Commuting Costs: Be Careful, They Can Be Surprisingly High!

It’s no secret that a big part of our financial engine is the type of career we have. Some offer more compensation, others not as much. Within each career track, there are different job opportunities that can pay more than others.

It just makes sense to consider these factors when looking at our ability to earn and save money. That being said, does it make sense to strongly consider our daily commute as well?

Personally, I think it does. Speaking from my own experience, the length of one’s commute to work in terms of time and distance can play a significant role in the ability to move our finances forward.

I’ve had commutes of varying degrees over the years. The shortest commute I’ve had was 5 minutes each way. That was many years ago, and actually that was the case with 2 jobs I had.  Funny, I really took it for granted back then and didn’t realize how nice that was. On the other end of the spectrum, I’ve driven as much as 1.5 hours each way, and had the commute become a big part of my day.  Having experienced both extremes, as well as points in between, it’s clear that there are significant costs involved.

Let’s take two examples that are a little bit less extreme than my commutes, and assess the costs.

Commute #1:  10 mile/15 minute commute each way

Commute #2:  40 mile/60 minute commute each way

Also, let’s assume that your car gets 25mpg on average, the cost of gas is $3.50 per gallon, and you’re working 22 days per month at 8 hours per day.

Gas Expenses

In terms of gas costs, your monthly/annual costs are as follows:

Commute #1:  $62 per month, $739 annually

Commute #2:  $246 per month, $2,957 annually

Clearly, that longer commute takes away from the amount of money one could save per year. The difference between the two is about $2,218 per year. Think about what you could do with that $2,217. If you chose to spend it, that would make one heck of a vacation! Or, if you choose to save it, that would be a nice addition to your retirement savings. When compounded over time, this can result in even more money.

Car Expenses

While somewhat less direct or quantifiable, there is a cost associated with wear and tear on our cars.  To illustrate this, let’s assume that our car is a $20,000 vehicle that we expect to drive all the way to 200,000 miles. Taking these assumptions into account, the amount of value that we’re losing from our vehicles will be as follows:

Commute #1:  $44 per month, $528 annually

Commute #2:  $176 per month, $2,112 annually

The difference between the two is about $1,584 per year.  Now, this is using straight-line depreciation based on mileage – excluding any minimal salvage value.  This calculation does have a number of assumptions built-in and doesn’t reflect direct cash expenditures, but it’s clear that a longer commute wears out a car quicker – which accelerates our future spending on our next car.

Time Expenses

Let’s consider this from an opportunity cost perspective. If we’re in the car trying to get to a job, it’s time that’s job-related and not personal. It takes away time that we could spend doing other things if not commuting. Time with family, housework/errands, and exercise are activities that first come to mind, among others.  There’s value there, even if it’s hard to quantify.

Well, let’s give it a try anyway, even if it’s not an exact science.  For sake of example, let’s assume someone with a basic, annual salary of $50,000.  That person’s time has value, as evidenced by the salary.  Factoring in the earlier assumptions about hours and days worked (22 days per month, 8 hours per day), this person’s hourly wage comes out to $23.67 per hour.  Going with this figure, the opportunity cost of the commute is as follows:

Commute #1:  $260 per month, $3,125 annually

Commute #2:  $1,250 per month, $9,375 annually.

Ok, I know that some folks won’t share my views on opportunity cost of time, but our time is valuable. If you do want to attempt to quantify it, it becomes clear that there’s value that’s being expended during our commutes to work. In this case, the difference between the two is about $9,375 per year.

Overall Assessment

At the very least, we can directly quantify the cost of gas with a longer commute. In that case, this “typical” example of short (15 min) vs. long (60 min) commute indicates a:

  1. $2,218 difference between short and long commutes based on gas costs.
  2. $13,176 difference between short and long commutes, when adding in the indirect costs of car wear and tear, and the opportunity costs of time.

Bottom Line:  Clearly, no matter how many layers of costs we want to include in such analysis, it’s clear that there’s an impact of commuting that might be more than meets the eye. So, when evaluating your current job or a future job opportunity, it’s worth taking a very close look at the overall commuting costs.

My Questions for You:

  1. If you’re working (or have a spouse that is), what’s the total commute like? How does this play a role in the quality of your life?
  2. Do you ever think about the costs of a job commute, and the impact is has on your finances?


  1. says

    My husband commutes approximately 50 minutes each way to work (just under 2 hours total per day). His job is about 40 miles from our house. Since we live in a public transportation desert, he has no choice but to drive. The best we can do is make accommodations in our budget for gas, tolls, and car maintenance to account for the commute. Which we’ve done consistently for the almost 6 years he’s had the job/commute. He loves his job and doesn’t mind driving. He likes the time alone, which he uses to listen to podcasts, audio books, decompress or whatever else he does for 2 hours a day.

    I think you make some excellent points about the overall cost of commuting and short commutes definitely are preferable. I think that in an ideal world, we’d all have short commutes and getting to work would be inexpensive. But sometimes long commutes are unavoidable, especially given the economic climate of the last 3 years.

    • Squirrelers says

      Jana – I think your last sentence in particular might completely resonate with a lot of people in this situation. Sometimes such commutes are just a part of things in this economic climate. You have to do what you can do for your family. Also, I know what you mean about some people using driving as decompression of sorts. I used to listen to books on tape (6 or 7 years ago) or CD, getting them from the library. Personally, I find taking a train/public transportation to be much more decompressing than driving, but as you alluded to, sometimes there’s no choice but to drive for people.

  2. says

    For me the time cost weighs the most heavily. The longest commute I had was 40 miles door to door (typically an hour to an hour and a half) and that just ate up way too much time. My commute now is 5 minutes, which is the most I would consider. My husband and I carpool too, so that’s nice :)

    • Squirrelers says

      Jackie – I know, the time aspect makes a big impact. Takes away from many other things that are important!

  3. says

    Not to mention your commuting distance also plays a part in your insurance premium. Like everything in life commuting distance is a tradeoff between stuck in traffic, to a good school district to cheaper homes!

    Weigh the pros and cons, not just from a monetary perspective but taking the above factors before considering commuting costs.

    • Squirrelers says

      Moneycone – that’s actually a great point about insurance premiums. Agreed totally on the tradeoff comments!

  4. says

    I work from home, so my commuting costs are pretty low. :)

    My husband drive is about 30 minutes to work and 45 minutes coming home. Really not too bad. 90 minutes like you experienced would have been awful. At one point, he too was 5 minutes from home, which was great.

    We never really considered commuting costs when it came to work because the commute was always reasonable, and the job was well worth it. However, it would definitely be an issue if we ever considered moving to a more rural area.

  5. says

    I have a 25min walk to work as my commute right now. I love it. I estimate I’ve saved around $400 in the last six months by walking. Living close to work is a big priority for me since I find that it helps my quality of life so much on top of the financial savings.

    • Squirrelers says

      No Debt MBA – now that’s a different situation you have, in walking to work. With decent weather, that’s an exercise opportunity – which helps with overall quality of life. Plus, the direct financial savings are there too. Seems like a good situation you have, glad you’re happy with it.

  6. says

    Yikes, we are moving across country. Hubbys commute will go from 8 minutes to 30. But the weather is much better and so is the job. Since I telecommute, it won’t impact me. With sirrius radio in the car, I think he won’t mind the drive toooo much!

    • Squirrelers says

      Barb – Well, as MoneyCone pointed out in a comment above, many choices are about tradeoffs. Longer commute but better weather…well, you’re getting some value there so that’s nice!

  7. says

    It’s true that we don’t think about commute while choosing our job. but I do consider this cost and that’s why i don’t want to own a home. Owning a home will shackle my job related moves reducing my income any way.

    very nice post

    • says

      With jobs less secure these days, it’s a great point to consider renting for maxiumum flexibility. This is especially good for younger workers who could be chainging jobs fairly often. Good point!

  8. says

    We hate commuting. There are many things we would do before adding an hour commute driving each day. If it were train or subway commuting it wouldn’t be so bad– there’s a lot that can be done during an hour subway ride.

    Our commutes are 15 min each way if we don’t do daycare and around 30 (including time settling in at daycare) if we do. If we carpool that adds ~10-15 min to the commute depending on traffic.

    • Squirrelers says

      Nicole – yes, there’s multitasking that can be done in some cases. I’ve done that, and agree. Also have to say that there are “transaction costs” of getting to the train station, getting on board, exiting the train, etc that are distractions that really cut into that potential work time on a train. Best to have a commute like yours, that’s pretty good!

      • says

        Ideally you would live in walking distance to a straight subway line (thus getting your daily exercise in effortlessly)… Too bad there’s so few places in this country where that’s a normal thing to do!

        • Squirrelers says

          Yes, that would be ideal. I’ve known a few people that had such a commute. They loved it, and I can’t blame them. Of course, they complained about that walk on cold winter days:)

  9. says

    So true! One way to help if you can’t move: the person with the longest commute can use the car with the best mpg. Carpools are good if you can find one. Keeping your eye out for job opportunities closer to home can work for some people.

    Ask at work if you can work from home some of all days of the week. This works well for jobs that are mostly done on the computer. Consider how many days a week you should be at work to stay connected.

    When decided where to live if you move for a job keep in the mind the commute costs! A long commute is usually tiring and takes a toll on your energy and time available to spend with family, etc.

    The costs of gas/diesel won’t be going down much in the future, so all of these costs will just go up.

  10. says

    Commutes can wreak havoc on your finances, and your life in general. They can be bad for your health and your relationships. People with long commutes often have less success in marriage and relationships.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>