Think back to your first car.

What was it? A family car passed from one sibling to the next? An old car from a relative? Something cheap you found in the paper (or online, for you millennials)?

Mine was a 1987 Toyota minivan. Coming from a family of five kids, of course my parents used minivans to haul us around. By the time I reached driving age in the early/mid 1990s, the car was almost 10 years old, which was just as well. I put a lot of battle scars on it.

While many of us have fond memories of the cars we inherited or bought ourselves, owning an automobile is one headache of adulting because they are so bloody expensive.

So because we are one-income households, and many of us don’t live in places with excellent public transportation, cars are a necessary expense.

So just how much car can you afford?

With the average new car clocking in at about $31,000, cars are usually the second most expensive thing you will buy after a house. Except cars lose 60% of their value after five years. At least houses (usually) increase in value!

My car is a perfect example. I have a 2010 Toyota Yaris (her name is Katya, but my coworkers lovingly refer to her as my “meep-meep car” since it’s a subcompact). I bought it new in 2010, and now Kelley Blue Book (kbb.com) estimates its value—in good condition—is exactly half what I paid for it.

I follow Dave Ramsey’s principle that the value of my car is 50% or less of my total income. So if you earn $40,000 a year, your car should be worth no more than $20,000.

There are also other factors to consider when trying to determine how much car you can afford:

  • Gas – As of this writing (August 2017), AAA reports that gas averages $2.28 a gallon nationwide. I’m assuming most of you are not in the Hummer demographic, but buying a car that gets more MPG will save you in the long run. Average out how many times you fill up in a month when you do your budget to keep aware of the costs.
  • Routine maintenance – Oil changes, tire rotation, windshield wiper blades…the list goes on. And the repairs will increase as your car ages. I set aside a certain amount every month in my savings account earmarked for repairs. I fully intend to drive my car until at least 2027, if not 2030. Toyotas last forever, and mine only has 45,000 miles!
  • Taxes – This is harder to determine, but 17 states (mine included) have tax estimators online. You can also call your DMV to see if they can give you a ballpark figure for your budget. Or, worse case scenario, assume what you paid last year will be the same.
  • Insurance – I have already written about how to shop for car insurance. You owe it to yourself to see if you qualify for certain discounts and to carefully research how to get the best deal while maintaining good coverage.
  • Auto club service – I used to have AAA when I drove a very unreliable Subaru. Since I’ve had my Yaris, I haven’t felt the need to have it. But now that she’s 7, that $100 may be a wise investment. As a single woman, this is a great investment, especially if you do a lot if interstate and/or night driving.

Between car payments, gas, etc., your car should represent about 10-15% of your budget. If it gets up toward 20%, you may want to rethink if you have too much car for your personal situation.

Cars offer the freedom to take you wherever you want to go, but they do require expense and planning. Budgeting for you car will make emergency trips to the garage less stressful and empower you to control your finances

What kind of car are you currently driving? Is it draining your budget, or is it manageable? Comment below!