A friend of mine works at a Home Depot about ten miles from her home, which means she has a daily round trip of about twenty miles for her commute. She makes more than minimum wage – let’s say $8 per hour after taxes– and she seems pretty happy there.
As far as I can tell, she works five shifts per week, seven hours each.
She drives herself back and forth to work on each of those work days. Her car is reasonably fuel efficient and pretty reliable. We’ll say, for the purposes of this exercise, that she paid $6,000 for it and figures she’ll be able to get 100,000 miles out of it without any major repairs. That’s really optimistic, I know, but it gives us something to work with.
Her car gets about 25 miles per gallon, too. In the area where she lives, gas is about $3.50 per gallon. Her tires wear out at the 40,000 mile mark, so she’s going to be spending about $400 to replace them all. She has to change the oil every 5,000 miles, which costs her, say, $25 per oil change (I’m trying to use round numbers that will divide easily while still being fairly accurate). She tries to stick to her maintenance schedule, too. She also has to cover auto insurance on her car – just liability insurance, mind you – which sets her back about $40 per month.
So, let’s start figuring this up.
Her gas cost is about $0.14 per mile. Since she commutes ten miles each way, that’s $2.80 per day.
Her tire cost is about $0.01 per mile, adding up to $0.20 per day.
Her oil cost is half a cent per mile, adding up to $0.10 per day.
Her insurance cost, assuming she only drives back and forth to work, is $0.10 per mile, adding up to $2.00 per day.
Her time invested in driving back and forth to work is about half an hour each way.
So, if we ignore her commute entirely, a given day sees her working a seven hour shift and bringing home $8 per hour for that work, totaling $56.
What happens when we include her commute? Out of that $56, she loses $2.80 to fuel, $0.20 to her tires, $0.10 to her oil, and $2.00 to her insurance. Her total goes down to $50.90. She also adds an hour of commute time, bumping her up to eight hours of work.
The commute alone drops her hourly take-home pay for her time away from home from $8 per hour to $6.30 per hour. That’s the reality of a commute.
I’m not going to suggest that she ditches her car and rides a bike to work. It’s certainly an option for her, but it’s not one that the vast majority of people will follow up on.
Instead, I propose something different. Take your commute into account when you’re shopping around for a job.
Let’s say she simply takes a job that’s two blocks away at a diner, still working seven hours a day, five days a week. She continues making the same wage as before, but she’s not driving her car each day and her “commute” is just a few minutes.
She’s still losing $2 per day to auto insurance, but she’s bringing home $54 for every seven hours spent outside the house instead of $50.90 for every eight hours spent outside the house. She now has an extra $2.10 to keep in her pocket every single day but, more importantly, she has an extra hour of freedom each day.
One of the best subtle financial moves you can make is to simply live close to your work. Ideally, choose to live close enough so that you can walk there or, even better, find some way to work from home. Your commute length – which is essentially part of your workday – virtually disappears, as do many of the expenses related to your commute. It doesn’t have any impact on your other buying decisions or your quality of life. It just leaves more money in your pocket and more time in your day.