Most people think of their cars as working for them. They imagine convenience, freedom, maybe even status.
But for many American households, especially those with an unnecessary extra car, that second or third vehicle quietly burns through enough money to take away real long‑term wealth.
If you want a surprisingly powerful path toward $1 million, start by exploring whether you really need every car in your driveway.
The hidden cost of owning a car
Owning a car or more per adult is normal. Monthly payments are normal. Gas, insurance, repairs, registration, parking, and random fees are normal.
But “normal” is expensive.
According to data from the U.S. Bureau of Labor Statistics, the average American household spends around $12,000 per year on transportation, and the largest portion of that is personal vehicles, including the cost of the car itself, insurance, fuel, maintenance, and repairs (U.S. Bureau of Labor Statistics, 2024). That’s about $1,000 a month, per household, tied up in keeping cars on the road.
In many two‑ or three‑car households, one of those vehicles is barely essential. It’s a convenience. A backup. A “just in case.” That “just in case” can be the difference between coasting financially and becoming a millionaire over time.
What if you invested your car money instead?
Let’s say you find a way to live with one fewer car. You sell it, cancel the insurance, stop paying to fuel and maintain it, and you redirect that $1,000 a month into an investment account instead.
Now invest that $1,000 per month consistently for 25 years and earn an average annual return of 8 percent (compounded monthly for simplicity):. What you get:
$946,000
So getting rid of an unnecessary extra car and investing the savings could put you within striking distance of one million dollars over 25 years.
Not by being a brilliant entrepreneur, taking big risks, or by winning the lottery. Just by not owning a vehicle you don’t truly need and investing what you would have spent on it.
But do I really “spend” that much on my car?
Many people underestimate what a car costs because they only think about the monthly payment.
Here’s what usually gets missed:
- The payment (if you have a loan or lease)
- Insurance premiums
- Gas
- Routine maintenance (oil changes, tires, brakes, etc.)
- Unexpected repairs
- Registration and taxes
- Parking, tolls, tickets
The American Automobile Association (AAA) regularly estimates that the annual cost to own and operate a new vehicle is in the five‑figure range when you add all of those pieces together (American Automobile Association, 2023). If you’re driving something newer or higher‑end, or you live in a high‑cost city, your real number may be even higher.
If your “extra” car is financed, the financial drag is even worse: you’re paying interest on a depreciating asset that’s losing value every year.
The lifestyle tradeoffs that make this possible
Dropping from two cars to one (or from three to two) isn’t always painless. It usually requires some mix of adjusting commuting patterns, occasionally using rideshare or car‑share, carpooling with coworkers, friends, or family, and/or planning errands and appointments more rigorously.
It may involve getting a bike, ebike, and/or using the bus more. And it all might be easier or harder depending on where you live.
But notice something important: even if you sometimes use taxis, rideshare, or short‑term rentals, that doesn’t come close to the full cost of owning, insuring, and maintaining an extra vehicle for the entire year. The all‑in ownership cost is what quietly kills your wealth.
Some families find that rethinking where they live is part of the equation: moving a bit closer to work, transit, or schools can lower or eliminate the need for that extra car, and also reduce stress and commute time.
This isn’t just about deprivation. It’s about thinking more strategically about transportation for a lot more long‑term freedom.
Why 25 years matters more than you think
Twenty‑five years sounds like forever, but it isn’t. It’s the difference between being 30 and 55, or 40 and 65. Those years are going to pass no matter what. The question is whether each of those months brings you a step closer to financial independence, or just another oil change and insurance bill.
The power is compound growth. When your $1,000 goes into an investment account earning around 8 percent per year on average, your contributions start earning returns, then those returns start earning returns. Over time, your growth accelerates, especially in the later years.
That’s why the decision to drop an unnecessary car early in your financial life can be so powerful. The longer your money has to grow, the more dramatic the result.
Your mileage may vary
This millionaire math uses round numbers to make the point clear. Real life is messier.
The example assumes you save and invest $1,000 per month for 25 years at an 8 percent annual return and end up with around $946,000. With a few more years of investing, you would likely cross the $1 million mark.
You can also adjust the levers: maybe you can only free up $500 per month, or maybe you can redirect $1,500. Maybe your average return is 6 percent instead of 8, or you hit a long stretch of strong markets and do better. None of these inputs are guaranteed; they are tools to help you visualize what’s possible.
You might look at $12,000 per year and think, “I don’t spend that much on my car.” That could be true. But it could also be an underestimate. Many people only think about the payment and gas, and forget insurance, registration, maintenance, and repairs. On the other hand, you might be spending much more. In recent years, many buyers have taken on large loans at high interest rates, often on vehicles that depreciate faster than the loan balance is paid down. That leaves them “underwater,” owing more than the car is worth, and feeling stuck. In those cases, the true annual cost can be well above that $12,000 benchmark.
You might also be in a situation where you can’t offload a car easily. Maybe you need it for work. Maybe the resale value is too low compared with what you owe. Maybe your family’s logistics feel impossible with fewer vehicles. That is all real. But there is usually still room to move somewhere on the spectrum. You might not be able to sell a car today, but you might be able to:
- Decide that your next car will be one you can afford in cash, not with a high‑interest loan
- Refinance an expensive loan if possible
- Drive less, combine trips, or carpool to reduce fuel and wear‑and‑tear
- Use transit or biking for some trips and delay buying an additional vehicle
- Set a firm cap on how much of your income will go to transportation
The point is not that every person should immediately dump a car and invest $1,000 a month. It is that cars are one of the biggest and most unexamined expenses in modern life, and we often underestimate how much they cost and how much wealth they displace.
So treat this article as a guide and a thought experiment, not a strict prescription. It is meant to highlight just how much money flows into vehicles, how strongly we are nudged to spend on them, and how powerful it can be if you create even partial alternatives. Whether that means going from three cars to two, stretching the life of a paid‑off car, avoiding a luxury upgrade, or planning to buy your next car in cash, small shifts away from automatic car spending can be surprisingly profitable over the long run.
How to know if an extra car is really “unnecessary”
Ask yourself:
Could we realistically coordinate schedules with one fewer car most days?
Are we keeping a vehicle mostly for rare situations (worst‑case scenarios vs daily needs)?
How many days per month does this car actually get used?
Would occasional rentals, rideshare, or car‑share be cheaper than owning this vehicle year‑round?
Can we move—or think differently about a future move already planned?
If a car is driven infrequently, mostly for convenience, or simply because “we’ve always had two cars,” that’s a signal. It may be less a tool and more a habit.
The mental shift: from car pride to good-decisions pride
Cars are visible status symbols. Investments are invisible. That makes it easy to prioritize the wrong thing.
When you reduce the number of cars you own, it might not show on Instagram. But it shows up quietly in your balance sheet.
Over years and decades, it can be the difference between consistently feeling stretched and building a substantial investment portfolio that supports you and your family
Think of every nonessential car payment as a missed investment deposit. When you flip that around, you’re not “giving up” a car. You’re buying long‑term freedom.
Twenty‑five years from now, you might look back at your old driveway and realize that the best “vehicle” you ever owned was not a car at all, but your investment account.
References
American Automobile Association (2023) tor. Your Driving Costs: How Much Are You Really Paying to Drive? https://www.aaa.com/autorepair/articles/your-driving-costs
U.S. Bureau of Labor Statistics (2024) tor. Consumer Expenditures in 2023. https://www.bls.gov/news.release/cesan.nr0.htm
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