Don't spend more than 10% of your gross pay on a car. Really

[PeteinSQ]

Saw this article the other day. So if you're earning £100k you shouldn't be buying a car for any more than £10k. Seems rather mean to me.

https://www.financialsamurai.com/the-110th-rule-fo...

Does anyone do this?

[Fastdruid]

That's a bit black and white as it doesn't take into account people who are "in to" cars and their car is their hobby/interest.

This one I think has a better split, essentially splitting it into 3 groups.

https://www.warrantywise.co.uk/blog/how-much-of-yo...

• If you’d like a cheap, affordable and simple vehicle that’s good enough to get to and from work, budget about 10 to 15 per cent of your annual income.
• If you’d like a safer, more reliable and more comfortable car for travelling to and from work and on using on weekends, budget about 20 to 25 per cent of your income.
• If you’re a car person and you view a car not just as a means of getting to and from places, but as a lifestyle item, budget about 50 per cent of your annual income.

[jwilco]

That's beyond over simplified. Doesn't seem to make any consideration for how much you have in the bank, or whether you have already paid your mortgage off. There can't be a single rule for this sort of thing that works for even most people.

[PeteinSQ]

Fastdruid said:

That's a bit black and white as it doesn't take into account people who are "in to" cars and their car is their hobby/interest.

This one I think has a better split, essentially splitting it into 3 groups.

https://www.warrantywise.co.uk/blog/how-much-of-yo...

• If you’d like a cheap, affordable and simple vehicle that’s good enough to get to and from work, budget about 10 to 15 per cent of your annual income.
• If you’d like a safer, more reliable and more comfortable car for travelling to and from work and on using on weekends, budget about 20 to 25 per cent of your income.
• If you’re a car person and you view a car not just as a means of getting to and from places, but as a lifestyle item, budget about 50 per cent of your annual income.

I think I prefer the system you've linked to.

It is the sort of thing that I think about. I'm lucky enough to earn a very good salary and have paid my mortgage off but buying a nice car comes with an opportunity cost vs having more of the money in savings invested or even just taking the family on a better holiday.

[55palfers]

...over how many years you intend to keep the car?

[Drezza]

Is it fair to say this is assuming you've got very little savings, a mortgage and the car is a white goods vehicle with no residual value? In which case it's probably a fair guide but still too many variables to say for sure.

[leef44]

PeteinSQ said:

Saw this article the other day. So if you're earning £100k you shouldn't be buying a car for any more than £10k. Seems rather mean to me.

https://www.financialsamurai.com/the-110th-rule-fo...

Does anyone do this?

But what if you like cars

[PeteinSQ]

Drezza said:

Is it fair to say this is assuming you've got very little savings, a mortgage and the car is a white goods vehicle with no residual value? In which case it's probably a fair guide but still too many variables to say for sure.

I think the general idea is that you should be investing that money.

My opinion is that some of these financial gurus are too focused on tomorrow and don't do any living today. You might snuff it tomorrow so you've got to do some living.

[nblr]

It’s a sad life when you have to be making $100k before you can buy a Kia Rio.

[leef44]

Actually, isn't is quite realistic if we are talking about 10k per year?

Including PCP or depreciation, and all annual running costs.

[Kent Border Kenny]

PeteinSQ said:

Saw this article the other day. So if you're earning £100k you shouldn't be buying a car for any more than £10k. Seems rather mean to me.

https://www.financialsamurai.com/the-110th-rule-fo...

Does anyone do this?

I used to use it as a rule of thumb as to how much it felt reasonable for me to spend.

I’ve relaxed it a bit nowadays, but still have a level in mind that I try to keep as an upper limit.

[InitialDave]

It's an American article, used cars, and the financing thereof, are totally fked over there. Ignore it.

As Brit who's really into his cars, it's an easy metric to meet, my current daily driver cost me a couple of percent of my take-home to buy outright.

[Pistonheader101]

1 years salary per car is fine

[Grrbang]

It is technically an oversimplification because the 1% can do whatever, but in practice it is good advice for the rest of us (ie whole population beyond this forum).

It’s easy to forget that retirement is going to hit multiple generations of us like a ton of bricks.

[RDMcG]

Are you 25 or 65?....

[John Locke]

Fastdruid said:

That's a bit black and white as it doesn't take into account people who are "in to" cars and their car is their hobby/interest.

This one I think has a better split, essentially splitting it into 3 groups.

https://www.warrantywise.co.uk/blog/how-much-of-yo...

• If you’d like a cheap, affordable and simple vehicle that’s good enough to get to and from work, budget about 10 to 15 per cent of your annual income.
• If you’d like a safer, more reliable and more comfortable car for travelling to and from work and on using on weekends, budget about 20 to 25 per cent of your income.
• If you’re a car person and you view a car not just as a means of getting to and from places, but as a lifestyle item, budget about 50 per cent of your annual income.

This is much more realistic for GB residents than the site linked by the O/P, although it does seem to assume new / newish purchases.
I and car nut wife slot neatly into category 3 as individual used buyers, but my car was 9 years old (having lost C90% of its new cost) when purchased, the wife's was almost 3 years old (having lost 62.5%).
Having lived in several other countries with different income levels, car prices, depreciation rates, and running costs, I think that the situation could be quite different elsewhere.

[The Mad Monk]

InitialDave said:

It's an American article, used cars, and the financing thereof, are totally fked over there. Ignore it.

As Brit who's really into his cars, it's an easy metric to meet, my current daily driver cost me a couple of percent of my take-home to buy outright.

This is a British article referred to above, which might be more appropriate

https://www.warrantywise.co.uk/blog/how-much-of-yo...

[PeteinSQ]

leef44 said:

Actually, isn't is quite realistic if we are talking about 10k per year?

Including PCP or depreciation, and all annual running costs.

It's 10% and then keeping the car for as long as you can make it run. So you buy your £10k car and then run it into the ground over a ten (or more) year period before buying a new one.

[CrippsCorner]

I... do actually do this. Not because I read some article though; just came up with it myself - I think after spending 100% of my savings on a car once and hating the experience!

I also however spend more on modifying than the car costs throughout its life so overall spend on the car would be about 25% of my annual salary. I change cars roughly every 4 years.

[toon10]

I'm currently at 17.9% NET. I'm doing this wrong.