My youngest son recently got his driver’s license, which is a rite of passage for so many young people. Between him beginning the process of looking for a good used car and my older son recently purchasing a car of his own, we’ve been discussing the importance of budgeting for a car emergency fund.
Owning a car isn’t just about the freedom and convenience it brings; it’s also about the responsibility and costs associated with its maintenance and repairs. I’ve stressed to them that it’s not just about budgeting for gas and oil changes — it’s the unexpected situations that need to be addressed, too.
I’ve encouraged all of my children to establish a dedicated fund solely for car repairs, and it’s a good idea for everyone. It can significantly help alleviate the financial burden of unexpected maintenance and parts replacements or even cover one’s insurance deductible in the case of a minor accident.
All tires eventually need to be replaced. Tire wear not only contributes to performance and fuel efficiency, but monitoring the wear level is also a safety issue. No one wants to drive too long on worn tires because they cannot afford to replace them. Tires can average between $100 and $300 per tire, depending on the kind and size of your vehicle.
Oil changes are another maintenance cost that must be budgeted for and done regularly to maintain your engine. Neglecting oil changes can lead to severe engine damage, and it is truly one of those areas where the old adage applies: An ounce of prevention is worth a pound of cure. Whether you take your vehicle to an oil change establishment or garage or change it yourself, it’s important to get it done on schedule.
I’ve always changed my own oil – it’s partially a benefit of growing up with a “car guy” father who was adamant that I get comfortable under the hood and chassis before I was old enough to take the wheel. I realize that not everyone lives in a home with a garage or driveway space to tackle this task as a do-it-yourselfer. However, not only do I enjoy doing it, I also save money over taking it in and paying someone to do it for me. It’s another component to consider if you’d like to save the most money.
All cars can suffer from unexpected issues. Over the years, I’ve replaced everything from belts to water pumps to brakes and actuators in our vehicles. Car repairs can be expensive, even more so if you’re not doing the work yourself. Depending on the complexity of the issue and the make and model of your vehicle, a repair might cost under $500 or more than $2000.
People without a car emergency fund may have to resort to financing their repair or putting the cost on a credit card, which ultimately will cost even more in the long run. So, how much should be in your emergency fund?
I recommend starting with the goal of creating a $1,000 automotive emergency fund and then increasing it to $2000. $1,000 will generally cover the cost of a set of tires or a minor issue. Continuing to replenish and grow your automotive emergency fund is crucial, too — if you’re tapping into it for oil changes or regular maintenance, make sure you’re also replenishing that fund.
Having funds readily available for whatever your vehicle might need also helps encourage you to keep up with regular car maintenance. For example, replacing your brake pads when worn helps prevent damage to the rotors – and doing the brakes is less expensive than replacing the rotors.
Lastly, if you keep your emergency fund in a separate bank account, you’ll likely be less tempted to spend it on other things. Consider an interest-bearing checking account so that the money you’re setting aside for automotive issues will grow while it’s not being used.
Jill Cataldo, a coupon workshop instructor, writer and mother of three, never passes up a good deal. Learn more about Super-Couponing at her website, jillcataldo.com. Email your own couponing victories and questions to [email protected].
