The beginning of the year is the perfect time to take a fresh look at your financial situation and bring your budget under control. Examine your income and expenses, and, if you are in the market for a new vehicle, perhaps consider getting a rent-to-own car as a more budget-friendly option. Here are some tips to consider.
Better budgeting in 2022
If, like most people, you find that your costs are increasing relative to your income, it is time to take proactive steps to make your money stretch further and perhaps trim some fat wherever possible. Try one of these three strategies:
- The envelope budget: This budgeting strategy involves setting specific spending limits in different discretionary categories. The name comes from the practice of assigning an envelope to each category – groceries, entertainment, etc., and then placing the appropriate amount of cash in each one. Once the envelope is empty, your budget is blown for that particular category until next month. The principle works with today’s digital-based banking as well, however, even if you are not putting actual piles of cash into physical envelopes.
- Zero-based budget: Zero-based budgeting is similar to the envelope method. It involves calculating what you have left in your accounts once your fixed expenses are paid, and then allocating what remains to variable spending and savings until you reach the 0. You may need to revise allocations across variable categories until you reach a spread that makes sense. You then need to stick to the allocated amounts for the rest of the month.
- 50/30/20 budget: With this method, instead of allocating specific amounts to a large number of variable spending categories, you divide your income up by the following percentages: 50% goes to fixed necessities such as your bond or rent, utility bills and insurance. 30% goes to non-essential spending such as eating out, entertainment and luxuries. The remaining 20% goes to investments, debt repayments and saving.
Why a rent-to-own car is the smart financial decision
Another way to make your finances more manageable in 2022 is to consider a rent-to-buy car. Purchasing a car outright is probably out of your reach – as it is for most people. Standard car financing also tends to be a less affordable and flexible option than your financial needs may require. Renting to own is an option that will help you to keep a handle on your budget. With many options available and flexible payment schedules, you can rent a car without the locked-in commitment of a traditional hire-purchase agreement. If your car becomes a little too expensive, you can always bring it back or exchange it for a cheaper one. At the end of the rental term, the car becomes your property.