Is It Really Cheaper to Ride the Bus?

Aaron writes in:

I love your cost breakdowns when you calculate the real truth behind some financial choice. I’ve got one for you. Is it really cheaper to ride public transportation to work? I have a bus stop about a block from my house. For about $2 each way, I can use public transportation to get to work, which is about fifteen miles away. But I have a car that gets about 28 miles per gallon and gas is about $3, so I’m breaking even to make the commute and I have a lot more flexibility. I just don’t see how the numbers add up.

In the numbers you give above, you’re neglecting a whole bunch of factors.

First of all, your car costs a lot more than you think. Gas is just the start. You also have maintenance, tires, insurance, license, registration, taxes, depreciation, and finance charges (if you have a car loan). According to AAA’s estimates on driving costs, if you drive a medium sedan 10,000 miles per year, the cost per mile figuring in all of those factors is 70.2 cents per mile.

So, your commute is 30 miles long, round trip. Your cost for that commute in a medium sedan that you drive 10,000 miles in a year (a guess based on the info you provided) is $21.

This, of course, doesn’t include things like parking costs, traffic tickets, and so on.

Of course, if you’re going to own a car anyway, the cost per mile for a medium sedan goes down to $0.39 (according to those AAA statistics, adding together maintenance and depreciation per mile). Your round trip in this case is about $12 in depreciation and fuel costs, with the other $9 coming in as costs related to the fact that you own a car, regardless of how much you drive it.

Another factor to consider is the savings of buying a public transportation pass. I’ll use San Francisco’s BART as an example. If you commute every day for a month (let’s assume 24 days), you’ll spend $2 each way on a commute if you don’t buy a pass, totaling $96. Alternately, you can get a monthly pass costing only $60, saving you $36 a month.

If you commute each day in your car, one that you would own anyway, your depreciation and maintenance costs would be roughly $288 ($12 per day over 24 days). If you only have a car for commuting, the total cost over that month is $504 ($21 per day over 24 days).

The case for saving money on public transportation is pretty clear, in my book. The big argument against it, of course, is speed and convenience, which is what you’re really paying for if you own a car in a large city with good public transportation.

If I lived in a large city, my family would own one car at most (and possibly no cars at all). We would use public transportation as much as possible and, if it worked out, we would simply rent a car for the rare occasions we needed one. If you only actually need a car a couple times a year and can use public transportation the rest of the time, it is far cheaper to go that route.

Remember, that extra cost per month for driving yourself to work is all about the flexibility and a bit of time-saving. How valuable is that to you? A few hundred dollars a month?

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.