Budget for Your First Car: Beyond the Purchase Price
📂 Budgeting

Budget for Your First Car: Beyond the Purchase Price

⏱ Read time: 5 min 📅 Published: 25/02/2026

💡 Quick Tip

Buying the car is only 60% of the first year's cost. Learn to calculate the Total Cost of Ownership (TCO) to avoid your car becoming a stationary garage ornament.

The Fast-Depreciating Asset

Follow the 20/4/10 rule: 20% down payment, 4-year max loan, and the total cost (payment + gas + insurance) should not exceed 10% of your net pay. Insurance for new drivers is the biggest shock, often $1,000+/year. Maintenance is inevitable: set aside $40/month for future repairs and tires.

📊 Practical Example

You buy a $6,000 used car. Total year 1 needs: $7,220 including insurance and initial service. If your monthly TCO is $250 on a $1,200 salary, you spend 20% of your life maintaining the car. A simpler model or public transport might be a better financial choice for now.