How commuting to work could cost you $7,540 a year
If the average commute is about 17 kilometres in Canada, that means that most Canadians that drive to their place of work are sacrificing roughly $7,540 each year.
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With house prices continuing to skyrocket across Canada, it seems like the only financially feasible path available to homebuyers is to consider a fairly substantial commute to their downtown places of work.
While owning a great house in the suburbs appears to be the ideal for many Canadians, the accompanying commute often leaves something to be desired.
While the fact that Canada’s 15 million-plus commuters would prefer a shorter drive to work isn’t exactly a headline-grabbing revelation, I think that most of us actually underestimate the true overall cost of driving to work every day.
The Canadian Automobile Association (CAA) claims that it costs about $0.54 per kilometre for the average person to drive a midsize car in Ontario.
For comparison purposes, a pickup truck clocks in at $0.70 per kilometre, and a compact commuter car runs about $0.46 per kilometre.
When most people think about a prospective commute they fail to take into account the increased wear and tear on their vehicle, as well as the increased maintenance schedule that is required.
Statistics Canada measured commuting back in 2011 and discovered that Canadian commuters spent an average of 25.4 minutes travelling to work.
This was very similar to the average found in the U.S.
With more and more Canadians having to look further away from downtown cores in order to afford housing, I think it’s safe to say that this figure has not gone down over the past few years.
If you want to quantify your commute into the simplest terms, think about the fact the most people work around 240 days a year.
For every kilometre that you live away from your work, you will drive that distance twice a day, for 240 days — costing about $1 per day if you drive a small car.
I’m not sure what worth you place on your time (a valuable resource if you think about it), but if each kilometre takes about 1.5 minutes to drive, that’s three minutes of your life every day for each kilometre you live away from work — or 720 minutes (12 hours) every year.
If your time is worth $25 an hour to you, that’s another $300 annually per kilometre.
Overall, each kilometre you have to commute to your job will likely cost around $540 annually.
If the average commute is ab+out 17 kilometres in Canada, that means that most Canadians that drive to their place of work are sacrificing roughly $7,540 each year.
If that much money was invested in your TFSA annually, and grew at an average rate of 8 per cent, you’d have more than $900,000 in 30 years’ time.
Alternatively, you could afford roughly $100,000 more of house (assuming a 25-year mortgage with an average interest rate of 6 per cent) if you took that $7,540 every year and applied it to mortgage payments instead of commuting costs.