Car share to drive up that bank balance

Make your commute profitable through a car share

As ever on this website, we are not looking at wholesale changes to your lifestyle. Instead, we are focusing on the small steps which can make a huge difference over time. This week, we shall be looking at how making income, in addition to your principle salary, can help your long term financial health. Today, we’ll address the price of running a car and how the “car share” could help you recuperate some of those costs.

Car share - photo

 

Running a car is becoming more expensive

I’m sure those who own a car feel this more than anyone. However, I have done some research into exactly how the cost of running a car has changed over the past few years. I have created the graph below from data from the aa.com website. This is based on the average miles driven each year in the UK and on a vehicle between 1400cc and 2000cc:

Car share running costs

As you can see, the cost of running a vehicle over time is only going one way. Up. Moreover, it is increasing at a faster rate than inflation (based on CPI in the UK).

Therefore, as we attempt to climb those steps to riches, we may need a little help with this one.

We could scrap the car? However, many people need their car for their commute to work because it is too far to walk or cycle. For these people (and you may be one), we should think about performing a car share.

 

The Car Share – what is it?

The car share, also known as carpooling, ride-sharing, lift-sharing and covoiturage, is the sharing of car journeys so that more than one person travels in a car. By having more people using one vehicle, the car share reduces each person’s travel costs such as fuel costs, tolls, and the stress of driving.

The car share is also seen as a more environmentally friendly and sustainable way to travel as sharing journeys reduces carbon emissions, traffic congestion on the roads, and the need for parking spaces. Authorities encourage the car share, especially during high pollution periods and high fuel prices.

The car share is popular for people who work in places with more jobs nearby, and who live in places with higher residential densities.

 

How can I find someone to car share with?

Firstly, ask your neighbours and work colleagues. These people already share one of the destination points and so you should quite easily be able to find someone who matches the other (especially if you live nearby a big town or city).

If you cannot find someone straight away, you could consider advertising on gumtree.co.uk.

Furthermore, there are multiple websites set up in the UK designed specifically for this purpose. Some charge a fee (most don’t) and have a database of thousands of people wanting to car share (both those with and without a car). Some include:

 

How much could I earn?

The amount you can charge for a car share depends on the journey you are taking. Let’s make a quick example to determine how much we can save.

The average commute in the UK is approximately a 18.5 mile round trip. The average person (working 5 days a week), will make this commute 252 times per year. Therefore, the total distance covered is 4,662 miles. Taking the information from the aa.com data which made the chart above, the cost of this journey (including all vehicle costs) would be £3,287. If we share this cost with one other person, then this would lead to around £1,650 income each year.

Would this represent good value for the counter party? Probably. The daily cost based on these figures would be around £6.50 per day. A similar train journey would be between £6.70 return. A bus may be slightly cheaper. However, the car pool is more likely to be much more convenient than these options.

An additional annual income of £1,650, saved with compound bank interest over 25 years, would amount to a tasty £94,000 in that time.

 

How about if you are on the other side?

You could also benefit from this if you are not a car owner. Firstly, you could save a fair amount of money through a car share. The above example shows that you would save compared to public transport. Now, imagine that you managed to car share between 3 people. This would reduce the cost to £4.33 per day. If you could find 4 people, it would be £3.25.

In addition, the alternative to car sharing may be to buy your own vehicle. If this is your first, the insurance and related costs may take you way above the averages we have used in these calculations.

 

Money Earning Tips

  • Firstly, if you don’t absolutely need a car, don’t buy one. Instead, try to walk everywhere, use a bicycle or take good value public transport.
  • If you do need to have a car, then you could car share with co-workers or neighbours. This will be mutually beneficial to both parties. Additionally, you could build up a new friendship or business relationship you otherwise would not have had.
  • Get as many people in on the car share as is comfortable. The more people, the less the cost.
  • If you are currently taking public transport, consider the possibility of a car share as this might end up even cheaper than the public transport (and with 3 or more people in the car, it can even be environmentally beneficial).

 

Remember, this website discusses the very small steps which we can make with very little impact on our lives in the short term, but which have huge financial benefits over time.

For the bigger steps to a wealthier future, I would recommend that you read my book: “Becoming rich: one step at a time” available now.

Happy climbing one and all!

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