Transportation costs are a substantial portion of most families' budgets. It's often difficult to know exactly how much a household should plan to spend on transportation. Often, the cost might seem severely inflated in contrast with the rest of their spending priorities. While your budget should depend primarily on your individual needs and income, it's helpful to consider some of the average family costs for transportation when developing a personal budget.
Obvious and Hidden Costs
For most families, monthly transportation costs consist of several components. Some costs are more obvious than others, such as gas and car payments. Other costs are considered to be more "hidden" because they are not typically though of as transportation costs, and they accumulate slowly and over time or they are simply made more probable by the use of transportation. For families and individuals that commute mainly by car, these costs include things like vehicle maintenance, parking fees and repairs after accidents.
Cost as a Percentage of Income
A common way to understand and plan for transportation costs in your household budget is to compare your expenses as a percentage of your income to the national average. If you are spending a larger percentage of your income on transportation than the average family, it might be wise to think about ways to reduce your transportation budget. To determine the percentage of your income consumed by transportation costs, simply total your yearly or monthly costs for gas, parking, car payments and maintenance and divide this number by your income for the same period. Multiply by 100 to get a percentage. As recently as 2000, families across the nation were estimated to have spent almost 18 percent of their income on transportation.
Public vs. Private Transportation
The costs of transportation for those using a public transit system are typically much lower than the costs associated with traveling by a personal automobile. This isn't just because the costs of gas are higher than fares, though sometimes this is the case. But the real savings for transit users tend to come in the less immediate costs of driving: expenses like parking, insurance, maintenance and car payments. As of 2001, drivers in California spent up to 15 times more on transportation as a percentage of their budget than public transit commuters.
Reducing Transportation Costs
Families looking to reduce their spending on transportation have several options. Because the costs of car purchases dominate transportation spending, buying a less expensive vehicle or refinancing your auto loans might be effective strategies to reduce car payments. The effectiveness of refinancing depends on variations in available interest rates. If you have a particularly expensive car insurance policy, it might be worth it to shop around and see if cheaper options are available. Additionally, families can sometimes find substantial savings by investing in regular maintenance, purchasing a more fuel-efficient vehicle or carpooling with others to work.
- Public Policy Institute of California; How Much Do California’s Low-Income Households Spend on Transportation?; 2004
- Center for Housing Policy; A Heavy Load--The Combined Housing and Transportation Burdens of Working Families; 2006
- Victoria Transport Policy Institute; Transportation Costs & Benefits; 2011
- Surface Transportation Policy Partnership; Transportation is Expensive; 2000
Matt Petryni has been writing since 2007. He was the environmental issues columnist at the "Oregon Daily Emerald" and has experience in environmental and land-use planning. Petryni holds a Bachelor of Science of planning, public policy and management from the University of Oregon.