How much can you really save by using public transportation?
The average commute in America is about 15 miles each way, meaning that a typical commuter drives 30 miles every day to get to and from work. How much could you really save by parking your car and taking public transportation?
In America, the average commute is about 15 miles each way, meaning that a typical commuter drives 30 miles every day to get to and from work. How much could you save by parking your car and taking public transportation? Let’s do the math together. It may surprise you.
First, we need to decide whether you’ll get rid of your car altogether or just parking it while you’re at work. If you get rid of the car altogether, you’ll save a great deal more than if you park it.
Let’s consider all of the costs of owning a car, presuming you drive a total of 1,000 miles per month (meaning you’re driving 400 miles per month on top of the commute and you’ll have to find some other way to cover those miles, too).
If your car gets 30 miles per gallon, you’ll burn about 33 gallons of gas each month, which at $4 per gallon results in a cost of $132 per month. Car insurance varies from person to person, but could easily be $100 per month, depending upon your car, your age and your driving record. Maintenance costs tend to be low for new cars and higher for older models, but can easily exceed an average of $100 per month, remembering that one set of tires or new brakes will cost hundreds of dollars.
The biggest cost of owning the car is the depreciation. Roughly 80% of the car’s value will be gone after 10 years. The simplest way to think about this is that the car will depreciate approximately 15% each year. The average price of a new car in 2012 is just over $30,000. Depending on the model and condition, a five-year-old car might be worth only $13,000. The depreciation for the year will be about $2000 or $167 per month. If you have a car loan with a 5% interest rate and a $10,000 balance, the interest is costing about $40 per month.
The total of all these costs would be $539, assuming you own a fairly average car or about $0.54 per mile. If your car is bigger, newer, fancier, gets low gas mileage, or if you have a poor driving record the cost could be much higher.
What it may cost to use public transportation in your city should be easy to learn. In mine, commuting would cost $78.50 per month or less than $3.60 per day, meaning that I would save $460 per month if I could jettison the car and use public transportation, instead. That would leave me plenty of room to use a car share, a taxi cab or even an occasional rental car for special occasions and still be money ahead.
If you don’t sell the car, but park it, you can’t get rid of the depreciation, interest or insurance, but you can reduce the fuel and maintenance proportionally. Fuel and maintenance combine for an average of $0.23 per mile in our example (more if your car is older or larger than average). The fuel and maintenance costs per mile total about $7 per day for 30 miles of commuting. So, using public transportation at a cost of $3.60 per day would save you almost half or $3.40 per day — and it’s environmentally "green." If you have to pay for parking, the savings will add up even faster.
Devin Thorpe, husband, father, author of Your Mark On The World and a popular guest speaker, is a Forbes Contributor. Building on a twenty-five year career in finance and entrepreneurship that included $500 million in completed transactions, he now champions social good full time, seeking to help others succeed in their efforts to make the world a better place.