A staggeringly high number of people are ignoring traditional rules of thumb when it comes to transportation costs.

Answer: 16.8%

Questions:

• Do you think it’s a good idea to have such a large portion of your income dedicated to a car payment?
• What are some other important spending categories that could be impacted by such a large car payment?
• What are some approaches you could take to lower the amount of money you spend on transportation, including your car payment?

Here are the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (Detroit Free Press): 

"If you don't limit what you spend on a car payment, you're not going to be able to save as much money toward bigger goals, such as a down payment on a mortgage for a home or building a nest egg for retirement, either.

'A large monthly car payment might result in an individual only being able to save 3% to 5% into their monthly 401(k), as opposed to 8% to 10%. Over time, that makes a huge difference,' Munzenberger said."

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About the Author

Ryan Wood

Ryan is the Partnerships and Adoption Manager for Next Gen Personal Finance’s midwest region. He brings his experience as a former teacher, curriculum designer, and sales and marketing professional to state organizations and school districts in supporting the implementation of their personal financial education efforts. He graduated from the University of Wisconsin-Green Bay and earned his teaching credential from Saint Mary’s University in Winona, Minnesota. He proudly taught at two rural high schools in Wisconsin before transitioning to curriculum design at NGPF, and is now excited to be on the front lines in delivering the best possible financial education in the midwest. He and his wife have three beautiful daughters, each of which inspire him to share the impact of being sound financial stewards both at home and as lifelong learners.