Cost of Driving: Part 1 – Financial Impact

cost of driving

Inspired by Mr. Money Mustache over the years, our family has incorporated biking as a big part of our lives.  We try to bike as much as we can.   The benefits are huge.  Not only do we get free exercise and enjoy the outdoors, we also save on the cost of driving.  We typically bike for any errands that are within 5 km from our house if it’s not raining or snowing.  We also try to bike the kids to daycare as many days as we can.  D also bikes to work (12km each way!) at least 2 days per week.

In this article I will focus on the financial impacts of driving less. I always knew that driving had a lot of costs however I was very surprised when we did a full analysis of what the actual cost of driving was.

Calculating the Cost of Driving

Driving has some fixed costs which cannot really be reduced if you need to own a vehicle. If you can find a way to eliminate a vehicle, you can significantly reduce these costs.  In our analysis, fixed expenses were insurance and registration.  For us, these totalled about $1,000 a year.

The variable cost analysis is when we were able to see just how much we could save by biking or walking to the store instead of driving.  Our longterm plan once we are FI is to drive only 10,000km a year and put away approximately $1,500 a year to buy a used car every 3 to 5 years. So spending between $5,000 and $7,500 on a new (used) car.  This amount could also cover major repairs if it significantly extends the life of our vehicle (i.e. if major work of $1,500 would extend the life of a vehicle for 2 more years). We are also budgeting about $250 a year for general maintenance.

So in total we will be spending $1,750 per year on 10,000 km.  This works out to $0.175/km.

On an small car or SUV like the one we drive now, we get between 500-600km for a $50 tank of gas.  This depends on city or highway driving. But for the sake of simplicity, we estimate that gas costs  us $0.10/km.

Total cost per km = $0.175 + $0.10 = $0.275/km

What does this mean?

This is an excellent number for us to keep in mind.  It really makes us consider the cost of taking the car out. For example, our kids’ day care is a 6.2km round trip from our house.  So, at $0.275/km, this trip costs $1.70.  This isn’t a huge savings, but in reality it takes almost the same amount of time to bike as it does to drive. If we biked them to daycare only half the time, we would save $170 per year.

Here are other examples of how my family is saving by getting on our bikes:

  • When D bikes to work (24km round trip), she is essentially saving $6.60.
  • When we bike to swimming lessons (16km round trip) we are saving $4.40.
  • When we bike to the library (6km round trip) we are saving $1.65.

These are all minor savings but they add up throughout the year.

What is the cost of driving for the average family?

Whenever I analyse an expense, I have to remind myself that, in many ways, we are not an “average family”.  Most families have multiple  cars (so doubling or tripling the fixed expenses).  They also don’t spend $1,500 /year on new cars.  They spend closer to $30,000-$40,000 every 5 years because they will refinance a new car every time the monthly payments are done.  This works out to approx. $5,000-$8,000 in annual “new car” expenses. Now we can also assume that they use their vehicle more than us.  So, we would amortize these costs over 20,000 km.  This works out to $0.25-$0.45/km excluding the cost of gas.  If they drive a small fuel efficient car like us, then gas is at most $0.10/km.  But they are likely spending closer to $0.12-$0.16 /km on gas.

So I would estimate that the average family’s cost of driving is probably at least $0.40/km. Or more! (this is based on my super simple math and observational opinion).

With that said, here are some examples of the cost of driving for the average family:

  • Driving to and from school or daycare (3km round trip X 2) costs $5.
  • Driving to the grocery store (2km round trip) costs $1.60.
  • Driving to work (20km round trip) costs $8.

Obviously a lot of other factors have to be taken into account.  For example, maybe you have too many groceries that won’t fit in a bike trailer.  Or maybe there really isn’t a good bike route to work. However, it’s a good idea to always keep in mind the cost of driving for your family next time you start your engine.

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5 thoughts on “Cost of Driving: Part 1 – Financial Impact”

  1. Another thing to look at is since you are reducing your expenses by 4$-6$-2$ everytime you bike, you can then multiply it by 25$, and remind yourself you need that much less in your stash! I keep a log of the amount of time/distance biked for errands/work in order to mentally calculate how much more I’m being paid than my coworkers due to this (for those in the same salary bracket), since apart from 1 other person, everyone drives.

    After a full summer of biking, I’ve found that I no longer get tired, I’m at a steady level, where as long as I’m not trying to get somewhere as fast as I can, almost any distance is no longer an issue.

    1. Great points! And yeah I do find we become way more resilient to longer bike rides the more we bike. Last week we decided to bike our kids to our evening swimming lessons which ended at 6:45. We didn’t realize how dark it would be. We biked 7km home with 2 kids in darkness (with appropriate lighting and sticking to bike trails) with a cold wind. But we survived and became tougher because of it.

  2. I really really like the way you do the math here!

    I started bike commuting last year and it’s been great. It took me almost 8 years to finally bite the bullet to try it. There are so very many reasons not to bike. And yet I feel awesome and stronger every time I manage to ride despite the inconveniences. I’ve learned that it’s OK to get wet – just need to be prepared to pack a change of clothes. That it’s possible to bike with an awful lot of groceries (more than I dreamed). That there are times a bike is inconvenient from a logistics perspective, but if I get creative, I can often find a way (I go as far as walking the 1.5 hrs to work if I am getting picked up by someone after work).

    1. Thanks Elaine! Agreed about the groceries. We’ve had some grocery trips where the bike trailer is so full of food that the kids even have to hold a bag. lol.

      1.5 hrs walk to work is impressive!

  3. I was curious if you ever thought of changing the layout of your blog? Its very well written; I love what youve got to say. But maybe you could a little more in the way of content so people could connect with it better. Youve got an awful lot of text for only having one or two pictures. Maybe you could space it out better?

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