Buying a car can be really costly to young adults of low to medium income group in our country these days. I worked out a basic calculation on the average income for a young executive to have a basic idea on an individual’s financial situation.
Assuming that a young executive with 3-4 years of working experience, and is earning about RM3,500 a month. He has committed to his parents and monthly household bills to about RM900 per month (Note: This is just a rough estimate and it varies depends on the location of stay).
Other monthly expenses such as paying for personal insurance, food, utility and phone bills, entertainment expenses amounting to RM1,000. Of the remaining RM1,600, RM1,200 is channelled to his loan repayment for car, petrol, toll and parking fees.
If there’s no additional spending on other items, he will be able to save about RM400 a month only. In this case, I’m assuming that he is living with his parents so there’re no rental expenses incurred.
As you can see, the expenses on his car alone take up one-third of his monthly income, and this has not yet included the depreciation of the car which could easily range from 10- 20% per year.