear anymore or old toys some kids might like could all make a dent in your savings goal.
You could also offer to pick up some extra chores around your house or for your neighbors if they need any errands or work done. Wash a car here for $10. Mow a lawn there for $25. These small paydays can add up if you’re willing to put in some extra work. When you look, there are lots of ways you can save as a teenager.
Arriving at your destination
Once you have saved enough to buy a car … Congratulations! You did it! Now comes time to buy the car. Don’t be afraid to ask for a better price. The worst a seller can say is “no,” and you’re no worse off. Then you could put any leftover savings toward insurance, gas and maintenance.
Bringing it home: How to save for a car as a teenager
- Set a savings Goal
- Find a renewable source of income
- Avoid needless spending
- Find additional sources of income when possible
- Buy your car
Saving for a car as a teenager may seem daunting, but with patience and consistency, you can reach your goal before long. With these simple car-saving tips, you’ll soon enjoy access to the open road. Then you can choose a new destination to start saving. Now that you know what you need to do to save, you’re ready to tackle anything.
This site is for educational purposes. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.