I had another post that spoke about why I will never own a car and mentioned that it is really expensive to have one. I didn’t dig into the finances on that one and based it more on my lifestyle needs. Here, I’m going to pull a hypothetical cost report together and also look at the additional costs of owning a car (no, it’s not the environmental impact, though that is a huge cost).
The scenario
You’re a 20-something experienced driver in Toronto, Canada. You use it twice a day on weekdays to commute to work and twice a day on weekends to visit friends or run errands. The car is fully paid for and it’s fairly fuel efficient. You work some sort of semi-sedentary office job from 9-5. Your own time is worth $20/hr to you*. You have free parking at work and at home.
Your additional cost for owning a car: $820 per month
Your monthly non-monetary costs for owning a car: 20 hours lost which you could have used to exercise, read, relax, sleep more. You are less energetic than you would like to be and miss out on investing in yourself via learning. Due to driving, you are part of the traffic problem and contribute to making everybody’s life worse via global warming.
Based on this number, I would pay more to live closer to work and amenities. If you ditch the car and commute, you can afford a place that’s $800 more expensive than your current one. You’re working an extra 10 hours per week* to have this car. Or, think about it this way, you’re giving up the possibility of a three-day weekend every week. I plan to retire by 35 so this will never be worth it to me.
so this will never be worth it to me.
Here’s the breakdown
Insurance: $200/month. This is apparently quite cheap.
Gas: the average commute distance is 23km, using the fuel economy of a Hyundai Elantra (most popular car in Canada), and say a gallon of gas is $3.90. The monthly cost is just over $110.
Maintenance: depends, but let’s say it’s is about $70/month.
Parking: in this scenario, you don’t pay for parking. However, if you end up needing it, it costs over $300/month.
Time cost: the average work commute is 30min one way in Ontario. You drive twice a day every weekday and we’ll ignore weekend time as part of leisure. In total, you spend 20 hours every month and it costs you $400 at your personal pay rate*. This is not including the opportunity cost of losing 20 hours every month.
Health cost: If you swap out the hour car commute for a bike commute you can skip the gym and probably add a few extra years. Gym costs $40/month and living a better life for longer is priceless. Your quality of life would also increase as a result of better health.
Other factors: mental stress from traffic, having to find parking wherever you’re going, driving is dangerous, and have I mentioned global warming yet?
Now I plan on retiring at 35, so at no point would having a car be worth it to me. The math won’t work out the same for you as it does for me. However, I hope this post made you think just a little deeper about what you’re giving up in order to have a car. Perhaps, you find that you can do without one as well.
If you own a car, what makes it worth it for you?
*Your personal pay rate is the amount of money you would accept to give up your free time to do something else. $20 is really quite low, and for myself, I would accept nothing less than $40/hr.