Need a new car, plan early

In Latest, Money cents by Donna Willan

Need a new car, plan early

So my car is the same age as my daughter, and she turns six next month – hmm how long can a car last, bearing in mind this is just a little Hyundai Atos. I guess I’ll be needing a new car in about four years. Now one of my basic money rules is ‘never take car finance’ – it’s always expensive!

So I need a plan that will give me cash in four years’ time – I need a new car fund!

Three things are troubling me: how much does my new car fund need, how will I get the money, and where should I invest this money?

Firstly, what is the target for my new car fund? I don’t need a big car, but I do want a reliable one; second-hand is fine, but not too old. I did my research and this is what I found – R125 000 today will give me some decent options: a three or four-year-old Honda Jazz, or a two-year-old Renault Sandero.

OK that was easy, now where will I get the money for our new car fund? If I save R1 500 a month for four years I’ll have R72 000 – I’m not there yet, but perhaps I can save wisely enough to “out-do” inflation. Fortunately, I just increased my working hours, so I have a little extra income every month, so I think I can do this!

Now where do I invest my R1 500 a month new car fund? I really don’t know what the best option is, so I need to ask around a bit more. I don’t think it’s shares because its relatively short-term – or maybe it is? Do I just add to my bond every month and use that as a “savings account”, or open a dedicated 32-day account? Right, I will do some more homework and let you all know what I have found on this one in a few weeks!

My next column is going to explore another ‘big saving’ I need to do – I turn 50 in 5.5 years’ time and I want to have an island holiday – how much do I need to save for that one?

Donna


The Just One Lap discussed buying a car, new vs. second hand here.


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