If you drive a car, then insurance is a necessary expense because you are required by law to have insurance on the vehicle. You have two options in paying the annual premium – in one lump sum or in monthly payments. Budgeting for the car insurance is one way that you can manage to make this payment and not feel the financial pinch of an unexpected bill arriving in the mail.
Budgeting for car insurance takes two forms. First you have to make sure that you are not paying too much for your car insurance. By shopping around and requesting free quotes from insurance providers, you can choose the best and most competitive deal for your needs. This allows you to seek out a company that offers discounts that apply to you and terms and conditions that meet your driving and insurance needs.
By preparing a household budget for each month in which you include the car insurance as a bill that has to be paid, you can make sure that you have the funds available to make the payment. It is not hard to prepare a budget. All you have to do is make a list of your expenses and subtract the total from your monthly income. This may take a little ingenuity on your part in making this money available. You may have to cut back on a few luxuries and in this way save the money for the car insurance.
If you prefer not to pay the premium for your car insurance in monthly instalments, take a look at what monies you have left over each month and put a portion of it in a savings account so that when the insurance bill arrives, you have the money you need to pay it off in full. This does require restraint in that you do have to make up your mind that you cannot use this money for any other reasons.
That being said, there are ways of saving money on your car insurance that will make the payment of the premiums much easier on you each year. Although you may think that it is impossible to do, set aside 10% of your income as savings. It is amazing how quickly this adds up and at the end of the year you will have the money you need to pay the insurance in full and have money left over. If you look at this portion of your income as a necessary payment for your future finances, you will be able to live without and wonder why you haven’t always taken this route.
When you take out car insurance, opt for a higher level of deductible. This will cut down on your premiums because the insurance provider sees that you are willing to take some of the responsibility for paying for any repairs. It will also keep you on your toes when driving knowing that you are responsible for this higher amount, which is usually $1000 for a higher deductible rather than the standard $500.
Many insurance providers are now taking the clients’ credit scores into consideration when determining the rate of car insurance. Before you start shopping around for insurance, take a look at your credit score. If it is low, you may not be able to do much about raising it if your car insurance is due within the next month. However, you do have an opportunity to bring up your score before the year is out and this will result in lower premiums when the policy comes up for renewal.