If you were rich, what kind of car would you drive?
A Bentley? A Porsche or a Ferrari? Maybe a $100,000 Tesla Model X? How about a Lamborghini, to be really obnoxious?
Ah, but here’s a little-known fact: Most rich people don’t actually drive fancy cars.
It’s true. When Experian Automotive pondered which cars the wealthy favored, the number-crunchers dug into their massive database of 600 million vehicles and came up with a surprising answer. They found that more than 60% of people who earn $250,000 or more aren’t driving luxury cars after all. Instead, they’re buying the same Toyotas, Hondas and Fords as the rest of us.
Sure, some of the rich are tooling around in luxury vehicles. Mercedes, Lexus and BMW are particularly popular brands among the well-to-do, Experian found. But the other models in their rich people’s top 10 included three Hondas, a Toyota, an Acura and a Volkswagen.
Now, what can we learn here? Here are three financial lessons that we’re taking away from this. It’s all about:
- Living within your budget.
- Avoiding today’s freakishly high car prices.
- Getting a car that’s not too expensive to maintain.
1. The Rich Don’t Need to Show Off, and Neither Do You
When it comes to the wealthy, you could argue that not spending gobs of money on flashy things is how they got to be rich in the first place.
A popular personal finance book that we’ve previously recommended, called “The Millionaire Next Door,” elaborates on this idea.
Most of the truly wealthy in this country don’t live on Park Avenue and snack on caviar and guzzle champagne as they go to the opera in their chauffeured Rolls-Royces. Instead, they amass their wealth through consistent work and smart choices and frugality — yes, frugality.
So: Maybe get a Honda, not a Mercedes. You don’t need to impress anybody. Buy a car you can actually afford.
Got a raise? Don’t succumb to the temptations of lifestyle inflation. Instead, continue to live within your current budget and sock away the extra money.
2. Today’s Car Prices Are Insane, so Plan Accordingly
Nowadays, car prices are through the roof.
First of all, there’s been an overall shortage of new cars due to a global microchip shortage plus a slowdown in production during the COVID-19 pandemic, and the automotive market is still recovering from all that mess.
Second, runaway inflation is hiking up the cost of everything, including sedans and minivans and SUVs.
The average new car in America sold for $48,301 in August 2022 — a fifth straight month of increases and a record high, according to Kelley Blue Book. Holy sticker shock, Batman!
With that in mind, we’ve got some tips for how to save money buying a car by getting an auto loan preapproval.
We’ve also got advice for how to buy a used car and avoid getting ripped off.
3. Get a Car that Won’t Be Too Expensive to Maintain
When we’re buying a shiny new car (or shiny used car), we rarely think about the cost of future maintenance. Because who wants to dwell on that when you’re trying out the reclining seats and basking in the new-car smell?
It’s actually pretty important, though. You’re probably going to own that car for a long time. A lot of those frugal rich people know that a Toyota is less pricey to maintain than, say, a Maybach or a Bugatti.
Research studies from automotive websites typically find that the cheapest cars to maintain include various Toyotas, Hondas, Kias and Nissans.
Kelley Blue Book has a car-cost calculator that includes estimated maintenance and repair expenses so you can narrow things down to your individual make and model.
We have a whole article on how much to budget for auto maintenance and repairs. You can’t see into the future to know exactly when your car will break down, when it’ll need to be serviced and how much it’ll cost, but you can prepare for the inevitable.
Think Like a Rich Person
Only 5% of American households bring in more than $250,000 a year, according to U.S. Census Bureau data.
If run-of-the-mill Hondas, Toyotas and Volkswagens are good enough for them, they’re probably good enough for your daily commute.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder. He drives a Honda Odyssey minivan.