Are you wondering if you can afford a car loan? Many adults were never trained on the process of keeping a budget, although the benefits of learning how are numerous. Creating and sticking to a budget can give you control over your money, so that you control it rather than it controlling you. This can result in improved self-esteem, which can impact a variety of areas in your life. Here are the basics to creating a budget, as well as the items you'll need to consider if buying a car.
Write down your income and your expenses
There are many computer programs available to help you create a budget, but your first budget doesn't have to be any fancier than a list made with pen and paper. You'll want to list your monthly income sources first. For most this is the income from employment, although other regular income sources, such as rental property or alimony, can be included as well. After determining your income, you'll write down all your expenses. Expenses are the items that you must pay for each month. Common expenses include utility bills, rent, and food. Of course if you are already making payments on a car loan, you'll want to include those as well. For irregular items such as certain taxes, you'll want to plan to save up a certain amount of your paycheck each month, so you'll have the money available to pay the expense when it comes due.
Adding in the car-related expenses
After you have accounted for all your expenses, you should have a good idea as to whether you have a surplus (extra money) or debt (not enough money). If there is debt, you may need to look at your expenses and see where you can cut how much you spend, or increase your income by taking a second job. If you have extra money you'll be able to take on some of the additional expenses of owning a car, such as gas, insurance, the car payment, and routine maintenance.
Making a budget is easy, but sticking to the budget can sometimes be difficult. You must have the discipline to say to temptation to spend if you do not have it. By doing this you will learn to live within your means.