### Grant Sabatier

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*MM Note: I’m stuck on a 4+ hour cross-country flight and highly *caffeinated*. Proceed at your own risk! Haha. Thinking about commuting this way was a game-changer for me and has helped me personally save over $50,000. Check it out and do the calculations to save some big money yourself. It’s super simple.*

I live in Chicago, which is one of the top 5 worst cities to commute to work in the United States according to Trulia’s study on best and worst commuting cities. A lot of people I know spend over an hour each day commuting to work – the ones who drive spend money not only on gas and car maintenance, but also parking. Many people pay tolls and even train commuting costs are increasing – both in time and price.

So how can you actually save money commuting?

There are some pretty simple calculations and a handy spreadsheet you can use.

I was chatting recently with my friend Sam (his name has been changed to protect the innocent ha ha!) who rents a parking space downtown for approximately $150 a month, but the company that owns it wants to increase the monthly rate to $250. That extra $100 a month will really add up, so he asked me what I thought and how he could save some money on commuting. Let’s look at a few different scenarios to calculate his best option.

Everything comes to down to time and money. We’ll not everything, but this question definitely does.

## How to determine your true commuting costs (and save money)

### First, we need to determine what his hourly rate is (including commuting time)

Do you know how much money you make per hour? It’s probably less than you think. Most people calculate their hourly wage by taking their annual salary and divide it by 50 weeks, and then 40 hours a week. But what they miss is their commuting time. To really calculate your hourly rate you need to factor in how much time it takes from the moment you leave your house to the office and then back at the end of the day. This is the time you are spending specifically for your job so you need to add that time into your calculation. A lot of people are surprised by how this changes their effective hourly rate.

So if Same makes a $90,000 a year salary, let take a look at his hourly wage with and without commuting. You can use this same simple calculation replacing $90,000 with your salary.

**Hourly rate without commuting**

$90,000 / 50 weeks = $1,800 a week / 40 hours = $45 hour x 0.70 (because he pays approximately 30% in taxes) = $31.50 per hour

Getting super nerdy here, let’s now quickly determine Sam’s per minute rate – since this will make our savings calculation easier and who doesn’t want to know how much money they make per minute? $31.50/60 = approximately **$0.53 per minute**

When I first did this calculation when I was making $50,000 it blew my mind. I was making $0.29 for a minute of my life. I knew I was worth more than that. You are too – here’s how to hack your boss and get a raise or build a profitable side hustle so you can increase your per minute compensation!

**Hourly rate with commuting (approx 90 minutes commuting time every day)**

$90,000/50 weeks = $1,800 a week / (4o hours + 7.5 hours commuting = 47.5 hours) = $37.90 x 0.70 (keep after taxes) = $26.53 per hour / 60 minutes = approximately **$0.42 per minute**

Alright to summarize **Sam earns: $0.42 per minute (with commuting) at his 40-hour per week job. Commuting effectively reduces his per minute compensation by about 20%. That’s an expensive commute!**

## How to save money commuting

### 1. Driving (with parking space)

Sam has been driving to work for the past year and he rents his parking space for $150 a month. It is also, by far, the quickest way for him to get to work. The challenge in really calculating the true cost of his car commute is factoring in gas, car depreciation, and the parking spot into the price – but for the purpose of simplicity, we are going to not include car depreciation since sometimes he uses his car and other times his motorcycle. But we will use gas.

Time to the office and home (round trip commute): 40 minutes a day, or 200 minutes per week, or 800 minutes per month

The cost to commute in a car per month:

Time: 800 minutes per month * $0.42 per minute (Sam’s salary) = $336

Gas: Approximately $80 per month

Parking: $150 per month

**TOTAL COST = $566 per month to commute to work! That adds up to $6,792 per year to get to work.**

% of after tax salary spent on commuting: ($90,000 x 0.70 = $63,000 per year after tax salary, $6,792 per year/$63,000 salary = **11%**

### 2. Uber-pool

The second option Sam is considering is Uber pooling to work and initially believes he will save money carpooling this way but let’s look at the numbers.

Time to the office and home (round trip commute): 90 minutes a day, or 450 minutes per week, or 1800 minutes per month (that definitely adds up!)

The cost to commute using Uber-pool per month:

Time: 1800 minutes per month * $0.42 per minute (Sam’s salary) = $756

Total Uber fee: Approximately $10 per day = $200 per month

Gas: $0

Parking: $0

**TOTAL COST = $956 per month! That adds up to $11,472 per year. **

% of after tax salary spent on commuting: ($90,000 x 0.70 = $63,000 per year after tax salary, $11,792 per year/$63,000 salary = **19% **

### 3. Bus & Train

Let’s check out the cost for Sam to commute by bus and train. Where he lives he can’t take either or, he has to take both a bus and a train, which really adds to the amount of commuting time – effectively pumping up the cost to commute. It takes about 90 minutes per day, so the same as Uber-pool, but ends up costing less than Uber.

Time: 1800 minutes per month * $0.42 per minute (Sam’s salary) = $756

Total transit fee: $5 per day = $100 per month

Gas: $0

Parking: $0

**TOTAL COST = $856 per month! That adds up to $10,272 per year. **

% of after tax salary spent on commuting: ($90,000 x 0.70 = $63,000 per year after tax salary, $10,272 per year/$63,000 salary = **16% **

### 4. Walking

I walk to my office and using these calculations I’ve determined it’s saved me over $50,000 in the past 5 years, so if you can move closer to work then you should definitely consider it and invest the savings (like I did). Sam, unfortunately, lives too far to walk to work… womp womp. But IF he did walk to work it would take him about 3 hours round trip each day or 3600 minutes per month. IMPORTANT: walking also burns calories and makes you healthier, so there’s gotta be some calculation to determine how the workout offsets the cost (for another day!).

The cost to commute walking per month:

Time: 3600 minutes per month * $0.42 per minute (Sam’s salary) = $1,512

Gas: $0

Parking: $0

**TOTAL COST = $1,512 per month! That adds up to $18,144 per year. **

% of after tax salary spent on commuting: ($90,000 x 0.70 = $63,000 per year after tax salary, $18,144 per year/$63,000 salary = **28****% – the benefits of the excercise = ?, likely a significant overall net gain! **

### 5. Biking

More people are biking to work every day and cities are no being designed to make it easy to get around on two wheels. Sam lives in Chicago, so realistically he can only bike to work at most about 70% of the year (aggressive given snow and cold). So biking isn’t the best option, but if he could bike all year it would be by far the cheapest option for him. It would take Sam about 60 minutes a day to bike to work, so let’s look at the hypothetical scenario where Sam could bike 12 months of the year.

The cost to commute biking per month:

Time: 1200 minutes per month * $0.42 per minute (Sam’s salary) = $504

Gas: $0

Parking: $0

**TOTAL COST = $504 per month. That adds up to $6,048 per year. **

% of after tax salary spent on commuting: ($90,000 x 0.70 = $63,000 per year after tax salary, $6,048 per year/$63,000 salary = **10****% – the benefits of the exercise = ?, likey a significant overall net gain! **

## Conclusion

If you made it this far then we probably have a lot in common! Let’s take a look at the results, so see what makes the most sense for Sam and how much more he can pay for his parking space.

1. Biking: $504 per month

2. Driving: $566 per month

3. Bus % Train: $856 per month

4. Uber pool: $956 per month

5. Walking: $1,512 per month

So…. Sam can actually pay up to $299 more per month for his parking spot (or $449 per month) and will be saving at least $1 overtaking the bus or train. Uber pool ends up being more expensive than he thought. It’s definitely going to be cheaper for Sam to drive. Minus the environmental impact of course, which is reduced using Uber pool, the bus, and of course walking. I did not factor in carbon offsets of the commuting methods, which would add more value to this calculation. Bike or walk when you can!

Here is the spreadsheet that was used to help Sam determine whether driving or Uber pool was the best financial decision. How do you commute and what does it cost you? Any other saving tips?

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