For a teenager, buying a first car is a big deal. A car means freedom and independence. Successfully saving for a car is also a big financial achievement. Whether you’re contributing to your P Plater’s savings plan or cheerleading from the sidelines, no doubt you’ll want to do all you can to help. We’ve put together some tips to help your P Plater rev up their savings plan.
How much should your P Plater save for a first car?
Getting clear on what your P Plater actually needs in a first car is a good starting point in deciding on a savings target. Assuming this is their first major purchase, it’s important to set a target that’s realistic and achievable. Sit down and discuss the following questions:
- Who will be using the car?
- How far will your P Plater be travelling?
- Where will the car be parked at night?
- To buy a new or used car?
- What does a realistic savings goal look like?
Before deciding on a dollar amount, don’t forget to factor in all the upfront costs of buying a car, such as car registration and car insurance. Car insurance for P Platers can be more expensive because inexperienced drivers are seen as a higher risk to insurance providers. It’s probably a good idea to also save up a reserve for some initial running costs too, such as petrol. There’s no use buying a car they can’t afford to run.
Saving tips for P Platers.
If savings are taking a bit longer than expected, there are some things you can do to help speed things up:
- Develop a habit – Savings can become a habit just like anything else. As habits develop, small changes in the brain take place to pave way for new procedural memory. So, the more often your teenager saves, the more natural it will start to become. Encourage your P Plater to add to their savings regularly, no matter how small the amount.
- Make the savings visible – Once they’re getting into the swing of things, one simple trick can help them stay on track. Research shows that the key to supporting a new habit is to make the signs of progress visible and tangible. For savings, that might mean having a savings scorecard or setting up a dedicated account with an app that makes keeping track of savings easy. Our fuss-free Purple Transactor Account could be a good option. There’s no minimum deposit and it comes with zero monthly fees and zero fees on card transactions.
- Dollar matching – If your financial situation allows, matching your P Plater’s savings once they reach their target could provide them with an extra incentive to stay committed to saving. If matching every dollar isn’t within your means, perhaps instead you could agree on a financial contribution that suits your budget once they hit their target.
- Encourage part-time work – A part-time job could go a long way to helping your P Plater save. Encourage them to look in your local area and online for part-time work. Your own network might also be a helpful group to tap into.
- Put savings on autopilot – Automating savings and eliminating the need for any decisions can reduce the risk of your P Plater venturing off course with their savings. By setting up the transfer of savings each month, extra payments made into the account are a bonus.
- Shop around for a good deal – As the purchase date draws closer, it’s a good idea to get a feel for where to find a P Plater car. Finding out when your local dealer has plate clearance sales or buying a demo car can save a few dollars. If you’re looking for a used car, do your research to see what the typical asking prices are for the models you’re interested in.
If your P Plater is a long way off their savings target and keen to get on the road, they could consider a car-share option like GoGet. It’s not the same as owning your own wheels, but it could help build up their confidence whilst they build up their savings.
This information has been provided without taking into account any of your objectives, financial situation or needs. You should consider whether it is suitable for your circumstances before acquiring this product.
All loans are provided by Beyond Bank Australia Ltd ABN 15 087 651 143 AFSL/Australian Credit Licence 237 856. © 2020.