Car costs and budgeting – track your spending

Once you’ve bought a new car, you might want to keep track of exactly how much you’re regularly spending to keep it on the road.

Why you should track your car spending

Even after you’ve saved up enough money to buy your car or have entered into a finance agreement, there are still additional costs that come with running a car.

If you feel like these costs are getting a bit high, you might want to start tracking your spending and see where you could save some money.

Searching for cheaper insurance, saving money on maintenance, and shopping around for fuel or free charging can help you cut back and stick to a budget.

Once you’ve spent a full year tracking your car spending, you can use that to predict the costs for the next year.

How to budget for your car

Once you’ve worked out what costs are included with owning your car, you’ll need to keep track of these regularly to make sure you’re on top of your spending.

You can keep track of your car costs by simply noting them down on your calendar or in a diary, or make a spreadsheet that’s tailored to your needs.

You'll want to know the dates of each payments, how regularly these payments occur, any dates for upcoming renewals (like your car insurance), and how much each of these payments will cost.

Once you’ve made a note of all of these factors, you can begin to mark when you’ve made a payment and keep track of when the next one is due.

You can also find digital and printed templates for car spending planners available to purchase, or free to download online.

There are budgeting apps and websites that can help you do this too. Goodbudget is a smartphone app that is based on the envelope savings system, where you split your income into envelopes that are labelled with what the payment is for.

This app doesn’t connect to your bank accounts, so it’s up to you to manually input your income and savings.

Spread the cost of purchasing a car with a car finance deal

How much does it cost to run a car?

The total cost of running a car will depend on a few factors, including the type of car you use and how often you drive it.

If you have a car that really drinks up fuel and you drive it on large trips regularly, then it will cost more to run than a smaller car that doesn’t drive as far.

Things like charging your electric car in peak times for your electricity tariff can increase costs, or choosing premium fuel when you fill up will also be more expensive.

Here’s a run through of the costs you might want to track when you’re budgeting your car spending:

Fuel or electricity costs

The price of fuel (or electricity if you’re charging an electric car) is probably the first running cost that comes to mind when you consider your car.

Working out how many miles per gallon (mpg) you’re able to get is a great way to see how efficient your car is.

To work out your mpg:

Record your mileage when you fill up with fuel, then record the mileage again the next time you need to fill up
Divide the total mileage since you first filled up by the total number of litres of fuel you’ve used
Multiply the result by 4.544 to get your mpg average

If you feel like your mpg figure could be better, there are a few things you can do to improve this in fuel-powered, hybrid and electric cars.

Driving in the highest gear for the speed limit is a good way to drive more efficiently, and travelling at a steady and smooth pace can help too.

You can track your monthly fuel usage to see if you’re spending more than expected. This might inspire you to walk for shorter journeys, or combine smaller trips into one big one so you’ll need to drive less.

As fuel prices change all the time, be sure you’re using the latest figures to work out your spending and keep track of any small top-ups that you make as well.

Total cost – will depend on the type of fuel and how often you fill up
How often do I need to pay? This will depend on the amount of driving you do, and how much fuel your car uses

Servicing, maintenance, and MOTs

You’ll need to schedule in the costs of a yearly MOT for your car, as this is a legal requirement to drive on UK roads.

The cost of a car MOT is set to a maximum of £54.85 for 2022 by the government. You might be able to find a test cheaper than this, so shop around to find the best rates from a trusted garage or MOT centre.

Some people choose to start a monthly saving pot, and put away a small amount of money to cover the cost of the MOT and any repairs that might need to be done.

Although car servicing is not a legal requirement, you should always keep up with car maintenance. A full service should take place every 12 months or 24,000 miles, and can cost upwards of £150.

You may also need to pay for other maintenance costs, like new tyres.

A plan like cinchCare can help you cover your warranty, breakdown repair, and servicing costs in one monthly payment. This way, you’ll know exactly how much you’re spending on a regular basis.

Total cost – around £54.85 for an MOT, and upwards of £150 for a full service
How often do I need to pay? Every 12 months for an MOT or a full service

Insurance

Car insurance prices will depend on the car you drive and which insurance band it sits in.

These groups are decided based on factors such as new car value, performance, safety, and repair costs and times.

The cheapest cars to insure are usually models with smaller engines that are cheap to repair, and are affordable to buy when new.

If you opt for an expensive car with a large engine that’s high-specification, you’re likely to pay more for your car insurance.

You might want to shop around for the best car insurance deal, as different providers will have different rates.

You’ll also have the option to choose monthly or yearly payments, so you can decide which works best for you.

Total cost – depends on the car you drive and the insurance band it sits in
How often do I need to pay? Either yearly or monthly, depending on how you set up your payments

Car tax

Car tax is another bill you’ll need to pay regularly if your car falls into that category (electric cars are not exempt from road tax, but they don’t have to pay any fees).

You can choose to pay your car tax on a monthly basis, or in one full lump sum each year – just like car insurance.

Your car insurance and tax are probably the most regular payments you’ll make, so you’ll have a reoccurring amount to track and fit into your budget.

Total cost – use the gov.uk website to work out the costs for your car
How often do I need to pay? Yearly, six-monthly or monthly, depending on how you set up your payments

Tips for saving money on running a car

Stick to a budget by starting an emergency fund for covering any repairs, or to pay the excess amount of an insurance or breakdown repair policy. Having this money readily available could help avoid unexpected payments.
Consider investing in better quality tyres, brakes and other car parts. These will usually last longer than budget parts, and will need replacing less.
Pay your car insurance annually instead of monthly to get a cheaper rate.
Choose an electric car to avoid road tax fees.
Find a good deal on a used car to keep the initial cost of buying a car low.