Car or Public Transport? Which is the Most Frugal Alternative?

Source:http://www.myinvestingblog.com/car-or-public-transport-which-is-the-most-frugal-alternative/
There is often great debate between those who catch public transport and those who prefer their own mode of transport, and the debate is further complicated by those who catch public transport because they believe it is the more frugal alternative, and those who are forced to catch public transport because they believe their finances don’t permit them the luxury of driving their own car.

Therefore, following a comparison of the frugality of your own car vs public transport, based on both the financial costs and the costs to your time, because after all your time is not only worth something to you, it is time you could be spending cooking a meal instead of ordering take away, it is time you could be spending ironing instead of paying a drycleaner to press your shirts.

The Costs of Owning and Running a Car

Everyone uses their car differently and everyone has a different taste in cars and so repayments, fuel costs and usage are going to vary in your own comparison. Therefore, we have chosen a standard family car for the comparison of the frugality of a car vs public transport, to give you an idea of the differences between driving your car to work every day vs working in the city, and whether the savings you make in catching public transport really add up for you.

The comparison car:

A middle sized sedan with comfort and luxury as well as room for a family, shopping or large purchases.

The cost of a middle sized car is approximately $27,000 to buy new, including on road costs.
On a seven year personal loan at an average current interest rate of 11.49% your monthly repayments would be approximately $498.
The gets 7 L/100 km and has a 60 L tank.
With fuel on average $1.20/L you will pay around $70 to fill up your fuel tank.

Is a Car a Frugal Option to Commute to the City?

First we compare the costs of someone who drives a 100 km round trip into the city and back to work five days a week. This is an approximately 40 minute drive and is a common commute time, and the average amount of time most people spend driving to and from work.

Costs of driving 100 km to work in the city:

You garage your car in a secure parking lot and pay $10 a day in parking.
You insure your car based on your commute and usage and pay approximately $78/month.
You drive another 350 km after work and on weekends to sporting commitments, shopping trips and to see family and friends.
You therefore pay $70/week to fuel your car.
Weekly financial costs of owning and driving a car to the city = $265.
Benefits of driving to work in the city:

A 100 km car trip will be faster and more direct than travelling the same distance by public transport.
Public transport across this distance will often require you catch a connecting bus, train or tram.
You are not subject to hot, cold or wet weather.
You are travelling in safe transport and retrieving your car from well lit private garage.

Is a Car a Frugal Option if You Live in the City?

If you both live and work in the city then you may want to compare the savings you can make from owning a car for the convenience of weekend shopping trips and ferrying the kids around, without the costs of fuel and parking which those with a longer commute face. Plus, if you drive your car less, many insurance companies will also offer you reduced premiums.

Costs of owning a car but not driving to work:

You insure your car based on your usage and you can pay approximately $58/month.
You use your car after work, on weekends and in bad weather and so drive approximately 350 km a week.
You pay $70 to fill your fuel tank every fortnight.
Weekly financial costs of owning a car but not driving to work = $174.

Benefits of owning a car but not driving to work:

If you live and work in or close to the city or your office you can walk and stay fit and healthy though you may spend the majority of your days behind a desk.
You have the convenience of a car if you have a large amount of files to carry to or from work, and in case of extreme hot or cold weather conditions.
Your reduced use of your car saves you fuel, insurance and parking costs.

The Costs of Using Public Transport

The costs of using public transport vs using your own car may immediately seem much lower financially, however to truly be frugal in using public transport you will financially benefit the most from not owning a car at all. Owning a car but taking public transport to work costs you both for the car and the public transport and as you can see from the second example above, owning a car but not driving to work costs you approximately $174 a week, on top of which come your public transport costs which are detailed below.

Costs to use public transport:

A ticket which gives you 10 public transport trips each week – one to work and one home each day – will cost you around $29.
The financial costs of public transport are the same whether you are travelling within the city, or whether you are making a 100 km round trip each day.
Weekly financial costs of catching public transport to work = $29.

Convenience costs of using public transport:

Service interruptions cost you time, be they from bad weather, warped tracks, driver strikes or break downs.
No option to travel in your own car during extreme hot or cold weather can cost your composure when you arrive at work, can damage suits or shoes, can cost for hair appointments and blow-dries to appear professional.
No option to travel safely late at night, in the dark or early morning.
You will have your own price to put on the weekly financial costs of these conveniences.

Is a Car or Public Transport the More Frugal Alternative?

To use public transport to and from work while also owning a car for convenience and weekend use will cost you around $200 a week. For just another $65 a week you can travel in the privacy, the security and the comfort of your own vehicle, leave and arrive at work when you choose rather than when it matches with a public transport timetable and be able to arrive composed and ready to get down to work each morning no matter what the weather.

Very few people will do away with a car in their lives completely in favour of public transport as ferrying children, pets and friends requires the use of your own car. Therefore, while using only public transport and not owning a car is the most frugal alternative, catching public transport to work and using your car on the weekends can help you be more frugal and remain organised and in control.