The federal government estimates it cost 56¢ for every mile driven in a personal vehicle. Let that sink in for a minute. Over 50¢ a mile! How much does that short trip to the grocery store cost you? Your work commute? How many miles do you drive a year?
When most consumers think about the cost of driving, they typically estimate the cost of gas. Do you realize that generally gas only makes up about 25% of the cost of driving? If your car gets 30 mpg, at $4 a gallon, gas is approximately 13¢ per mile. That is less than one fourth of the cost of driving!
Transportation, and especially driving, tends to be one of the most underestimated expenses for the typical American household.
What are the true costs of driving?
- Vehicle Purchase
- Scheduled Maintenance
- Auto Insurance
- Interest Payments
- Problems and Maintenance Issues
- Upgrades and Accessories
- Environmental Cost*
So, why do Americans so grossly misjudge and miscalculate the expenses of driving? For most people, even those that keep detailed track of their finances, the issues arise due to the fact that the cost comes from a lot of different categories and on intervals that are inconsistent. You only buy a car once every few years. You don’t actively see depreciation (unless you have kids). The cost of insurance is an annual cost. The cost of scheduled maintenance only happens every year or two depending on how far you drive. The cost of sporadic maintenance issues, problems or accidents only happen at the worst possible times. Gas is the most visible and consistent of all expenses. And don’t forget, especially if you know a teenager or someone who owns a Jeep, the amount of money spent on accessories or upgrades add up as well.
Calculating Your Driving Cost
Calculating this cost is really easy. Just think of the distance in miles one way as the cost of a round trip. For example: If I am going 5 miles to Trader Joe’s and back, it will cost me about $5 (@ 50¢/mile). Basically, measure the distance one way for a round trip and that will approximate the total cost of that trip.
Distance in miles to destination: 8 miles
Estimated cost to drive there: $8
Think about the places you go most often: work, school, church, daycare, target, grocery store, gym. How much does it cost to get to each one? If the gym is four miles away and you drive there 20 times a month, you are adding $80 to your gym bill (get a bike and it will be a win/win)! These numbers can really add up quickly when traveling long distances but they also put into perspective how much it cost to be inefficient when driving small distances too.
The Suburban Expense
I currently have family that lives in the surrounding areas of Atlanta and Houston (which happen to be two of the most inefficient and highest per capita mile driven cities). For those who have always lived in an urban environment, you would be amazed at both how ‘far’ and how ‘close’ everything is considered for suburbanites. In many non-urban areas, it’s miles before you can get to anything. Typically, nothing is more than ten miles away (except to work) but nothing is close either. Seriously, I’ve been in neighborhoods in Texas that take twenty minutes to get from one end to the other! And to walk and see anything other than a house would take over an hour. That trip to grab a latte from Starbucks might end up costing $9 if it is six miles away and the drink is $3 (welcome to Atlanta or Houston).
The standard training for middle class suburbia includes a gift of a car at sixteen and even the illustrious gas card, if you are super lucky. The startling combination of these two completely removes the concept of driving as an expense from the vehicle’s captain. This type of training and habit formation is what leads many Americans to develop the idea that driving is just another mandatory expense.
The irony of rising gas prices might just be that if people drive less when gas goes up, they might actually be saving money. Instead of being angry about gas going up, just remind yourself that you will appreciate later if you drive less! And I haven’t even touched on the environmental issues which could be the biggest reason of all to drive your car less.
Ways to beat the Federal Per Diem Rate:
- Drive slowly and learn about hypermiling
- Buy/use the smallest vehicle possible to meet the needs or the situation**
- Learn how to ride a bike
- Batch your errands
- Live close to where you spend most of your time
- Drive an inexpensive vehicle
- Look at cars based on total efficiency (total cost of ownership)
- Don’t pay interest
- Consider transportation cost when you decide where to live
- Share a car
- Don’t buy a new car
- Drive less
- If you live far away, often ordering online can be cheaper (especially if you use Amazon Prime or Shoprunner).
So, do you accurately calculate the cost of your driving? If so, how does that play into your decision making process?
*Not used in the dollar value calculations
**My last two scooters had an average cost per mile of less than 5¢. I used my last two for the calculation because I was able to measure the total cost of use after they were sold.