Posted by Michael Andersen (Contributor) on November 21st, 2014 at 4:16 pm
We didn’t all love math when we were 15, but most of us probably liked buying stuff.
In a comment Wednesday evening on our post about how much money bikes can save a city, reader Gutterbunnybikes shared a story about helping his teenage son understand how big a difference bikes can make to one’s personal finances.
Funny you say this, but the average income in Portland is around 45k a year. Lifetime earning potential of 1.8 million dollars. If the automobile was eliminated from your budget, you’d save roughly 400k over your life time. Which puts you 800 k over your car driving friends – if you do nothing else but ride the bike..
If you invested the money that would normally go towards automobile expenses every month and got a 4% average interest rate (Many AAA bonds give you this much, it could be much more money if you invested it more aggressively), you’d have almost another million dollars added to your lifetime earnings.
Sorry I’d get more specific, but I’ve done this same post about a dozen times (I should just make a cut/paste doc. on it). All the numbers are based on AAA yearly automobile cost estimates -not perfect I know but it’s a base, and the automobile costs are assumed to remain the same for 40 years which doesn’t happen (it goes up every year and will probably top 10k this year).
And yes I’m aware there are ways to make driving less expensive, the first being never ever buying a new car and avoiding financing the purchase.
I ran these numbers as my son was turning 15 about a year ago to show him how what seems to be relatively small decisions like driving can have on your long term well being. Needless to say he seemed pretty shocked that driving for him is potentially a million dollar decision, and now nearly a year later and he’s yet to show any interest in a trip to the DMV.
I’ve been a cheapskate as long as I can remember, but it was actually a college professor who told me once, in an email of advice for happy young-adult life, that one of his most satisfying financial decisions had been to avoid car ownership as long as possible. Thank goodness that stuck with me, or I might never have discovered all the other ways that low-car living could enhance my life, too.