diff --git a/pkg/disk/disk.go b/pkg/disk/disk.go
index 1af5ee06d..3ee51dbeb 100644
--- a/pkg/disk/disk.go
+++ b/pkg/disk/disk.go
@@ -9,6 +9,7 @@ import (
 	"errors"
 	"fmt"
 	"io/fs"
+	"os"
 	"path"
 
 	limaStore "github.com/lima-vm/lima/pkg/store"
@@ -121,7 +122,15 @@ func (m *userDataDiskManager) createLimaDisk() error {
 func (m *userDataDiskManager) attachPersistentDiskToLimaDisk() error {
 	limaPath := fmt.Sprintf("%s/_disks/%s/datadisk", m.finch.LimaHomePath(), diskName)
 	if !m.persistentDiskExists() {
-		err := m.fs.Rename(limaPath, m.finch.UserDataDiskPath(m.homeDir))
+		disksDir := path.Dir(m.finch.UserDataDiskPath(m.homeDir))
+		_, err := m.fs.Stat(disksDir)
+		if os.IsNotExist(err) {
+			err := m.fs.MkdirAll(disksDir, 0o755)
+			if err != nil {
+				return fmt.Errorf("could not create persistent disk directory: %w", err)
+			}
+		}
+		err = m.fs.Rename(limaPath, m.finch.UserDataDiskPath(m.homeDir))
 		if err != nil {
 			return err
 		}
diff --git a/pkg/disk/disk_test.go b/pkg/disk/disk_test.go
index a7c89b73e..4dcf2a501 100644
--- a/pkg/disk/disk_test.go
+++ b/pkg/disk/disk_test.go
@@ -58,6 +58,7 @@ func TestUserDataDiskManager_InitializeUserDataDisk(t *testing.T) {
 				cmd.EXPECT().Run().Return(nil)
 
 				dfs.EXPECT().Stat(finch.UserDataDiskPath(homeDir)).Return(nil, fs.ErrNotExist)
+				dfs.EXPECT().Stat(path.Dir(finch.UserDataDiskPath(homeDir))).Return(nil, nil)
 				dfs.EXPECT().Rename(limaPath, finch.UserDataDiskPath(homeDir)).Return(nil)
 
 				dfs.EXPECT().Stat(limaPath).Return(nil, fs.ErrNotExist)
@@ -89,6 +90,7 @@ func TestUserDataDiskManager_InitializeUserDataDisk(t *testing.T) {
 				dfs.EXPECT().ReadlinkIfPossible(limaPath).Return("", nil)
 
 				dfs.EXPECT().Stat(finch.UserDataDiskPath(homeDir)).Return(nil, fs.ErrNotExist)
+				dfs.EXPECT().Stat(path.Dir(finch.UserDataDiskPath(homeDir))).Return(nil, nil)
 				dfs.EXPECT().Rename(limaPath, finch.UserDataDiskPath(homeDir)).Return(nil)
 
 				dfs.EXPECT().Stat(limaPath).Return(nil, fs.ErrNotExist)
diff --git a/pkg/path/finch.go b/pkg/path/finch.go
index b5472ed06..ff8d0013f 100644
--- a/pkg/path/finch.go
+++ b/pkg/path/finch.go
@@ -5,6 +5,7 @@
 package path
 
 import (
+	"crypto/sha256"
 	"fmt"
 
 	"github.com/runfinch/finch/pkg/system"
@@ -20,8 +21,8 @@ func (Finch) ConfigFilePath(homeDir string) string {
 
 // UserDataDiskPath returns the path to the permanent storage location of the Finch
 // user data disk.
-func (Finch) UserDataDiskPath(homeDir string) string {
-	return fmt.Sprintf("%s/.finch/.datadisk", homeDir)
+func (w Finch) UserDataDiskPath(homeDir string) string {
+	return fmt.Sprintf("%s/.finch/.disks/%s", homeDir, w.generatePathSum())
 }
 
 // LimaHomePath returns the path that should be set to LIMA_HOME for Finch.
@@ -29,6 +30,11 @@ func (w Finch) LimaHomePath() string {
 	return fmt.Sprintf("%s/lima/data", w)
 }
 
+// LimaInstancePath returns the path to the Lima instance of the Finch VM.
+func (w Finch) LimaInstancePath() string {
+	return fmt.Sprintf("%s/lima/data/finch", w)
+}
+
 // LimactlPath returns the limactl path.
 func (w Finch) LimactlPath() string {
 	return fmt.Sprintf("%s/lima/bin/limactl", w)
@@ -60,6 +66,11 @@ func (w Finch) LimaSSHPrivateKeyPath() string {
 	return fmt.Sprintf("%s/lima/data/_config/user", w)
 }
 
+func (w Finch) generatePathSum() string {
+	sum := sha256.Sum256([]byte(w.LimaInstancePath()))
+	return fmt.Sprintf("%x", sum[:8])
+}
+
 // FinchFinderDeps provides all the dependencies FindFinch needs to find Finch.
 //
 //go:generate mockgen -copyright_file=../../copyright_header -destination=../mocks/finch_finder_deps.go -package=mocks -mock_names FinchFinderDeps=FinchFinderDeps . FinchFinderDeps
diff --git a/pkg/path/finch_test.go b/pkg/path/finch_test.go
index c1cb2d5d4..f37b5a55c 100644
--- a/pkg/path/finch_test.go
+++ b/pkg/path/finch_test.go
@@ -27,7 +27,7 @@ func TestFinch_UserDataDiskPath(t *testing.T) {
 	t.Parallel()
 
 	res := mockFinch.UserDataDiskPath("homeDir")
-	assert.Equal(t, res, "homeDir/.finch/.datadisk")
+	assert.Equal(t, res, fmt.Sprintf("homeDir/.finch/.disks/%s", mockFinch.generatePathSum()))
 }
 
 func TestFinch_LimaHomePath(t *testing.T) {
@@ -37,6 +37,13 @@ func TestFinch_LimaHomePath(t *testing.T) {
 	assert.Equal(t, res, "mock_finch/lima/data")
 }
 
+func TestFinch_LimaInstancePath(t *testing.T) {
+	t.Parallel()
+
+	res := mockFinch.LimaInstancePath()
+	assert.Equal(t, res, "mock_finch/lima/data/finch")
+}
+
 func TestFinch_LimactlPath(t *testing.T) {
 	t.Parallel()