The 10 Percent Rule For Buying A Car
Cars are expensive. For most people, they are the second most expensive purchase they will ever make – behind their houses, of course.
But, as with property, people often wind up spending more than they can afford. And it costs them both psychologically and financially.
10 Percent Rule For Buying A Car Millionaires, therefore, recommend that people observe something called the “10 per cent rule” for buying a car.
The idea here is to spend enough so that you can afford something decent, but not so much that you cripple your ability to gain wealth.
Currently, the super-rich suggest that people cut their spending on motor vehicles to around 10 per cent of their total take-home pay.
The average person in the UK makes around £26,000 per year before tax. So, ideally, under this scheme, you shouldn’t spend more than £2,600 per year on motoring in total.
It sounds like quite a lot of money, but when you break it down, it is actually a tiny budget. At least £1,000 immediately disappears in insurance and maintenance costs. And we haven’t even got onto the subject of fuel or tax.
Sites like https://www.lrc4x4.co.uk/finance.php recommend that people take out cheap finance to keep their monthly outgoings down to a minimum. Ideally, you want payments on your vehicle to be as low as possible.
The benefits of the 10 per cent rule, though, are quite extraordinary. If you manage to pull it off, you can look forward to a host of advantages.
You Don’t Have To Stress About It
Spending a lot of money on motoring can actually affect your enjoyment of everyday life according to https://www.cnbc.com/2019/11/04/. Every time you take your vehicle out, you worry about getting a ding and having to pay an expensive repair bill. You also see the money flooding out of your account every month and wonder what it’s all for.
When you slash the costs of finance on your vehicle, you stop feeling so anxious. Suddenly, you have all the money you need to make ends meet comfortably, giving you a financial cushion, should things go wrong.
You Don’t Have To Live With The Guilt
Spending too much money on motoring comes with another problem: the feeling of guilt. What’s interesting about this sensation is that people get it even when they don’t have families to support. The reason for it is simple: you feel bad for your future self. You know that your profligacy today will result in fewer opportunities tomorrow – and that worries you!
The good news is that there you don’t have to spend a fortune to get a quality vehicle. Used vehicles offer all of the perks of new, but at a fraction of the RRP.
You Won’t Have To Put Up With High Maintenance Costs
Luxury cars have famously high maintenance costs. Every component is upgraded from the standard, mass-produced options, meaning that you have to pay hefty premiums every time something wears out – which it will.
Cutting your motoring expenses, however, allows you to avoid these maintenance costs and avoid extra hidden costs.