Budgeting 101: Simple Steps to Figure Out What You Can Afford

If it's your first time buying a car, you may feel overwhelmed by the financing process. If you're like many Lehighton drivers, your idea of what cars are in your price range comes down to a vague gut feeling: "A used Ford Focus seems pretty affordable, I bet I could swing that. Maybe a new Fiesta? But the Fiesta ST is probably too much..."

There's an easier way to figure out exactly what your budget is, and it only takes about 15 minutes.

Pull up your bank statement for the month, or the past few months to be safe. If you only have one primary checking account, then all the information you need will be right there.

Add up your income for the month.

Add up your expenses, dividing them into static expenses—things you have to pay each month, like rent, loans, and utility bills—and variable expenses. Maybe you went to the movies every weekend last month, but you could save money by watching Netflix instead.

Subtract your expenses from your income, and what's left is your budget for a car. Just remember, your car budget is more than just loan payments—factor in insurance, maintenance, and gas too!

Categories: Finance


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