Personal transportation is expensive. Very expensive. The mean transportation cost in the United States, per household is $12,295 per year. That makes transportation the second highest expense category for Americans – 32% higher than the third highest spending category – the food we eat to keep us alive (which comes in at a comparatively small $9,343 per household).
All but $845 (6.9%) of those transportation costs comes from the cost of vehicle ownership – the cost of owning/leasing, insurance, financing, maintenance, fuel, and other related expenses.
What does that say about Americans?
How about the following, for starters:
- we drive too far
- we drive too frequently
- we commute at distances that are not responsible
- not enough of us are driving inexpensive cars or fuel efficient cars like electric cars
- we spend too much on the automobiles we drive
- we don’t bike, walk, or run enough
- we don’t take enough public transportation (in fact, only $845, or 6.9% of total transportation costs were in the form of public transportation)
Here is how transportation costs stack up against the “big 5” expense categories, by income:
| Item | First (Lowest) 20% | Second 20% | Third 20% | Fourth 20% | Fifth (Highest) 20% |
|---|---|---|---|---|---|
| Housing | 41.0% | 37.6% | 34.8% | 32.0% | 30.2% |
| Transportation | 15.1% | 17.1% | 17.4% | 18.0% | 16.3% |
| Food | 15.6% | 13.7% | 13.8% | 13.2% | 11.2% |
| Health Care | 10.3% | 9.3% | 9.6% | 8.2% | 6.3% |
| Personal Insurance (Non-Health) & Pensions | 1.9% | 4.9% | 8.8% | 13.1% | 17.4% |
Housing costs may be the largest. But that seems justifiable because of the sheer amount of resources that are needed to put a livable shelter over your head. And food? That stuff we put in our mouths to sustain our existence? Food costs have actually been decreasing as a percentage of total household expenses for decades (pandemic blip aside).
Transportation costs comfortably occupying the #2 spot, ahead of food, health care, and pensions/insurance? Indisputably the most ridiculous expense category, per capita.
Over the next 2 weeks, we’ll discuss how to spot and remedy ridiculous transportation costs. The good news is, where there is great waste, there is great opportunity for quick, easy, and high impact financial improvement.
Transportation Costs Discussion:
- What are your total transportation costs and how does it break down?
- What are you most disappointing and/or pleased about when it comes to your transportation costs?
Related Posts:
Our transportation costs are VERY high. Over $1,000 per month.
We are right on par with that average at $9,046/year. That includes car insurance ($2,072), car registration ($327), gas & tolls ($3,647) and auto repair ($3,000). I should clarify that this is in Florida and includes two SUVs, one small sedan (just sold it so next year will be lower), a moped scooter, two jetskis & two trailers to tow them. Our auto expenses are intermingled with entertainment since the jetskis are in there – if I had to break it out, it’s probably 75% for just the automobiles.
I’m most pleased that we own all of the vehicles and toys outright and my husband is a fantastic mechanic who keeps everything running smoothly. We recently sold the third car since it was literally just sitting in the driveway & we got tired of paying to register & insure it. Also pleased that I work from home so my driving expenses are much lower now. I’ve been considering selling my car also, but since we’ve got a baby coming in two weeks I see the value in having two cars.
GE,
Thanks for the post. Wow! That is a HUGE amount! After looking at my expenses for the past year in transportation, my breakdown amounts to about:
27% Insurance
38% Gas
19% Service and Parts
3% Public Transit
10% Misc
3% Air Travel
Glad my amount is significantly under the national average though!
Am not so surprised by the stats. For example we are a two car household (non-hybrids), add to that the long commutes, maintenance and insurance and the costs can be surprisingly high. Can we do with one, not really an option right now though we are looking for ways to cut back somewhat on these costs.
On the decreasing costs of food, I think its a good thing, means more people can eat healthier foods.
My husband and I typically spend about $275 per month on our two cars ($200 for gas and $75 for insurance). There’s also routine maintenance – oil changes, annual inspections, etc. but those costs are pretty minimal.
As for repairs, it’s nearly impossible to predict when a car will need major repairs so we usually take it out of savings rather than trying to budget for such expenses on a regular basis.
It might be interesting in this series to factor in the tax-related costs of transportation. I have no idea how easy it is to get data on how much of our federal and state tax dollars go for transportation, but I’m sure its a huge amount.
Building on this, I’ve seen studies that show that investments in public transportation infrastructure pays dividends – in terms of dollars saved and jobs created – than more investments in our car culture. Basically, over time, our communities may save more money if we drive less and rely on public transportation. Also, more public-transit friendly communities also leads to higher home values – a win-win for homeowners.
So, perhaps my point is too long-term for a finance blog, but using (or demanding) more public transit over individual car use could be a good long-term investment strategy by creating healthier and more in-demand communities.
Ahhh, yes. I hear people complain about this often. I bought a used Honda in 2009, put a decent amount down and paid it off within 2 years. Not having a car payment is a huge help! I will drive this car until it dies, and then I’ll probably buy another used Honda :)
I just ran our numbers on what we’ve actually spent in the past year.
gas, parking, public transportation: $1,677.79 (28%)
vehicle maintenance, insurance, fees: $1,854.67 (31%)
flights: $2,482.80 (41%)
All told we spent slightly over $6,000 on transportation in the last year. However, we are building up savings as well for repairs as needed or our next vehicle. We are a one-car family, but when we stopped driving our second car we calculated that we were only projecting to spend about $1k/year less than we had been.
Even though we don’t spend much on driving, it still kind of sickens me! My benchmark seems to be the year I lived car-free and had my subway fare paid by work.
We keep our transportation costs low by biking to and from work as well as for small trips within the city. The only time we drive is to visit friends and family in other nearby areas. This plus a fuel efficient car help keep our transportation costs to ~$5,600/yr. And this includes $200/month for a replacement car fund.
I’m an anomaly (in many ways). Our average transportation costs have been pretty minimal since about 2015, when I moved to a place that erased my commute (and I *love* that fact).
Doing quick and dirty math (with a little contingency that’s on the conservative side), I figure we pay about $3000/year for our two-vehicle family of 12 (ages birth to age 18).
We own both vehicles (and have for almost 10 years), and both are older models (that reduces registration costs). We live in a town where walking and biking are not only easy, but enjoyable. This means we rarely have to drive our children to any of their many activities.
We still do regular vehicle maintenance, but wear and tear is also reduced because of minimized driving (meaning tires last longer, and so do other things).
I recognize, as I said, that my situation is anomalous. That said, I love it, and plan on maintaining it for a long time.