How to Budget for Car Insurance

Car insurance cost is often forgotten when someone begins shopping for a new vehicle. When it comes time to hand over the cash, however, the budget all comes crashing down. Car insurance doesn't have to be a financial burden. In fact, it is there to help your finances in the long run. This article will show you how to better budget your car insurance so that it seems like a privilege instead of a pain.

Difficulty: Moderate

Instructions

Things You'll Need:

• Phone
• Bank

1. Decide right away if you need full coverage car insurance or liability coverage only. Of course you will need full coverage if you have an auto loan. If your car is fairly used and 10 years old or more, liability coverage is sufficient. Simply sock away the extra money you will save each month and put it into a fund to pay for your car or a new car if you are in a wreck.

2. Set up as few payment plans as you can for your car insurance. Typically, the less often you pay, the less fees you pay as well. For example, you can pay your car insurance once a year, or you can pay 12 times a year with a $5 service fee each time. If the 1 payment each year is difficult for your to budget, divide your payment by 12, and remove that money from your account each month.

3. Call your car insurance provider immediately when you turn 25 and when you get married. Your rates severely drop during these life events. Car insurance is much easier to budget when the cost is lower.

4. Think about your insurance payment when you think about buying a new car. If you can budget for a $300 monthly payment, make sure you subtract your insurance payment each month to come up with the real amount you can pay.

Tips & Warnings

• Don't turn in every little dent and scratch to your car insurance company. Frequent claims no only increase your payment, it can also get you dropped from the insurance altogether.