How Much Does Your Commute Cost You?

Your commute can be the black hole into which your money – and time – gets sucked into. Very few people realize just how much they lose when they have a long commute. – Me

In 2017, the average American had a one-way commute time of 26.9 minutes according to the latest data released by the Census Bureau, up from 26.6 in 2016.

The new guy at work chose to add to the average.

He recently moved to the state for the job and purchased a house in an area that gives him a 40-minute commute. If you like to go by distance, it is 32 miles. EACH WAY!

He doesn’t realize it, but he just signed himself up for one HUGE yearly bill. A bill that is paid in small increments across different accounts and at mostly random times. This piecemeal and spread out cost is why he, and many other Americans, do not understand how much a commute costs.

Let’s break his commute down for a work year.

• 64 miles per day, 5 days per week, for 48 weeks (we get 4 weeks off per year): 15,360 miles
• 80 minutes per day, X5, X48: 320 hours
• Using the government standard mileage rate of 54.5 cents/mile, his cost is: $8,371.20

MILES

While those 15,360 miles will depreciate his vehicle, that cost is included in the government’s standard mileage rate. What isn’t included is the environmental impact of his decision. While I realize that one more car on the road for longer won’t change things, it’s just adding to the problem. The more people that don’t think about their impact to the planet, the worse things get.

Small numbers add up quickly over time. If more people drove less, the combined reduction in emissions would be large. And this is just his commute, his personal driving and errands will further increase his yearly mileage.

This many miles is much more than all my yearly driving combined.

TIME

If you look at 320 hours in the confines of a normal 8-hour workday, it comes out to 8 WEEKS worth of jobbing. The sad thing is your commute time doesn’t count as work so all this time is put on top of what you have to spend on the job.

This means he will have less time to spend with his family, his hobbies, and his passions. Basically, he signed up for an additional 2 months of unpaid work per year.

COST

$8,371.20 is not chump change. This amount of money invested for 20 years at a conservative 7% would grow to over $360,000.

Now it’s not practical to assume zero commuting costs as we all have to pay something to get to work. Even if you are able to telecommute, there are costs associated with doing that.

I will use my own commuting costs and the same formula but with my inputs, I come out with my personal numbers: 2,400 miles, 88 hours, and $1,308.

The monetary difference between our commutes is $7,063.2, or over $309K if invested at that same 7% rate for 20 years.

CONCLUSION

My new coworker is actually one position above me and so earns more — except he chose this long commute. When I calculate the difference in cost between his commute and mine, he only ends up earning about $1,000 more than me per year.

But you also have to consider taxes on his higher income. You see, saving money is 100% yours but if you earn more the tax man wants his cut. If he falls into the lowest 12% bracket, his last $1,000 income advantage evaporates. If he is in the 22% bracket, he ends up with less money than me even though he earns much more.

All because of this one poor decision.

While I focused on a car commute and listed some of the most direct negatives involved with this type of commute, there are some small benefits. Two of the most commonly mentioned are a chance to have a mental break before and after work as well as the option to listen to podcasts or audiobooks.

But let’s face it, those are two crappy benefits compared to having a few thousand dollars in your pocket and that same amount of time freely available to your use in any way you see fit.

When I hear someone say that “I just don’t know where my money goes,” I have to think that they are not calculating the incremental daily transactions.

Speaking of which, I found this little commute calculator if you want to quickly see what your commute costs you. They use a slightly different calculation than I do, but you get the idea.

Additional Info:

• His spouse is currently looking for a job so her work commute wasn’t part of the decision.
• The area he moved to is a cookie-cutter planned community and is nice because everything is new(ish), but there are closer places just like it with similar price points.