Money Minute: Get Tips and Resources for Buying and Maintaining a Car

Budgeting For Buying And Maintaining A Car
· By knowing what you can realistically afford, you can set a car budget that will help you avoid overpaying for a car and getting yourself into financial trouble.

· The first and easiest step in setting a car budget is to determine what your income and expenses are. Remember, you are going to want to base your income on what you actually take home (after taxes) and not your gross pay.

· Much of your budget will be dictated by your personal circumstances. If you already have a lot of expenses—such as a mortgage or rent, student loans, food, etc.—there isn't much you can cut from your budget.

· If, on the other hand, you have expenses you can and are willing to cut, like your entertainment or vacation budget, then you can afford more for a car.

· The next, and much more difficult step, is to determine how much you can afford and want to spend on a new car. Just because you can afford an expensive car doesn't mean you should buy one. You may have other priorities to consider, or may want to account for unexpected expenses down the road.

· The general rule of thumb is that you shouldn't spend more than 15% of your monthly income on your car loan payments—and some even say that is generous.

· Unless you are very comfortable with debt, the larger the down payment you can make, the better. It will cost you less in the long run because there will be less interest to pay.

· Shoot for a 20% down payment if you can.

· Budget for the following recurring costs: maintenance, car insurance, gas, inspections, state registration renewal and parking.

Additional online resources from KeyBank:

Auto Loan Details
What Is an Auto Loan?
Auto Loan, Boat Loan, Motorcycle Loan
How Do I Save Money?

(This material is presented for informational purposes only and should not be construed as individual tax or financial advice. Please consult with legal, tax and/or financial advisors. KeyBank does not provide legal advice. KeyCorp 2017. KeyBank member FDIC.)

Make Sure Budget Basics Are Part Of College-Bound Checklist

All across the country, college-bound students and their families are running through the move-in day checklist:

Sheets and towels? Check.
In-room refrigerator? Check.
Shower caddy? Check.

First-year-away-from-home-budget – Probably not even on the list.

It’s no secret higher education is an increasingly expensive investment that can affect students’ and their families’ personal finance, starting with saving for college through to paying off student loans.

Most families actively involved with helping to pay for college have already come to terms with the big-ticket items tuition and fees. (According to the College Board’s most recent survey of college costs, tuition and fees at a two-year public school average $11,520. That tab soars to $45,370 for private four-year college.)

But late-stage sticker shock can still set in as every day miscellaneous expenses start adding up, with the average student spending about $5,000 on additional expenses:

* Laptop or tablet, with accompanying software updates.

* Everyday essentials such as laundry and cell phone service.

* Entertainment, whether it’s coffee-shop caffeine and snacks to fuel an all-nighter (and dorm meals missed while recovering from same) to on-campus shows to off-campus adventures

* Travel to and from home

KeyBank has the following tips for the college-bound, their parents and others who are helping them along the way:

The first step is taking a hard look at all anticipated expenses. Then, break those costs out between needs and wants.

The “needs” expense column includes costs such as books and supplies, mandatory fees such as lab and dorm fees, travel expenses for trips home during the school year.

The “wants” expense column can quickly fill up with small items – the occasional meal out, the occasional trip to the movies, passes to school sporting events – to more expensive ventures such as social group membership fees or accompanying a friend on a spring break vacation.

The goal for the college-bound and their families is not limiting spending on “needs” and do without things someone might want. Building relationships is a big part of the college experience, and building relationships starts with shared experiences such as social events, impromptu off-campus adventures and the like.

The bottom line is this: Think through what it will cost to cover the things your college-bound child will need. Drill down into the details so there are no fiscal surprises. Then have a frank conversation with your college-bound child about what he or she can spend on items in the “wants” column.

Doing a deep dive into wants and needs is a first step toward financial wellness. At KeyBank, financial wellness means having the confidence to dream big as the result of knowing your current financial situation, your financial goals and having access to tools and insight to attain those goals. KeyBank’s financial wellness program, powered by industry leading personal finance software, helps clients to take control of their finances.

Armed with complete and realistic financial picture, families can develop budget and spending plans to help the college-bound family member to manage their money.

Budget basics

When you think about it, there’s no real difference between a real-world budget and one for college students. Budgets are based on income and expenses – and the occasional incentive for boosting the former and sticking to the latter.

The key to a successful budget, especially for a college student, is to keep it simple, realistic and goal oriented. First, review expenses – what your student needs and what your student might want. Then, determine available income, which can be money from summer jobs, graduation gifts, a parent-provided regular allowance or proceeds from a part-time job on campus or in the community.

Finally, add in savings goals so students learn the value of exercising restraint on today’s spending to create future financial flexibility.

For example, that student budget could include a savings incentive – a special senior year vacation, a new (or new-to-them) vehicle or gift cards to help the new college grad settle into their first post-college apartment.

Yes, saving a significant amount of money can seem insurmountable. At KeyBank, our experience is small, consistent savings efforts really do add up over time. Saving $5 a week every week for four years is more than $1,000 tucked away at graduation. Parents could help support the savings incentive by matching their students’ savings goal.

Remember, the primary purpose of college is to help students gain an education that will prepare them for a fulfilling career full of great earning potential. By helping college-bound offspring make strong financial decisions throughout their college experience, parents can have peace of mind knowing they have given their college student a head start on financial wellness.

Additional online resources from KeyBank:

Making College More Affordable
Three Hidden Costs of College
College Savings Account, 529 College Savings Plan
College Savings Calculator

(This material is presented for informational purposes only and should not be construed as individual tax or financial advice. Please consult with legal, tax and/or financial advisors. KeyBank does not provide legal advice. KeyCorp 2017. KeyBank member FDIC.)