No. of Recommendations: 2
Well, I'm a bit late to the discussion...

Likewise. :)

I think of cars as an expense like anything else. Why base any expense on your net worth? Instead just figure out what makes sense for you, and budget accordingly.

Most necessary expenses have a range of values where there's some minimum and maximum you could plan on spending. With something like a car, you might decide that at a minimum, you would like to buy a new-to-you, slightly used, lower-end vehicle every 10 years, at a periodic cost of $10,000, or $1,000 per year. The upper bound might be a brand new mid-range car every 8 years at a periodic cost of $40,000, or $5,000 per year.

With that budget in mind, now you can plan accordingly. It's nobody's business but your own what numbers you should use... you would need to tailor the plan to suit your own needs, desires, and financial situation. Your net worth may inform the numbers, but it need not dictate it. For example, a person with a net worth of $10M would be in a better position to look at more luxurious cars than someone with $1M net worth, but that doesn't mean she's obligated to spend more simply because she's worth more. Plenty of high net worth people drive Hondas.

Rob
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.