Published in: Banks | April 30, 2020

Cutting This 1 Expense in Your Budget Could Save You Thousands

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Hint: It's something many of us have, but can possibly live without. 

Chances are, there are a number of large expenses taking up lots of room in your budget. Housing could easily be one of them -- it may, in fact, be the thing you spend the most money on month after month. Healthcare can also be a big expense, especially if you're paying for a health insurance plan on your own without an employer subsidy. But while you need a roof over your head and you need health insurance to protect yourself from catastrophic bills, there may be another big expense in your budget that you can get by without: a car. 

Two women chatting while standing on a sunny bus.

Image source: Getty Images

How much can you save by getting rid of a car?

AAA reports that on average, it costs $9,282 a year, or $773.50 a month, to own a vehicle. Now, if you live in rural America, having a car may be an absolute must, and there's no getting around it -- you'll need to bear that expense. But if you live someplace with reliable public transportation, being car-free is an option -- and one that could save you a lot of money.

In Washington, D.C., for example, a monthly transit pass costs $81 a month. In Baltimore, it's a modest $68. And in San Francisco, it's $91. Compare these numbers to the $773.50 a month it costs to own a vehicle, and getting rid of a car seems like a total no-brainer. Even if we pad these numbers by assuming that instead of owning a car, you'll buy a transit pass but also spend $100 a week on rideshares, there's still a substantial amount of savings to be had. And chances are, you don't need to spend $100 a week on rideshares anyway -- especially if you're a reasonably fit person with the ability to walk from place to place. 

Lower your car ownership costs

Of course, getting rid of a car isn't something everyone can do. If you have an infant or young children, then a car might be a necessity. The same applies if public transportation is unreliable where you live, and not having a car could mean putting your job at risk. 

But one good way to make the cost of owning a car more affordable is to buy a used model instead of a new one. The average used vehicle costs roughly $17,000 less than a new one, and seeing as how new cars lose about 20% of their value the moment they're driven off the lot, it makes little sense to spring for a new car when you can buy a certified used one instead.

What could extra money do for you?

Maybe your savings account is in sorry shape and you're eager to boost it. Or maybe you're carrying a whopping balance on your credit cards and you're looking to free up cash to pay them off. Getting rid of a car is a great way to buy yourself more financial flexibility, and if that's not an option, getting a used car may be a more economical alternative to paying a premium for a new vehicle that's likely to lose value quickly.

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