Some monthly bills are just part of life — but others can do more harm than good. According to money expert Austin Williams, there’s one expense in particular that could be making it more difficult to add money to a person’s bank account.
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If money always feels tight, this overlooked bill might be the reason why.
Financial Impact of a Monthly Car Payment
Williams explained in a recent video on his YouTube channel that the average car payment is $745 for a new car and $521 for a used car in 2025. He suggested keeping a car that is in good condition and paid off (rather than getting a new car) and using the extra money towards investing and saving for retirement.
He also commented on the fact that even a low monthly car payment of just $350 could be invested instead, and grow over five years to be worth over $24,369 — and grow over 30 years with compounding interest to be worth over $245,216.
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Investing for the Future
Experian agreed that once a vehicle is paid off, it is a good idea to think about what could be done with the extra funds. If the funds could be redirected towards savings, then investing in a tax-advantage IRA for retirement would be beneficial in the long run.
Rate Genius gave the advice that after paying off the car loan, it is tempting to run out and buy a new vehicle. But it may be better to save the amount of money you would normally spend on a car payment and put it to better use. Obviously, if there are less payments, there’s going to be more money available that could be put towards saving for retirement.
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This article originally appeared on GOBankingRates.com: Money Expert Austin Williams Shares Common Monthly Bill Keeping You Broke
