How having a job could cost you over £200,000 over the years

You know those things that aren’t all that good for you? Smoking, drinking, sitting in the sun until you resemble a lobster. There are loads of things that are bad for us, and we often know what they are. Yet, there are also other things that don’t affect our physical health, instead impacting us in other ways.

Financially, for instance. And with an effect that we wouldn’t usually consider.

Take, for example, that feeling when you’re standing at the petrol station, filling your car’s tank up and watching your bank balance shrink before your eyes.

Or the despair as you leave the house in the morning and see a completely flat tyre. You quickly do some maths in your head to figure out how much that will cost to replace and whether you can afford to do it yet.

Or worst of all, MOT day. After paying about £50 to wait nervously for an hour, you see the sympathetic look on the receptionist’s face that says ‘this won’t be cheap’ as they hand you the list of fails and advisories.

At times, owning a car can feel like you’re just throwing money into a fire.

The staggering difference between cost and price

The car is possibly the biggest luxury-turned-necessity in modern life. What was once only an option for the rich is now a mass consumer product, available with 0% financing, leasing and trade-in options, and is so popular that most households have more than one.

The moment we buy one it suddenly becomes something we can’t live without. For good reason, too – instead of waiting in the unreliable British weather for an unreliable bus, we have total freedom to go where we want, when we want. In heated or air-conditioned comfort, unaffected by other people. No doubt about it, having a car is great.

Until it isn’t.

Ponder for a moment – your car spends more than 90% of its time turned off and sitting alone: on your drive or in your garage, in car parks, at the office, or wherever. It’s depreciating in value all the time, too. And how many times have you felt like the rug was pulled from under you with a car expense? Something like:

  • MOT/servicing
  • New tyres
  • New brakes
  • Repairs

Can you think of any others? Tell us in the comments below, we love hearing from you.

And that’s not even including the price of petrol. A few months of prices around £1 a litre had many of us forgetting the hard swallow of £1.30 a litre, but they are on the way back up now.

Oh sure, owning the car makes us feel good – especially when we’re sitting in the comfortable seats as the sat nav directs us to where we’re going in luxury and style. But the mounting (and often unexpected) costs have the consequences of more stress and less money.

Neither of which we want.

Added up over time, how much does it really cost to own a car?

Let’s say you have total monthly costs of £357.50*. That equals £4,290 each year. If that was invested and had an annual average return of 6%, after 20 years it would be worth…

Brace yourself…

£166,005!

And this is before expenses like repairs, MOTs and servicing. Yep, there’s a whole lot more cost than the headline price plastered all over the dealership’s forecourt. (If you’d like to work out what your car is costing you in the long run, just head over to the calculator site and enter the figures.)

For many people, the bulk of that car use is for commuting. In fact, having a job can be expensive over the years. After all, lunch may also be an everyday expense, too, and spending just £5 a day for 46 weeks would rack up £1,150. Again if that were invested over 20 years with an average annual return of 6%, it would give you £44,498.

And if you combine those totals, you’d be looking at a massive £210,503 – in just 20 years.

No, you don’t have to stop spending money

Okay, sure, everyone knows it’s easy to save all your money if you don’t spend anything. That’s not really the point here, though. It isn’t practical for everyone to live without a car, and it’s definitely not a good idea to stop eating.

The point is to be aware of the total costs of things, and to reduce them where possible. Whether that means refinancing the car to a lower rate, selling the car and using a car sharing service instead, or dusting the bicycle off to get to the shops or not is entirely up to you. Taking your own lunch to work can make a big difference to your bank account, too.

Money quickly adds up, and it can be amazing to see how much our seemingly modest everyday expenses can really cost us over the long run. And the numbers also show that it’s possible to accumulate a lot of money without relying on a high income – we just need to be aware of where our money is really going.

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