In 2022, the average new car price exceeded $47,000, and the median salary is $53,924 for a full-time worker. After paying income taxes on a $53,924 salary, the take-home pay is reduced to $43,422. The average used car price has surged close to 30% in recent years, bringing the average transaction to $27,633. The old rule of spending 10% – 15% of your monthly income on transportation expenses is hard to stick to, especially when you factor in rising gas prices.
The average American might spend more than 20% of their monthly income on the vehicle’s payment alone. Once car insurance, gas, and maintenance are factored in, the percentage of income being spent on transportation nearly doubles. Driving a small, fuel-efficient car can save 25¢ per mile in operating costs compared to a large SUV or truck.