This article is part of a 30-day series called the 30 Steps Program to Financial Independence. You can find other posts in the series here.
As you move towards financial independence, you might start to notice some things you don’t actually need, like a car. Maybe you bought a car in college because everyone else did, without thinking too much about the long-term costs.
If you bought your car with cash and chose an older, reliable model, you probably spent around $5,000 upfront. Then there’s about $500 annually for insurance, not to mention the costs of maintenance, gas, and parking. These expenses add up quickly, especially if you’re paying off a car loan or leasing.
While owning a car is essential in rural areas, it’s not always necessary in big cities like New York or San Francisco.
I grew up in Paris and later moved abroad. At 32, I’ve only owned a car for seven months in my life. Instead, I relied on bicycles and used to roller skate too, although those days are behind me. I enjoy walking and using public transport because it means I don’t have to focus on driving. When I do need a car, like for moving or a short trip, I just rent one. This approach keeps my annual expenses much lower than car ownership.
So, how much am I saving exactly? I don’t have an exact number, but I know that by only renting a car when I really need one, my expenses are justified.
Let’s break down some potential costs. Parking could be $100 a month, insurance another $100, fuel around $80, and about $200 every three months for oil changes and minor repairs. Plus, occasional costs like ferry fees or toll roads might add another $20 monthly, and $100 for depreciation. Altogether, that’s around $600 a month. And if you’re financing the car, the total could go up to $1,000 per month.
In contrast, I bought a good bicycle for $500, and its upkeep costs me about $50 a year. I spend roughly $30 per month on various public transport tickets, and for two big holidays, I budget $100 each for a train ticket and rent a car three times a year at $100 each. Annually, this totals $910—less than the cost of owning a car for even one month.
Would you like to save an additional $6,000+ per year? Learn to live without a car. Walk, run, cycle, skate, or use any other means to get from point A to point B. If you have two cars, consider getting rid of one. Plan your errands efficiently to minimize driving, like combining grocery shopping, dropping off the kids, and picking up dry cleaning in one trip.
You could also arrange to borrow a car from friends or family occasionally, offering gas money or another form of compensation in return. I always return a borrowed car with a full tank, which keeps everyone happy and costs me less than renting.
Ultimately, you’ll adapt to living without a car. This will bring you closer to financial independence by significantly reducing your expenses.