Is a car a necessity or a luxury in a major city?

Question

Rich Dad · Accepted Answer

A car isn’t transportation — it’s either a tool or a trophy, and most people can’t tell the difference.
In a major city, a car is rarely a necessity — it’s usually a convenience wrapped in ego. Let’s break it down with numbers. In cities like New York, London, Toronto, or Singapore, the true cost of owning a modest car can run $800–$1,500 per month when you include payments ($400–$700), insurance ($150–$300), parking ($200–$600), gas, maintenance, and depreciation. That’s $10,000–$18,000 per year. Invest that same $1,000/month at an 8% annual return for 10 years and you’re sitting on roughly $180,000. That’s not transportation — that’s opportunity cost on wheels.
Now here’s the entrepreneurial lens: a car is only a necessity if it produces income or dramatically increases your earning power. Are you a real estate agent showing properties across town? A contractor hauling equipment? A consultant whose clients are spread across suburbs? Then the car is a business asset. It’s like a laptop — you wouldn’t call that a luxury if it helps you earn $200,000 a year. But if you’re commuting 20 minutes on a subway that costs $150/month? That car is a shiny liability.
Let’s look at scenarios. Scenario one: You live downtown, work remotely, and have Uber, trains, and grocery delivery within 10 minutes. You’d need to drive 10–15 times per month before ride-sharing even approaches the fixed cost of ownership. Scenario two: You live in Los Angeles with weak public transit and commute 45 minutes each way. In that case, the car becomes a productivity tool — it gives you 1–2 hours per day back versus patchwork transit. Time is money. If that time is used to build skills or income, the math changes.
Now here’s the uncomfortable truth: many people buy cars in cities for identity, not utility. Status, comfort, “I deserve it.” That’s emotional spending. A $50,000 SUV in Manhattan isn’t transportation — it’s parking anxiety with leather seats. Wealthy people often delay that purchase until their assets pay for it. When your investments throw off $1,500/month in passive income, then buy the car. Let the asset fund the liability.
Could there be non-financial benefits? Absolutely. Safety at night. Visiting family. Weekend freedom. But freedom is cheapest when you rent it. Rent a car for $80–$120/day when needed. Flexibility without the burden.
In a major city, a car is rarely a necessity. It’s a financial decision disguised as convenience. Treat it like a business investment — or admit it’s a luxury and make sure your assets can afford your lifestyle.
If it doesn’t make you money or save you serious time, it’s not a necessity — it’s a lifestyle choice.

Poor Dad · Answer

A car may look like a luxury on paper, but peace of mind doesn’t show up in a spreadsheet.
In a major city, whether a car is a necessity depends heavily on your daily life, safety needs, and long-term stability. Yes, public transportation can cost $100–$200 per month versus $800–$1,200 for car ownership. That’s a big difference. But life is not lived in averages. What if you work late shifts? What if transit shuts down early? What if you have children? A missed train is an inconvenience; being stranded at midnight is a risk.
Consider practical examples. A nurse working rotating hospital shifts may finish at 2 a.m. Waiting 30 minutes for a bus in an unsafe area isn’t just inconvenient — it’s dangerous. A parent juggling daycare drop-offs and a full-time job may lose an hour each day coordinating buses and transfers. Over a year, that’s more than 250 hours — six full workweeks. Sometimes paying more ensures reliability, and reliability protects your job and income.
However, I will say this clearly: many people underestimate total car costs. Depreciation alone can reduce a $30,000 car’s value by 40–50% in five years. Insurance in dense cities can exceed $250 per month. Parking permits and tickets add up quickly. If your income is unstable or you’re carrying credit card debt at 18–25% interest, adding a car payment is financially risky. Be careful not to trade short-term comfort for long-term financial stress.
There’s also the stability factor. If your job is secure, your emergency fund covers at least 6 months of expenses, and the car payment is less than 10–15% of your take-home pay, then it may be manageable. But if you’re stretching your budget just to “feel independent,” that’s dangerous. I’ve seen too many young professionals lock themselves into 5- or 7-year auto loans and regret it when layoffs happen.
A balanced approach might be this: rely on public transit for daily commuting and use car-sharing services or short-term rentals for special situations. Services like Zipcar or weekend rentals can cost $300–$500 per month if used moderately — still far less than full ownership. That way, you maintain flexibility without a long-term financial burden.
In a major city, a car is often not strictly necessary — but for some lifestyles, it provides stability, safety, and predictability. Just make sure the decision fits your income level and doesn’t compromise your savings or retirement contributions.
It’s better to arrive a little slower than to drive yourself into financial stress.

Is a car a necessity or a luxury in a major city?

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