We often hear from customers how frustrated they are because their vehicle “always seems to be costing money!” Money they don’t have or, had hoped to spend on something more fun. The truth is, vehicles are expensive but not spending money when it is needed will make your vehicle MUCH more expensive than it needs to be. Your vehicle is an important part of your daily life. Think about the time it saves, the access it gives you to do what you want to do. Knowing the costs associated and planning ahead of time can save you from a vehicle related crisis and keep you on the road, living your life!
What does it really cost to own a vehicle?
What is your largest expense each month, besides housing? If you said your vehicle you would be right. Many people don’t realize how much their vehicle is costing them. They don’t really think about it until faced with a large repair. If that large repair can’t be avoided it may create a crisis. If you haven’t planned for the repair, it can throw all the plans you had for the month’s budget into chaos.
REAL costs of vehicle:
Depreciation: The difference between what you pay for your vehicle and it’s trade in value. This is important to consider if you are buying a new(er) vehicle. Vehicles lose between 40 – 60% of their value in the first year of ownership.
Insurance: It is tempting to only have basic coverage on your vehicle and your family. It’s important to know what you are risking by making this decision. Sign up for our insurance workshop for more information.
Gas: This is the most consistent cost and the one that most people think of first in relation to their vehicle cost. It is about 24% of your vehicle expenses so definitely worth keeping an eye on! (thinkinsure.ca) Calculate cost of gas: Fuel efficiency of vehicle, how many kms you travel every month and the cost of gas. Average driver covers 20,000 kns every year. Average cost of gas can be found on gas buddy. Liscensing and Registration:This isn’t a large cost but if not paid can cost you a lot! The decision of our government to stop sending paper reminders may have saved them money but is costing Albertans. Go to https://www.e-registry.ca/ to sign up for an electronic reminder. The cost of missing the deadline can be as high as $310.00.
Roadside Assistance: This is a cost similar to insurance.. You hope you will never have to use it but if you do it’s definitely worth it! AMA offers a few different packages and has some extra benefits as well. Good News Auto is now also offering roadside assistance through Castrol. Call for details! Costs of NOT having a vehicle: If you went outside today and your vehicle didn’t start what would be the costs associated with that? Loss of work, late to daycare, taxi/transit or rental, repairs, towing. Do you have a plan B?
Parking: This isn’t for everyone or a regular basis but it’s something to consider in the total cost of operating your vehicle. Preventative Maintenance: The most effective way to save money on your vehicle and often quite neglected. Everyone knows oil changes are important but do you know the other preventative maintenance needs for your vehicle? These are all found in your owner’s manual or you can access a general guideline through your shop. The cost of prevenative maintenance varies based on kilometres driven each year and your vehicle but a good average is $100.00/month. Tires: This cost only comes along every 3-4 years but can send your budget fishtailing out of control if not planned for. Replacing two tires or used tires vs. new tires—calculation? Vehicle Repairs: As vehicles get older there will be more repairs needed. A vehicle is either being rebuilt piece by piece or replaced. By keeping track of the cost of repairs you can decide when it’s time to replace your vehicle.
SPENDING PLAN? Before you can begin to manage your money, you need to identify what is important to you. This will give you a foundation to decide what you want to do with your money. Write down what is important to you and use your list to help you determine goals for your money. 1. Set goals: What do you want your money to do for you? Emergency Fund? Pay off debt? Save for a new vehicle? Go on a vacation? In order to reach these goals it's important to have every dollar working for you and doing it's job.
Step 2. Identify how much you have to spend on your vehicle and track your expenses.
There are a variety of ways to track your spending. Pen and paper, online tools like everydollar.com or this worksheet from Credit Counselling Society. (https://www.mymoneycoach.ca/_Library/docs/Expense_Tracker.pdf)
Step 3: Separate needs from wants: As you begin to track expenses you may find you are spending your money on things that aren’t necessary or purchased on impulse. This is where having goals really helps. If you have a goal in mind it is easier to stay on plan. Before buying eyelashes or lift kits for your vehicle it’s important to make sure you have the “needs” of your vehicle covered. The money your vehicle “needs” are often the things you don’t “want” to spend on your vehicle. The upside of taking care of your vehicle’s needs is you are less likely to run into crisis vehicle spending. This ensures the other parts of your pie aren’t eaten up by a costly and unexpected repair. Step 4: Design your budget Think back to the goals you set in Step 1. Your goals will effect your plan because you will have to put off some purchases or wants to be able to set money aside to reach your goal. Were you surprised by what you found when you tracked your spending? Is there a way you can lower your expenses or plan more effectively? Take a look at this article 20 Ways to Lower Your Vehicle Expenses for ideas to make your vehicle expenses fit your piece of pie! It's important to plan for larger and irregular costs for your vehicle. How much, for example, are you setting aside for tire purchase on a monthly basis?
Step 5—Put your Plan into Action You have set goals and determined the amount of money you have to spend on your vehicle. Now it ‘s time to put your plan into action! How are you going to reach the goals that you have set for yourself?
Do you need set up separate bank accounts for your vehicle?
Automatic withdrawl to savings account to save for irregular expenses?
Picture of dream car as your screen saver?
Step 6: Manage vehicle spending. Set aside time on a regular basis to review and modify the your vehicle spending plan. This will help you see if there is anything that needs to be adjusted or if you have allocated enough money to reach your goals. Make sure to build small rewards into your action plan as well. This will make the times where you get off track or when planning is "un-fun" a bit less challenging. There will always be times where crisis can't be avoided but there are ways to manage crisis. For example, take your vehicle in for a full inspection at least once a year. This ensures that you know any major repairs coming up. This gives you a chance to save towards these repairs. It also ensures you are catching issues in a timely manner and not spending as much on major repairs.