I am reading in this community from JosephMontanaro  that only 10% of income should be spent on car expenses. How is this possible? You have gas, oil changes, tires, License Plates, update stickers, taxes and maintenance.  I had to buy license plates stickers twice this year because someone stole mine.

Where are these percentages coming from?  Another site says 20% for cars and 30% for housing.  So where can someone get a workable percentage of total budget for income to live within your means.  Is there a table where you plug-in your income and the percentages in income pop up? How do we know which percentage to go by?


I'm the guilty party! The reality is that everyone's situation and budget is different, but the key is that you spend the time to make sure your budget reflects what's important to you.  Here's a blog by my friend Scott Halliwell used to dive  into the subject of cars.


Here are some broad guidelines on what you should spend where (as a percentage of gross income). Hopefully, this will give you some "guardrails," but there's no arguing that there's not a one-size-fits-all solution:


Car expenses: 7-10%
Savings & Investments: 15%
Insurance: 2-4%
Credit Cards and Other Debt: 3-5%
Personal care/clothing: 3%
Utilities: 5-9%
Groceries: 7-10%
Taxes: 20%
Other: 5%
Entertainment: 3-5%

Good luck!



I too have found those general guidelines to not always be applicable to my situation. I think they are good for the majority of people in the middle, but may not work as well if your situation is a little more unique. That said, if you are struggling to get the car expenses down, I think it is really important to make sure you are:


  1. a) buying used vehicles for all cash, not financing
  2. b) buying small, fuel-efficient vehicles (i.e. no big trucks because you feel you need a status symbol or might move something large 2x a year)
  3. c) check out Consumer Reports or similar for reliability data before choosing which car to buy so you aren't spending a bunch on repairs down the line
  4. d) get the car checked out at a mechanic before purchasing to reduce the chances of buying a lemon
  5. e) do regular maintenance to keep the car running well.

Finally, since the % categories don't always work well for us, the way I handle things for our finances is to save FIRST, then spend the remainder on housing, food, cars, etc. and not worry too much about percentages. I think financial advisers should be telling people to put away AT LEAST 15% for retirement, more if possible, and then divvying up the rest for the different categories. Best of luck to you!