<prompt> Human: I am wanting to purchase a new car and want to have a reference of what will be a good amount to spend while still being comfortable. I dont want to start looking and drool over something I cannot afford. I know I have heard people say they should spend 2.5 times annual income on a house. Is there a comparable figure for a car? If I have a decent savings, should I just pay cash, and if so what is a healthy amount to keep in savings? I imagine its a bad idea to blow it all on a car! Any advice is greatly appreciated!  <response>: Buying up to the limit of what can I afford on everything in life is a good way to always live paycheck-to-paycheck, without ever building up a financial buffer or nest egg.What kind of car do you NEED? A simple daily driver to get to work? A minivan for kids? A pickup truck for your job as a contractorbuilder? A nice looking luxury car because you have a client facing business e.g. luxury real estate or fancy lawyer?For most people, with no kids, a simple reliable daily driver like a 5 year old used Toyota Corolla for under 10k or something will be perfectly sufficient. You dont have to drive a beater, but you also dont need to spend 20,000-30,000 just because you can technically afford it. 