Have you ever really stopped to think about how much your commute is going to cost you? Not in terms of pollution of the planet or risk to personal safety, although these are very real concerns. But how much in pure dollars and cents, as well as your opportunity cost of commuting? Well let me hit you with some knowledge, feller.
Here’s a little background about this post. When I started my job for my current company (yea, That Finance Feller doesn’t live full time off his blog!) I was also starting fresh in a new city. I had moved from Mankato Minnesota to the Twin Cities area of Minnesota. Specifically, I was working in Eden Prairie, MN. I didn’t know the area very well, and I didn’t really understand just how far the commute really was. There’s something strange that happens when people move to the Twin Cities (TC) area; they basically accept that they are going to have to drive long distances every day.
When I was living in Mankato, I was working in St. Peter. The towns aren’t all that important, but the distance between the towns was almost 10 miles. When you live in Mankato, you will have people look at you like you’re crazy if you commute 10 miles to work. They will literally feel bad for your, for your soul. But when you move to the TC area, people talk about commutes of 30 miles and hours long drive times like it’s nothing. Of course, they don’t enjoy it, but they accept it as a fact of life for some reason. My commute, right away at this company, was 15 miles and took about 20 minutes. Not terrible for the TC area. For some perspective, my coworker was commuting 32 miles and it could take him 2 hours some nights. And that’s not accounting for poor weather. One night it took him almost 4 hours to get home with the snow.
Factor A: The Distance
For some reason, I always hear Cake singing whenever I say the words “The Distance”. Now that we all have the same song stuck in our heads, lets talk about the biggest factor that comes to play when talking about commuting: The Distance.
When I started my first job at my current company, I was 15 miles away. I thought it was pretty far, but it really wasn’t that bad compared to what everyone at the company was doing. It was likely below average. After a short while, since I am a baller, I was promoted to a position that didn’t require me to commute anymore! I was, from that point forward, a full-time remote employee working from home (WFH). I saved money in gas, auto repair bills, and other expenses associated with driving. Necessary expenses, like getting new tires every so often and buying hot dogs every time I stopped for gas. Necessities.
Now, however, I am working in a new role within the same company that does require me to start commuting again. Unfortunately, during my time being a remote employee my wife and I decided to buy a new home in a city further away from the office. This requires me to commute 29 miles one way to get to the office. A commute I have to do 5 days a week! Granted, I will eventually be required to commute 3 days weekly, but since I am new to the position I need to be in the office. Now, feller, lets do some MATH!
Commuting 5 days per week, and with gas at $2.63 (last I filled up), my yearly expense purely on gas for commuting would come to:
The math, is in the background until someone requests that I bring it to the front. This is based on my car getting 28 MPG (estimated, since it’s a 2000 Toyota Camry) and my daily commute being 58 miles total. That’s how much money the commute would cost me for the gas alone. Every. Single. Year. If I work for this company, commuting this distance for 30 years (the length of our home loan), that means that I would be losing out on a guaranteed $40,205. That’s assuming that the cost of a gallon of gasoline doesn’t ever change (which it will go up and down) and my car doesn’t ever get more fuel efficient (which it won’t). That’s definitely more money than I take home in a year. But that’s not all that a commute will cost me, is it?
Factor 2: The Time
Keeping in mind that these are all simple calculations, and that my commute time doesn’t factor in traffic or unfavorable weather conditions, these time estimates are simply a best case scenario for commute times. That being said, commuting at my current distance 5 days per week, wouldn’t just cost me money in gas. It would cost me in the most precious commodity anyone can ever have: time. Let’s just say that I can commute at 1 mile per minute in the cities. This isn’t exactly realistic, but lets assume that That Finance Feller has a lead foot, so time spent going fast equals out time spent behind a snow plow, stuck in traffic, or going through the drive through at Taco John’s. So 1 mile = 1 minute.
If I am commuting 246 days per year, and spending 58 minutes behind the wheel each day, I am commuting for 237 hours PER YEAR. That’s ….(make some computer or sciency sounds in your head)…. going to cost me 9.9 days of my life, each year that I am working. So if we draw this out, 9.9 days for 30 years is going to cost me 297 days spent commuting over the course of a lifetime. I should probably spend this time learning something new from a podcast or audio book, but realistically I am going to listen to sports talk radio. This is time that I am going to be losing to the ether of space time. Since we have come this far, I think it’s important to get to the point of the whole post, but first we need to factor in one more thing; the opportunity cost.
Factor 3: The Opportunity Cost
When you’re talking about opportunity cost, you’re talking about what you’re missing out on because of the decision you made. That’s about as good as That Finance Feller can do at explaining things, so there ya go. But for this post, the opportunity cost is what we would have missed out on had we chosen somewhere closer to commute to. Lets start with the cost of gas. If I had lived closer to work, we would be talking about something more reasonable like 10 miles at most, the cost of gas goes down significantly. Assuming the cost of gas would be the same, which it would, and the car stays the same, we see the yearly fuel expense go from $1340 down to $462. That’s %34 of what the cost would be. Again, yearly, so we’re talking about saving $26,341 over the course of 30 years spent working.
But we’re not only missing out on money, we’re missing out on time. Specifically, we’re missing out on 6.5 days of our lives had we chosen to live somewhere closer each year. That’s over 102 days of a life spent commuting (30 years for continuity), which means we’re saving ourselves almost 195 days of our lives! Hypothetically speaking, of course. When you’re talking about opportunity cost of commuting, you have to be willing to consider what you’re missing out on by commuting one place instead of another.
Finally, we come to the point of this post.
Finally, the Point
The whole point of this post is to illustrate the fact that the time we spend commuting to work shouldn’t be taken lightly. It can have profound effects on the rest of our lives when we take a high level viewpoint of the discussion. When you’re talking about working hours and salary/wages, you should also take into account the time you will spend commuting. With my current job, I am not spending 8 hours per day working, I am actually spending 9 hours. That’s because I am only spending time commuting for the job. 1 extra hour per day accounts to almost 250 extra hours my employer gets from me at no cost to them. If I factor the time spent commuting into my hourly wage, and lets say hypothetically I made $50,000 per year, that means that my employer isn’t paying me $50k for 2,080 hours of my time, they are paying me $50k for 2,340 hours of my time. That means I am not making $24 per hour but I am instead making $21.30 per hour, for the whole year.
Obviously no one makes that kind of money. I mean, can you imagine someone making $24 an hour!? They’d basically be an actual king as well as a titan of industry at the same time! Hello, Mr. Monopoly. How are you enjoying your new found god-hood?
But seriously, these are factors that you should take into consideration when you’re talking about how much you make and what job you are willing to take. This is the kind of thinking that this entire site is dedicated to. These are not thoughts that I ever had before I started taking personal finance serious and I regret that lack of thinking. When you’re talking about how much you make, you should always take into consideration the time and money that goes into making money for your time.
We can’t all ride bikes like this guy…
Fellers, what is your commute like? How much time do you spend commuting and how much money does that come out to at the end of the year? How do you go about saving yourself from the expense of commuting?