Looking down the Road: Budgeting for Vehicle ... - Financial Highway

Nothing can harpoon your attempts at responsible financial planning like an unforeseen repair bill. If you are operating under a tight month-to-month budget, unexpected automobile expenses can, in one swift motion, throw your budget in the red, and jeopardize your entire financial plan.

Furthermore, failure to properly budget for anticipated vehicle maintenance ? oil changes, new wiper blades, tire upgrades ? can lead to you putting off needed upkeep, which in the long run will leave you stranded on the side of the road and your budgeting efforts in shambles.

For this reason, it is wise to start an automotive maintenance fund within your personal or family budget that will pay for anticipated expenses, and at the very least, provide some extra buffer for those times when you have to bit the bullet and pay for an unexpected ? and costlier ? repair.

As you likely already know, the best way to budget for future expenses is to analyze past expenditures, and this is the first step to any auto maintenance budget. Using your bank statements and vehicle maintenance records, tally up all the money you spent on auto maintenance and repairs in the past month ? don?t include gas, insurance, or registration fees in this number, as those should really be in a separate, albeit related, category.

Now divide that number by 12, to figure out how much you spent per month. If you didn?t have any major repairs done on your automobiles in the last year, I strongly urge you to add 25% to that figure, because you need to be squirrelling away enough money to pay for major repairs, even if you don?t foresee those happening. You can alter that 25% figure either up or down, depending on the age and condition of your vehicle ? if it is older and thus more likely to need repairs, you might add in an extra 50%; similarly if your vehicle is new, or recently underwent major upgrades, you might be able to get away with budgeting for the same amount that you spent last year.

So if you devoted $1200 to repairs and maintenance last year, you figure you spent on average $100 a month. Add in the extra 25% buffer, and you need to plan for just under $125 a month for maintenance and repair costs.

Regardless of your past year?s auto maintenance expenses, it is generally prudent to stash away at least $100 per month for these expenses. Hopefully, you won?t have to burn through that much money in a year to keep your car running ? and if you have carryover at the end of the year, you can adjust the amount you save each month accordingly next year. In the long run, the goal is to have a couple thousand dollars saved up for vehicle expenses.

Keeping this money in a separate account ? away from your day-to-day expenses ? is advisable. Savings accounts are obviously perfect for this task, and you can make it easy on yourself by setting your account up to automatically add the given amount to savings each month.

Planning ahead and controlling your auto maintenance costs will prove to be beneficial in other indirect ways, as well. You?ll be able to think ahead and ensure that proper maintenance is done on schedule, your long term maintenance expenses will likely go down as you focus on prevention of major problems, you?ll also likely improve the bond you have with your repairman, as you can discuss your repair/maintenance budget with him/her, improving the lines of communication.

Finally, like many sound budgeting techniques, the payoff will come with extra cash in your pocket and, maybe even more importantly, you?ll obtain some peace-of-mind, knowing that if an unforeseen expense arises, you are prepared for it.

Jack Payton is a car nut in the purest form. He loves to write about everything gear related, and rebuilt his first engine at 15. He works as the online publisher for the online tire retailer tires-easy.com. In his spare time he enjoys cruising, attending car shows, and watching NASCAR.

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