The Definitive Car Budgeting Checklist

Do you know how much money goes into your car? 🤔 Knowing how much you need to spend on your car is crucial in maintaining a controlled budget for it. The price of the vehicle is not the only thing you have to think about. You also have to consider the costs of running a car such as fuel, taxes, congestion charges, parking fees, insurance, repairs and maintenance. To help you prepare your finances, here’s a definitive car budgeting checklist to guide you!


The money that goes into fuel costs is not just about whether your car runs on petrol, diesel, or electric power. There are a lot of factors to consider such as the price of fuel, fuel type, and how much your vehicle consumes fuel. In fact, even your driving habits can affect how much you spend on refilling your tank. 

As you may already know, diesel is more expensive than petrol but you’ll be able to drive your car further with it. But this is only cost-efficient if you have frequent long drives. For driving short distances in the city, the best option would be to go electric. Charging your electric vehicle is far cheaper than petrol or diesel. 

Check fuel price reports online to know how much you need to budget. These days they are on a steep increase! Once you already have an idea of your average mileage every month, it will be easier to calculate how much money you need to set aside for fuel costs. 

MOT and Servicing

When your car reaches its third year, then you’re now required by law to take it to an annual MOT. Sure, it feels like such a hassle because you have to take your car for its regular servicing apart from the MOT but it’s vital that you know that your vehicle is still safe and roadworthy. 

The MOT costs may be different depending on your vehicle but for a regular car, you only have to prepare about £55 for it. After the MOT, it might be recommended that your car be taken for servicing. While this might only be a recommendation and not a requirement most of the time, it’s still best to get your car checked over regularly so that the auto mechanic can spot issues before they get worse. Sometimes you can find offers of combined service and MOT which might save you money overall. Be wary of organisations that offer really cheap MOT charges - sometimes you will find they recommend unnecessary repairs so make up for that. 


Maintenance and repair costs can vary from one vehicle to the next so it’s hard to set a budget for it. Typically, electric vehicles are cheaper to maintain because they have fewer moving parts than combustion-engine cars that need an oil change, engine repairs, and other issues that may arise as the car gets old. 

If you have a brand new car, then you don’t really have to worry for the first three to seven years because the vehicle is covered by the manufacturer’s warranty. The number of years would depend on the car manufacturer, so do check with them to know the length of your warranty. During this time, you don’t have to pay for repairs if the car has any problems. Make sure you get it serviced regularly as advised though, or you might invalidate your warranty.

Beyond the years covered by the manufacturer’s warranty, take your car for regular maintenance checks so that the specialists can identify any issues and work on them before they get worse and become more expensive to repair. Have a car maintenance checklist ready so you can also check your car yourself anytime you want.  

Car Tax

The amount you need to pay for car tax depends on the specifics of your vehicle such as the engine type, fuel type, and CO2 emissions. Cars that have been registered after 1 April 2017 will have to pay tax based on the CO2 emissions of the car when it was first registered, and then a standard tax applies. 

For older vehicles that have been registered from March 2001 to April 2017, the tax to be paid will be based on the CO2 produced by the vehicle. There are some car owners who might be exempt from paying car tax such as those who drive electric vehicles or if the car is being used by a disabled individual, or "historic vehicles" over a certain age - 40 years old. 

To save money on taxes, it’s important to choose a car that produces fewer CO2 emissions. If you want to enjoy the tax exemption, consider buying an electric car since it doesn’t produce any tailpipe emissions at all. You get to save money while also contributing less carbon footprint. 


Having an insurance cover is a legal requirement to drive in the UK and it gives you peace of mind knowing that you’ll be covered from financial liabilities in case of an incident. There are several types of insurance cover to choose from – third party, third party fire and theft, and comprehensive. 

For the bare minimum insurance cover, you can get the third party cover. However, it would only cover the other vehicle or other individuals in case of an accident where you are at fault. For the third party fire and theft, you will get the same cover as the previous one but your car will also be insured in case of theft or fire. Finally, a comprehensive cover is the best one because it covers third party, fire, theft, and any damage to your vehicle, even if you caused it.  

An insurance cover might cost about £500 per year but it still depends on the type of cover you get as well as the make and model of your vehicle, your age, the length of time you’ve been driving, and any insurance claims you’ve previously made. You also accrue a "no claims bonus" for all the years you have been insured and not had an accident. This is also sometimes transferable if you have been a named driver on another person's insurance and they have not claimed. This bonus can significantly reduce your premiums. 


Owning a car requires you to set aside enough money for the running costs, insurance, repairs, MOT, taxes, parking fees, and other things like car fluids. You may want to note such expenses for the first few months so you can get an average amount of the money you spend on your vehicle. The more you know, the better you’ll be able to prepare so your finances will remain intact even when there are unexpected car issues. Check out our article on what to do if your car budget is lower than you need