Reduce Commuting Costs: Expert Tips & Employee Benefits

If you’re trying to save money, you’ve probably looked at the usual suspects to cut costs: groceries, cable and phone. You may think the cost of commuting is an expense you just have to put up with (like the bumper-to-bumper slog to work or a packed train ride).

After all, you have to get to work to make money. But taking some time to tally your commuting expenses, understanding how to save money on gas and learning about employee commuter benefits may help you discover some commute solutions that can help cut costs.

In fact, transportation is the second largest household expense after housing.¹ That means making cuts in this area can help you save big.

Use public transportation, a cheaper way to get to work

The American Automobile Association (AAA) estimates that when you add up all the costs of driving to the office, including car depreciation per mile, maintenance, tires, insurance and gas, the cost per mile to drive is about 55 cents.²

Most commuters live within 25 miles of their jobs³, and there are about 260 work days per year.⁴ That brings the total cost of driving to work to about $7,150 annually. For the 3.3 million Americans who drive 50 miles or more each way³, that number climbs to $14,300.

Compare those numbers to the nation’s priciest public transportation region: New York and New Jersey. New York City’s monthly MetroCard allows users unlimited travel on the city’s subway and bus system. The MetroCard is $121 per month or $1,452 per year—the highest priced in the nation.⁵ And a 50-mile trip on the country’s most expensive railway system, NJ Transit, costs $451 per month or $5,412 per year.⁶

Using these stats, a person who travels 25 miles to work could save more than $5,600 per year. And a person who drives 50 miles each way may be able to add more than $8,800 to their savings account by using public transportation. If you live in a region with cheaper public transportation options, you could pocket even more.

Here’s another look:

Cost per year for a 25-mile car commute	Cost per year for public transportation	Annual savings
$7,150	$1,452 (MetroCard)	$5,698
Cost per year for a 50-mile car commute
$14,300	$5,412 (NJ Transit)	$8,888

To figure out how much you can save by using public transit, use this calculator from the American Public Transportation Association.

Have to drive to work? You can still cut commuting expenses.

For some people, public transportation just isn’t an option. Don’t despair. There are ways to save.

• Set up a carpool: Can you can take turns driving with a coworker from the neighborhood? Or use an app like iCarpool to find people in your area that travel in the same direction. Carpooling helps reduce the mileage and wear-and-tear on your car.

• Pass on premium gasoline: Cut your gas cost per month by using regular gas (unless the owner’s manual specifically recommends premium). It costs 20 to 40 cents⁷ more per gallon, which can add an extra $3 to $5 at every fill up.

• Opt for a fuel-efficient car: These cars save money on fuel costs and on the time spent at the pump. For a midsize car, you could save between $600 and $900 per year on fuel.⁸

• Avoid left turns: Waiting to turn left wastes gas while you idle. GPS apps like Waze allow users to select routes that keep you moving. Fun fact: UPS routes are designed to avoid left turns, too.²

How to save money on car insurance

Another big car-related expense is insurance. There are ways to lower these costs, too.

• Rethink collision coverage for older cars: If you have an older car with a low cash value, it may make sense to cancel collision coverage. You could be paying more per year than you’d get back in case of an accident.⁹

• Qualify for a good driver discount: If you have a clean driving record, call your insurance provider to see if you qualify for a good driver discount. Depending on how many drivers in the house qualify for it, this move could save hundreds of dollars per year.¹⁰

• Make sure you’re not paying double: Check your insurance coverage to review everything you're paying for. People with AAA membership may not need roadside assistance coverage. If you have great medical and disability through work, you may be able to lower your personal injury protection.⁹

• Check your mileage: If you’ve been driving less, call your insurance carrier. Many plans will offer a low-mileage discount if you drive less than 7,500 miles per year.²

• Switch insurers: A recent study found that when people shopped around for a better rate, they saved an average of $356 on their yearly premium.¹¹

Commuter benefits may help you save even more

Many businesses provide pretax commuter benefits to help cover the cost of getting to work. These programs allow employees to set aside money from their paychecks before taxes to pay for commuting expenses. There are 2 ways to get these benefits:¹²

• Use public transportation: Workers who use trains, subways or buses can set aside $255 per month to pay for transit.

• Drive to work: People who drive to work can also set aside $255 before tax to pay for parking.

If you drive to a public transportation hub and then take public transportation the rest of the way, you’re eligible for both.¹²

The amount you can save using these benefits varies. It’s based on your tax bracket and how much money you spend getting to work. For example, a person in the 30% tax bracket who sets aside the pretax amount of $255 monthly for a year would save about $918.¹³

More commuting tips to help you spend less

• Bike to work: It’s cheaper than driving or taking public transportation. Plus, you may be eligible for a $20-per-month commuter tax benefit¹² from your employer that can cover the costs of bicycle maintenance and repairs.

• Consider telecommuting: See if you can work from home a few days per week to cut down on commuting expenses.

• Avoid rush hour: Idling in traffic wastes fuel, so leaving before or after rush hour is a way to save on gas.

• Try ride-sharing: If you take Uber or Lyft to work, use their ride-sharing services to save money. UberPOOL and Lyft Line let you match up with another rider who’s going in the same direction. You both share the ride and the cost. In fact, a recent study suggests that that ride-sharing is a cheaper option than driving your own vehicle to work in 8 major U.S. cities, including New York, San Francisco, Chicago and Miami.¹⁴ Savings ranged from $6 to $83 per week.¹⁵

When you examine the cost of commuting, you may be surprised at all the extra money you’re shelling out. Hopefully, making some changes will bring significant savings. Even if you can only save a little, just taking the time to understand and readjust your expenses can help you feel more in control of your finances and may help you save more money over time. And that can make even the roughest commute a little less stressful.

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