What portion of your income should be spent on cars ??
Discussion
Depends on your situation.
If you won the lottery and bought a 6 bed mansion outright but have a job paying an average salary, you could probably afford to spend 100% of your income.
If you're up to your eyeballs in debt/mortgage, then you probably ought to spend £1k even if you earn £50k a year.
If you're living at home and your parents aren't charging you rent plus have no hope of saving up for a deposit, then go crazy.
If you won the lottery and bought a 6 bed mansion outright but have a job paying an average salary, you could probably afford to spend 100% of your income.
If you're up to your eyeballs in debt/mortgage, then you probably ought to spend £1k even if you earn £50k a year.
If you're living at home and your parents aren't charging you rent plus have no hope of saving up for a deposit, then go crazy.
My car cost 7.5% of my gross annual.
My wifes was 100% of hers! But given that she only works the odd afternoon and one Saturday every 6 weeks that's not too bad.
When I was young and crazy I had a car that cost 60% of my annual gross. It was great at the time but probably not the best idea in the long run.
My wifes was 100% of hers! But given that she only works the odd afternoon and one Saturday every 6 weeks that's not too bad.
When I was young and crazy I had a car that cost 60% of my annual gross. It was great at the time but probably not the best idea in the long run.
Buying a car should be like buying two large kitchen/household appliances. It shouldn't be like paying rent or a mortgage.
So for the average wage (approx £30k per annum) person £3k max every 10 years.
Well that is tbe sensible approach. Problem is that most people are not intellectual enough to be financially sensible.
So for the average wage (approx £30k per annum) person £3k max every 10 years.
Well that is tbe sensible approach. Problem is that most people are not intellectual enough to be financially sensible.
Edited by Audemars on Thursday 30th March 09:51
Audemars said:
Buying a car should be like buying two large kitchen/household appliances. It shouldn't be like paying rent or a mortgage.
So for the average wage (approx £30k per annum) person £3k max every 10 years.
Well that is tbe sensible approach. Problem is that most people are not intellectual enough to be financially sensible.
£300 a year? Good luck with that. Good luck with buying a £3K car and keeping it running for 10 years too. I spend more than £300 a year on bicycles.So for the average wage (approx £30k per annum) person £3k max every 10 years.
Well that is tbe sensible approach. Problem is that most people are not intellectual enough to be financially sensible.
The law of diminishing returns invariably kicks in when you spend big money on anything - houses, cars, boats, watches or HiFi. That's mainly because the more you spend the higher your expectations become and the moment your expectations exceed the actual reality a door named disappointment opens wide in front of you. So if you do spend more than necessary you need to take great care you're not lining yourself up for a big fall.
I take the view that cars make excellent servants but terrible masters so I'd say as spend little as possible to acquire cars you're reasonably content with and are capable of doing all you need them to. If you really can't do that then it's always much easier to just lower your expectations until you reach a point where you can than it is to find a shedload more cash to spend buying and running a car.
I take the view that cars make excellent servants but terrible masters so I'd say as spend little as possible to acquire cars you're reasonably content with and are capable of doing all you need them to. If you really can't do that then it's always much easier to just lower your expectations until you reach a point where you can than it is to find a shedload more cash to spend buying and running a car.
I'm unsure how you quantify this if you buy the car outright.
Ages 17 I bought a £9,000 car outright, I was not earning a massive amount at the time (though not too bad for my age given I was still at school and then college), it was all my own earned money though so it counted. Does that one off payment count as part of the calculation?
Ages 17 I bought a £9,000 car outright, I was not earning a massive amount at the time (though not too bad for my age given I was still at school and then college), it was all my own earned money though so it counted. Does that one off payment count as part of the calculation?
Audemars said:
Buying a car should be like buying two large kitchen/household appliances. It shouldn't be like paying rent or a mortgage.
So for the average wage (approx £30k per annum) person £3k max every 10 years.
Well that is tbe sensible approach. Problem is that most people are not intellectual enough to be financially sensible.
The one thing that you never account for is that the closer your income is to the minimum wage the more you can risk spending as the downside risk of zero wealth diminishes the closer you are to the State support mechanism. Ie if you are minimum wage you can spend everything you earn, borrow as much as you can because there is no real downside risk to your quality of life. So for the average wage (approx £30k per annum) person £3k max every 10 years.
Well that is tbe sensible approach. Problem is that most people are not intellectual enough to be financially sensible.
Edited by Audemars on Thursday 30th March 09:51
Conversely, the more you earn the bigger your risk of a change of lifestyle so the more you have to save to create a safety buffer and obviously that means spending less.
This is why someone on £30k income in reality can have greater spending power than someone on £60k+ as the downside risk is far lower plus they don't have the same pressures to be spending on other services.
t on by pigeons while I am at work.
As little as possible to fill your functional requirements and be enjoyable. I'm coming increasingly to the realisation that expensive cars are a really boring way to spend money, more expensive != more fun in fact often quite the opposite. My cars between them cost 16.6% of gross income but the depreciation is <1.5%.
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