The real cost of commuting – For Australians

commuting, cost, sutralisn, early retirement, financial independence

Not too long ago, I read the absolutely excellent Mr Money Mustache (MMM) article “The True cost of Commuting“.  Because I agree with so much of what is said and would have written about it at some point, I wanted to take the time to give the article an Australian focused spin and add my thoughts to the matter. Furthermore, not only is that article 6 years old now, but MMM freely admits that car ownership costs are cheaper in the US than anywhere else in the world. So it makes sense to show those Americans who the most “self-destructive” car commuters really are!

I’ve come to believe that there is insanity in every workplace. No I don’t mean the bureaucracy or the internal politics. I’m talking about your humble co-workers. Everywhere I have ever worked has them, I like to call them the long commuters. Every day they are commuting from outside the city to earn a living and drive right back out in nauseatingly bad traffic after work is done.

When I got my first ‘real’ job located in an area close to Parramatta, I had a colleague living in Bulli and another living in Somersby, both approximate 1 hr 20m commutes. When I learned where they lived and that they commuted daily my jaw dropped. So absurd was this concept to me, I stupidly asked “really!?” several times with a dumbfounded look on my face. These two colleagues were only my first introduction to the ‘long commuters’.

In subsequent jobs I kept meeting more and more long commuters. One of my colleagues right now travels from Wollongong daily, another 1 hr 20m commute. I have finally come to accept that this is not all that uncommon.  That living close to work actually makes me the weird and abnormal one!

These places are not even a part of what I consider ‘Sydney’. Being about 85km away and needing to get on a highway just to get to work seems quite insane to me. In fact when I travel up to the Central Coast or down to Wollongong, it is usually for a holiday or weekend away from the city! You know, it’s somewhere I actually sleep for the night because driving that distance and back in one day would be too draining for me.

This seems quite unreasonable to me.

When talking to those long commuters, they don’t seem to mind the 1.5 hr plus commutes each way. Effectively sucking 3 hours per day from their lives. If the traffic was not cooperative (which it often isn’t) it could easily suck much more than that.

…3 hours a day behind the wheel. That would feel like a prison cell to me.

When I ask about it, I get answers like:

  • “It’s OK, you get used to it.”
  • “I love Wollongong and don’t want to live in Sydney.”
  • “Real estate is too expensive in Sydney.”

Why would anyone want to get used to something so destructive of your free productive time and happiness, not to mention your back pocket? I love Wollongong too and real estate is too expensive in Sydney…but there are better options available that don’t include flushing your free time and money down the toilet.

Their motivation is clear, if a little ill considered. The real estate in Sydney is insane and the lifestyle not everyone’s cup of tea, but the jobs are here, so they decide to work in Sydney while buying a cheaper larger house in a more desirable location, win -win right?


The important question to ask is how much do my “self destructive” colleagues spend on their commutes?

Commuting Costs exposed

Based on the 66c per kilometre value that the Australian Tax Office (ATO) utilises for tax deduction purposes, you could say my colleagues are paying over $100 to commute per day. This is a bit extreme and I think this calculation breaks down at very large yearly kilometres, which is why the ATO limits it to 5,000km per year.

Instead, I will use the RACQ Car Running Costs guide as a basis for my calculations. However RACQ calculate their averages on an estimated yearly travel of 15,000 km, whereas my colleagues in the scenarios above travel more like 45,000 km per year. So to be fair I will adjust the c/km figure down to spread the fixed costs across 45,000 km instead of  only 15,000 km.

Using Australia’s most popular car from 2013-2015 the Toyota Corolla, I get the figure of 27.69c/km, and Australia’s most popular car in 2016 the Toyota Hilux, we get 42.41c/km. These are for cars bought new and on credit, which is the case for all of the colleagues I mentioned above.

Driving a Toyota Corolla, my self-destructive colleagues are spending $221.50 per week driving to and from work. Driving a Toyota Hilux, they are spending $339.3 per week! To put that into perspective, every day they are spending 1.5 – 2 hours of their work day, earning money just to pay for the car which they own primarily for the purpose of getting them to work! In fact as a little aside, I would like to point out that a lot of your colleagues are working for over half their work day before they are actually gaining a net positive financial result for the day!

Financial independence, work, spending, retire early
What are you really working for

After 10 years of keeping this up, my Toyota Corolla driving colleague will be over $165,000 poorer. My Hilux driving colleague will be over $250,000 poorer.*

Let that sink in for a moment….a quarter of a million dollars for the privilege of being stuck in a particularly fancy steel box for 3 hours a day.

Truth be told most have a commute better than this, but I consider even a 40 min commute to be extreme. Even at more ‘reasonable’ commuting distances the numbers aren’t much better. For example, if we take the RACQ estimate of 15,000km per year average, our Corolla owner is $113,000 poorer and our Hilux owner is $180,000 poorer over a 10 year period. Over a lifetime, we are talking millions of dollars for fancy bits of steel and plastic.

Our measuring stick is completely broken when a 40 min commute is considered OK. Something around 15 or 20 minutes max is when I start thinking this is becoming too much.

How to get out of the commuting rut

By far the best way to avoid car costs is to not own a car. Walking and biking to work are the best options. The beauty of these options is that they double as exercise, so it is not wasted time at all!

However, I think most people will choose to own a car regardless, so it is available for those longer trips and family vacations. So the following effective car optimisation measures are the next best thing to greatly reduce these costs:

  • Buy a $5,000 car or less, (Like I did!)
  • Never use borrowed money to buy a car.
  • Choose the smallest, most fuel-efficient car possible for your needs. (This is most probably a Yaris or something similar**)
  • Optimise your life so you do not need to drive to work. Change either where you work or where you live to put yourself within biking distance.
  • Save the car for emergencies, long road trips etc

Owning a car, as described above, could potentially only cost you $20,000 – $25,000 over a 10 year period. Imagine handily putting $100,000 or even $200,000 back in your pocket, which can compound to millions over a lifetime.

There is also the real human time value that could be saved. This is actually where the real magic happens. What would you do with an extra 2 or even 3 hours every single day?

You could work an extra 1 or 2 hours per day, impress your boss to earn a raise or promotion and still have more free time than your colleagues. If that doesn’t float your boat, you could:

  • spend more time with your children
  • exercise more
  • be creative, learn something new
  • cook more elaborate and fancy meals
  • create income in other ways
  • indulge in your hobbies.

I think this also comes down to how much is your time really worth. I know what my time is worth, and shaving years off of my working career while helping me increase my health sounds like an obvious no-brainer for me.

Shuffling commute options.

Pat the Shuffler

*If that weekly saving were invested instead, earning roughly 6% pa

**I was previously told that you could not put a baby seat in a Yaris. At the time took it at face value. It turns out this is false, link here. Not yet certain if I was being purposefully misled by an extreme ‘self-rationaliser’ or there was some other misunderstanding. Please feel free to contact me and clear it up if you like.

23 Replies to “The real cost of commuting – For Australians”

  1. Nice analysis. Unfortunately I am in a scenario where despite living close to work (15km away) the only realistic option is driving. I live on the north side of the bridge and work in St Peters.

    Getting public transport with a walk over 1km at each end is $9.76 in fares each day, and takes at least 1 hour 20 minutes.

    I only pay a toll one way – southbound over the bridge – which is $2.50 if I go over before 6:30AM. At that time it takes under 20 minutes to get to work. About half the time I travel after that time which means the toll is $4.00, and it can take anywhere from 40 minutes to well over an hour. If I start early at 7:00AM I also try to leave before 4:00PM to avoid true peak hour craziness

    Fuel economy in my Subaru goes up in stop start traffic so is around 12L/100km. Unfortunately it takes PULP so that’s around $5.00 to $6.00 in petrol each day.

    Rego and insurance, whilst expensive, I don’t count simply because they are fixed costs that are sunk whether I drive the car 1km or 100,000km a year. I need my car on the weekend for recreation and commitments out of the city.

    So the only other variable is maintenance. I’m fortunate that with contacts I know i can have the car maintained with genuine parts for around $60 for a minor service. I do this every six months but I also try to factor in the more major and irregular items such as brakes, timing belt, tyres, and so on. So annual maintenance could range from $120 to $1000 depending on what needs to be done.

    Toll: $2.50
    Petrol: $5.50
    Maintenance (assuming $1000 annually):

    I think your broader point is correct for the vast majority of people, but Sydney is a great example of a city with generally woeful public transport that is expensive for what it is. It’s also worth considering that some people, myself included, enjoy the greater comfort afforded by not having to stand or squish into a peak hour seat on a crowded train or bus!

    One thing I will not argue is that people buy ridiculous cars that they can’t afford. Like you, I have several colleagues who drive from Wollongong or Camden etc and they have cars that are more than half their annual salaries which are financed on personal loans. I’d certainly agree that if that’s the way you want to ‘own’ a car then you are literally burning hundreds of thousands or potentially millions of dollars in a lifetime of working and commuting. Pay cash for a car or don’t buy it, simple.

    1. Hey tougehack

      I get the weekend recreation thing, but also consider the depreciation. A car driven 3000km per year will last another 15-20 years no problem. A car driven 20000km per year may start falling apart after 5-10.

      I understand it is a huge undertaking for some who have established lives in a certain area, but if you foresee yourself working at the same employer for a long time, is it worth moving much closer? Or perhaps finding a closer job to where you live now? I can confirm the positive lifestyle effect puts you in an almost constant good mood which in reality is far more important than the money saved.

      1. Depreciation is an important point and something I didn’t put specific numbers as it is hard to gauge what the rate will be over time. However, I bought a well used vehicle (had just over 100,000km on the clock) second hand with what is widely regarded as the best depreciation rate in its class (no exaggeration). The original owner had already lost more than 50% of the value of the car and I bought it a further 15% under market value – took many months to find a good one and nail a sweet deal though!

        Maybe another way to broach the vexed issue of commuting is to ask why it is tha many employers are so inflexible with regards to start and finish times! I encourage my team to work hours that suit their lifestyle and commute as best as possible. I’m surprised so many employers still cling to the outdated notion that everyone has to work nine to five.

        1. I have actually long considered why the government doesn’t just make the whole thing the private sectors problem.

          Hear me out

          If the government put in a policy where employers must pay for employees travel time (slowly ramped up from 0% to 100% of that persons equivalent hourly wage over say 10 years). Then the government has effectively incentivised all employers to hire people closer to their place of employment or for employers to facilitate moves and to decentralise out of the city.

          The whole thing can be offset by a lowering of wages, a decrease in tax on actual work hours but an an increase in tax on travel hours and a tax rate that goes up with longer travel such that on average if employers do nothing they are no worse off, likewise with employees, if they do nothing they are no worse off. Grants can be given

          The whole thing might need a little more thinking through to close all the loopholes, unfairness etc. I know it is not a complete thought just yet but I am sure a policy something along the lines of this would be of such benefit to the entire economy, it would pay for itself.

          The ramblings of a crazy shuffler

          1. That’s an idea so good that it will never become policy!

            In the same vein, the incentives for businesses to move to regional centres are piss weak. We have an issue in Australia with such a highly centralised population around a handful of larger cities. The government is making it worse by allowing record high levels of migration (note: this is NOT a white nationalist jingoistic argument, merely one of fact) and the bulk of these migrants are stuffed into Sydney and Melbourne.

            For the most part they’re stuffed into Sydney or Melbourne because it’s too hard to get a job elsewhere, especially in many professional fields. In my industry it would be IMPOSSIBLE to get a job outside of Sydney or Melbourne, just unheard of.

  2. Good post. I’ve engineered my life so that my commute is a 4 minute bike ride to work. I drive a 2001 Corolla to Sydney from Canberra once every few months to visit family but all maintenance, rego, and insurance is done gratis by my old man who runs a truck repair business. Meanwhile the colleague next to me commutes from Goulburn every day. He’s now thinking about getting a new Subaru on finance! People are strange.

    1. That is awesome man! The positive effect it has on your entire life is hard to get across to those who haven’t experienced it before. It really does flow on to your mood, your success at work, your relationships, pretty much everything! Keep it up 🙂

  3. It’s such a tricky one, because finding a job in my industry (marketing) that pays 6 figures is very centralised to having to live in a big city.

    Where Australia is crap compared to the rest of the world is that our corporate jobs are so centralised so it is next to impossible to escape the high cost of living.

    It is easy to say the commute isn’t worth it, but what is the alternative? Jobs in the Gong and Central Coast for someone in a corporate gig are like finding a needle in a hay stack – they just aren’t there.

    Hence the appeal for me now is to become a freelancer, which means we can leave Sydney in our dust.

    I am lucky to have found a job in the same Shire that I live (yes that shire) but it still take me 25 minutes in traffic! Even with my paid off crappy 2005 car.

    1. It is definitely tough, and our cities are becoming more and more centralised as time goes on which really sucks. The only options are live in a much smaller place closer to work vs live far away in a larger place.

      I would pick the smaller place every time because I know exaclty what a huge impact on my entire life that having a short commute has.

      -Better mood/happier
      -Kick more ass at work
      -More time to cook great meals (healthier)
      -Save money on commute costs
      -keep fitter.

      The traffic is crazy everywhere in Sydney, congrats on finding a slightly closer job to your current abode. Keep your ear to the ground for opportunities to work even closer, or if you are like me just pick up and move closer, even if it means a slightly smaller place.

      Freelancing sounds great, even better if you are already most of the way to being FI. Likewise I cannot wait to leave Sydney in my dust, coming back only to visit my parents, friends etc.

      I would consider a 2005 car to be almost new to be honest. The workmanship and engineering in cars improved so dramatically from the late 80s to the early 2000s that everything since then has just been better styling/interior materials and bootstrapping more technology to the basic premise of the car, ie, bluetooth, radar cruise, blindspot monitoring. Take away the tech and the styling and the basic premise of the car seems completely unchanged to my untrained eye.

      We should all be looking at a 2005 car not as a piece of shit, but as an engineering marvel, so amazing is our science progress and quality control that it has created thousands of these super comfortable seats that can take you across the country in a few days, last over 2 decades even with daily use, and for the price of a bit of ongoing maintenance keeps on chugging along. It really does amaze me how we can all get carried away and forget to appreciate what an absolutely amazing world we live in built upon genius and successive iteration that is completely beyond my mind to comprehend.

      Next time you look at your car, try to remember that this would of seemed like complete magic 200 years ago.

      I can really get going sometimes! apologies for the super long response to read through 🙂

      1. Good point on the car it has served me well.

        We are already in a 2 bedroom place with two kids so about as small as we can go. We bought a place separated into two dwelling so downstairs is rented out to help pay off our mortgage. Has been a good little hack to get us ahead in our FIRE journey.

        Putting the house on the market and heading up North to be mortgage free. No jobs lined up so I better get hustling!

  4. Nice post Pat. I would add consider a used hybrid. I managed to bag a used 10yo 90K Prius for $8K cash the other day. Admittedly a little more than your Yaris, but at 4.5L/100km and being able to hum along in silent stealth mode when stuck in traffic, very futuristic 🙂

    1. Very nice, and possibly much more environmentally friendly than my Yaris. But at an extra 3K (plus maintenance? is it more to mainitain than a regular car?)The hybrid would have to save me almost $6,000 over 10 years in petrol (Because that is about as much as I can earn investing that $3000 over a 10 year timeframe)

      At a usage of 5000km per year, 1.5L per 100km extra petrol usage for my yaris over the hybrid and a petrol price of $1.5/L that would only save me about $112.5 per year. Over 10 Years that will compound to about $1,800.

      That being said $4,000 extra may be a good price to pay for the environmental benefits.

      Thanks for the thought 🙂

    1. Hell yeah

      More time to blog now aye, just don’t use that as an excuse to eat a pub meal every night though!

  5. When I lived in Sydney I didn’t have a car and got the weekly train pass. On the rare occasions I needed a car I’d rent one. Otherwise train or bike for everything. Even the two weekly trips to visit my son in Canberra was on the train. I loved it.

    This worked ‘cuz I rented on the north shore in Waverton and was about 200 metres from the train platform. That pass would get me up to Chatwood or as far as Central going the other direction.

    1. This is a great example of lifestyle design.

      Yeah some people think they need cars, but by adjusting where you live and work you can at the very least relegate your car to some weekend use, and at best you may realise that using a car is a pain in the ass.

  6. Great article. I point you to this study if you haven’t read it. Google “effective speeds car costs are slowing us down paul tranter pdf”. It’s a very good resource for showing the true costs of commuting.

    1. I haven’t seen that before!

      It is a great way of presenting the information and thinking about it! I may have to rip off some of it for another post 🙂

  7. I used to live 2 minutes drive from work. Did that commute for 13 years. It was sweet.
    Last year though, I moved 45 minutes away from work and now commute by train. Why?
    I sold my house and downsized, putting a very tidy sum into my pocket in the process. Gotta love the housing boom! I figured that the extra $$$ compounding was worth the extra commute time, and if I touch off my Myki before 7:15AM I get my trip into work for free( with a nice little walk built into it as well.) Therefore my daily commute costs $2.80, I listen to podcasts and/or knit as I travel and I get at least 5,000 steps done just getting to and from work.
    FIRE, here I come!

  8. An unpacked train is probably my favourite way to commute if I must, but it would take quite a lot of money to convince me to give up a 2 minute commute! (by my estimation a 10-15 minute walk! I would never have even touched my car.

  9. Hey Pat,

    I just stumbled upon your blog via a link on an ABC news article. As a long time MMM reader, it is good to see not just an Australian perspective, but a Sydney perspective on FI.

    As an emergency services worker, our shifts allow us 4-5 days off over an 8 day cycle. So it may not surprise you to know most of my colleagues live far beyond the GSA and even outside NSW! It’s just crazy! But they all have the same reasoning; real estate prices and lifestyle. They even try to encourage me to “get into the market while you can”. They have stretched themselves to breaking point in return for what?! I don’t know how to explain to them that I have no desire to lock myself up for 30 years. Sometimes I feel like I’m the only one with an alternative viewpoint but it’s good to see there are others out there in Sydney like me.