How to Budget for Car Expenses and Running Costs

For a lot of people in Australia, owning a car is essential. Getting to work, visiting family, dropping kids off at school/preschool all means we need to own a car.

But owning a car can be expensive. Apart from the initial costs of purchasing a car, there are a lot of running expenses to anticipate and budget for.

Regular Running Costs of a Car

Unfortunately, running a car isn't cheap, but fortunately, you can prepare for a lot of the costs of owning a car. Every car is different and will have its savings or extra expenses, but there are a few running costs of a car you can always expect and budget for, no matter what.

Fuel

The cost of fuel for your car can vary depending on the type of fuel you use and where you live. On average, people who live in a city pay around $70 a week on fuel and people who live in more regional areas pay around $75 a week on fuel. That isn't because fuel is cheaper in the cities (in fact, the opposite is often true), it's just that people who live in more rural areas use their cars a lot more than people in the city do.

Insurance

Insurance costs will vary due to things outside of your control a lot of time. You'll fall into one of the many groupings of insurance costs. For example, people under 25 will pay more for insurance than people 25-29. People aged 50+ have the lowest insurance premiums, but that could change depending on the type of insurance you have.

Some people will get basic insurance that will only cover the costs dealt to another car if you're at fault in an accident, while other people will insure every inch of their beloved car. On average, an Australian household pays around $20 a week on insurance.

Registration & Licences

Registration is one of the most stable costs of owning a car for your budget. Your registration costs will often be the same each year if you have the same car, as it's based on the weight of your car and the standard base costs in your state. On average, registration will put you back $25-30 a week.

Maintenance & Servicing

Where having a cheaper car may cost you less in insurance, it can cost you more in maintenance. Your car, when not properly serviced, can be dangerous to you and others so it's vitally important you keep it in the best shape you can. This means paying for regular mechanic check-ups and potentially paying for replacement parts.

Excluding extra costs like fixing issues or replacing parts, the average service will cost anywhere between $150 and $2,500 depending on the make and model of your car, and you should have your car serviced every six months. Extra services like replacements will cost more, and that depends on the part needing replacement and the fee your mechanic charges for their labour.

Creating a Budget Around These Car Expenses

Creating a budget you can rely on requires consistency, so budgeting around car expenses can be hard because there are so many variables.

First, gather all the information you can. By now you should know how much you spend on fuel, insurance, registration, servicing, etc. Try to find the receipts of past payments if you want more accurate amounts.

Then budget in "miscellaneous" to your budget to create a small savings account to cover any surprise costs, like new tyres for your car. This miscellaneous cost can be whatever amount you like, but between $5 and $20 a week is a stable choice.

Adding up these costs, the average household in Australia will face around $160 a week on car expenses, including fuel and setting aside money for services and miscellaneous costs. This number will be a lot higher if you're also repaying a car loan or if you have other car expenses.