Why Your Car Is Making You Broke And How to Turn It Into Wealth Instead

Buying a car is one of the biggest money traps in America, and most people have no idea just how bad it really is. I’m going to walk you through exactly why the average vehicle is making people poorer, how car payments can silently rob you of millions over your lifetime, and what I’ve done personally, and what you can do, to flip that script and actually start building wealth.

Let’s start with the obvious: cars are insanely expensive now. The average new car costs over $50,000, and once you include interest, the real cost balloons to $65,000. Five years later, that $50,000 car is now worth maybe $20,000. Meanwhile, the average monthly payment is $749, but when you factor in insurance, maintenance, registration, and repairs? You’re realistically spending close to $1,000 a month just to drive.

And here’s the scary part over half of Americans have little to no savings, yet they’re driving around in cars worth more than their investment accounts. That’s not wealth. That’s the illusion of wealth. I call it being “fake rich” when your lifestyle looks good on the outside, but your bank account says otherwise.

Buying a car is the ultimate triple whammy. First, it’s a depreciating liability—it loses value from the moment you drive it off the lot. Second, people finance these cars, which means you’re paying interest on something that’s losing value. And third, cars don’t last forever; they die in five to ten years, and then you start the whole process over again.

Now, imagine if instead of making a $749 car payment every month, you invested that same amount. At a 10% average market return, you’d have over $1 million in 25 years, $1.6 million in 30 years, and more than $4 million in 40 years. All from money most people hand over to the bank without thinking twice.

So what’s the smarter move? My rule is simple: never finance a car. Buy it in cash. If all you have is $8,000 to $12,000 saved for a down payment, then buy a reliable used car in that price range. Will it be flashy? No. But it won’t strangle your financial future either. And every dollar you don’t put into car payments is a dollar you can put into wealth-building assets.

Let’s talk about investing those dollars, because this is where your financial life can change fast. ETFs like VTI (the total stock market), SPY or VOO (S&P 500), or QQQ (Nasdaq 100) give you exposure to entire sectors of the market. And if you want cash flow? Look into dividend-focused ETFs like SCHD. These pay you every three months, actual cash, for simply owning shares.

This is where the concept of “Always Be Buying” comes in. Instead of worrying about timing the market, just invest consistently. One hundred dollars a week. Two hundred dollars a month. Whatever your number is stick to it. Don’t let emotion stop you when the market dips. If anything, dips are buying opportunities.

Now, I’m not going to pretend the world is the same as it used to be. AI and automation are replacing traditional entry-level jobs at lightning speed. But I actually believe this shift will create more millionaires, not fewer. Why? Because people who are willing to learn, adapt, and take control of their money will have opportunities like never before.

And that’s what this whole conversation comes down to: control. Cars take money out of your pocket. Investments put money back into it. Most people spend everything they earn, and then wonder why they never feel financially secure. Instead, follow a simple system: spend 75% of your income, invest 15%, save 10%. Set up three separate bank accounts and automate everything.

If you avoid the car loan trap, invest consistently, and control your spending, you’ll be shocked at how quickly your net worth begins to grow. A wealthy life isn’t built on what you drive it’s built on what you own. And real wealth comes from assets, not liabilities.

If you want to build wealth, you have to stop trying to look rich and start focusing on actually becoming rich.

Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.