Transit Commuting as an Investment Option

Buddy Alves
Commuter Choice Maryland Program Coordinator

Even if you think you are a savvy investor and a smart money manager I’ll bet you a dollar of your hard-earned cash that you are still leaving a whole lot of money on the table. You see if you are still driving to work alone in your car you are spending a boatload of your earnings that could be saved put toward additional investments.

Ten years ago my wife and I were driving separately to downtown jobs, parking in expensive garages and buying lunch at area eateries five days a week. Sure, we could afford to do so, but we had just bought a new house that needed upgrading and we were beginning to think that our budget was about to take a big hit.

I should mention that we are both avid savers with direct deposits into mutual fund portfolios. With major home repairs, rising costs of gas, food, utilities, cable TV and just about everything else we knew we would have to find ways to stretch the money we earned to cover our projected expenses. Plus, we wanted to continue to add to our savings so that down the road we could retire comfortably.

We took a good look at all the numbers and realized that a big chunk of our monthly expenses were going toward commuting to work. So, we compared our monthly commuting expenses (gas, maintenance, wear and tear [including mileage], insurance, taxes, tags and registration) with what it would cost to take transit to work. The savings by taking transit were extraordinary.

About this time, we received a bit of good news when my wife was offered the opportunity to “telecommute” (work from a home office five days a week instead of going to a company office). The arrangement would save us thousands of commuting dollars each year.

The Automobile Association of America (AAA) reported that the cost to operate a car would run, on average, $.54/mile. We live 17 miles from downtown so a daily round trip would run me $18.36. A year of commuting would cost approximately $4800, not including parking, which was an additional $1000 per year.

On the other hand, taking transit to work would cost me $64/month or only $768/year. We calculated that together we could save approximately $10,000/year by not driving to work. That’s $10,000 of our annual earnings that we could use for other things including additional investments. We set up individual monthly pre-tax salary deductions of $400 and directed the money to mutual fund investments (my $400) and a money market account (my wife’s $400).

Over the years we made all the repairs to the house, fenced the backyard, went on three trips to Ireland and bought new furniture for the living room. We did all this with savings by not driving and instead taking transit. The moral of the story…you don’t have to love transit, but if you love money it’s the easiest way to keep more and invest more of what you earn.