There are two basic paths for building savings, you can either reduce your overheads or ensure your investments (be it cash, property or shares), are working super hard to deliver the best returns. On the whole we tend to focus on the latter, to put you in the driving seat with your money.
To mix things up a bit though, we wanted to look at something that could result in you reducing overheads; the cost of your daily commute. It can be a sobering experience to calculate the cost of getting to and from work 240-odd days a year.
Especially for those living in major cities, choosing one mode of transport over another can have major cost implications. Here’s a brief guide to the options available and the impact they can have on the household budget.
There are some signs Gen Y aren’t as obsessed about owning a vehicle as previous generations. Nonetheless, it’s still the case that most of us get all or at least part of the way to work by driving. The advantages of vehicle ownership are many but the price is commensurately high, involving the cost of the vehicle itself, insurance, registration, servicing, petrol and, more than likely, tolls and parking charges (not to mention the possibility of speeding fines and crash repairs).
A 2013 RACQ survey found that the average weekly cost of running a $16,000 Holden Barina was $141.46, which adds up to $7,355.96 a year. For larger and/or more expensive vehicles the annual running cost can top $20,000
Car sharing schemes have taken off across Australia, often actively encouraged by councils. On paper, they make a lot of sense – you get the benefit of a car but without the cost of owning one.
Of course, you are indirectly paying a proportion of those costs through the fees charged by the car share scheme operator. GoGet, for example, charges a joining fee of $25-$49; car share plans then range from $0-29 per month, and hourly vehicle rates are between $5.69-$13.90, depending on your package and the type of car (economy vs. premium).
In practice, car sharing works best for those in densely populated areas who only need a vehicle once or twice a week, rather than on an ongoing basis for their daily commute. But if you only occasionally need a car to get to and from work it is an option worth considering.
While it is usually heavily subsidised by the relevant state or territory government, public transport still isn’t cheap. Over the course of a standard 48-week work year, paying $30 for a weekly bus, train or tram ticket will add up to $1440. The upside is that it’s a fixed cost and straightforward to budget for.
Cycling or walking
If you’re fortunate enough to live relatively close to your work, it’s worth considering getting there under your own steam. Walking is completely free and a bike, helmet and some cycling gear will quickly pay for itself.
For simplicity’s sake, let’s say it costs $150 a week to commute by car, $70 by car share, $30 by public transport, $5 by cycling and $0 by walking. Someone who got rid of their car and cycled to work instead would, on these figures, end up with an extra $6,960 in their pocket a year. That’s more than enough for a calves-rejuvenating overseas holiday. Or maybe even a top of the range carbon fibre racing bike.