Family Finances: Commuting Economics

One of the joys of modern life is the Commute.  Sitting in a metal box, wasting time and money getting to the job that’s you hate.  What’s not to like?

In the past, people were not happy enough, so they decided that it was best to live in one place and work in another.  No more would you just go downstairs to your workshop, walk to the factory or trudge to the fields to get to work.  Now you can live as far away from your place of work as you like and spend all your time, money and energy getting back and forth to work – like an obedient prisoner on night release from the prison camp.

 

Well, I am in this position and I have been in the position of needing to commute to work for 7 years now.  In those 7 years I have been through a few cars, lots of spare and repairs and whole lot of fuel.  Our family likes the freedom that cars give you – but I dislike the whole cost and expense of the whole thing.

Since commuting (by car) is so common, I thought I would put together a simple cost benefit analysis of commuting looking at speed.  My commute to work involves a 30 mile stretch on a dual carriage way along in the North East of Scotland.  The A90 is a thing of great beauty and wonder – but since I’ve driven this road about 3000 times now, I’m becoming immune to its charms.

Cost Benefit Analysis

For the 30 mile stretch, I’ve  looked at my average miles per gallon and with increasing speed from 40 to 80 miles per hour, the efficiency peaks at around 50-55 miles per hour and drops as you go faster and faster.  This means that to save money on fuel, you should drive around 50-55 miles per hour.  That’s what you see, how much your fuel costs you.

mog

The next part of the puzzle is the unseen part – if you value your time, your commute is costing you (life points, freedom berries or a dollar figure – it’s your choice how to see it).  If you think that your time is worth £10 per hour and you drive for 30 miles at 60 mph, then that costs you 30 miles / 60 miles per hour x 10 £ per hour = £5.  £5 for that 30 mile drive, each way, every day!  What you do with your time and how your spend it is a cost that needs to be accounted for.

The graph below shows you the cost of my time commuting for different speeds and different values for my time.  I probably value my time at £15 per hour after tax, so based on this, I should drive faster (but within the speed limit obviously).

Commute 2

Adding the cost of fuel into the equation shows that the lowest cost of commute is at around 70 mph – costing me just over £10 for the 30 mile commute.

Commute 3fds

But what if I value my time at a higher price, say £25 per hour, £50 or even £100.  Well, earning more means that driving faster pays.  But it doesn’t pay that much.  In fact at £50/h, driving at 80 instead of 70 mph saves you only about £1.19 – not that much really and probably not worth the added stress from driving faster than everyone else plus I’m sure that your car parts wear out more at high speed + you need to refuel more often which takes time as well.

Commute 5

In summary, I would say that driving slowly is a false economy and if you add in the cost of your time, you should drive at the speed limit as much as possible.  If you do value your time very highly, you should maybe consider whether you need to be commuting at all.

The calculation could be more complicated – variable rates for fuel prices, other costs associated with cars, other costs associated with CO2 emissions, safety vs. speeding, or impact of lift-sharing.  But if we keep it simple – it’s clear that whatever way you spin it, commuting is not only a waste of your time but a drain on your wallet.

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