Live close to work to save on commuting costs

German road
this road sort of makes me want a longer commute, maybe a bike commute actually

Right off the bat, I have to mention that my inspiration for this post was Mr. Money Mustache.  He has a very similar post, and I want to give credit where credit is due: The True Cost of Commuting by Mr. Money Mustache. That being said, I had to get this into my ROI scoreboard because car commuting is such a big expense, and therefore likely to be one of the biggest savers as well.

The way I set this example up was to assume that you moved 10 miles closer to work.  Remember, these costs / savings are on a per person basis, so with a two car, two person household, the savings could be double.  What I found is that over 10 years, if you live 10 miles closer to work, you will save about $37,000! That is about 1 year of work every 10 years at an average U.S. household income after taxes.

Here are the numerical details:

  • 10-Year NPV: $37,173
  • 10-Year ROI: 188%
  • 10-Year Payback: 0.4 years

The savings come primarily from driving less.  At 40 cents per mile, the decision to live close to work can save you a ton, especially if you invest your savings (as we assume here).  There are also intangible savings of $12,200 that are a result of spending less time in the car.  If you are uncomfortable with the time savings, you can take a look at the hard value with growth number, which is still impressive at $25,000.

Personally, I get really excited about these numbers.  As someone who is reluctant to commit to a 100% bike and public transit lifestyle, this shows that living closer to work can still save you a lot of money.  And if you work in the suburbs, your housing costs might even go down too.  At a minimum, it is something to think about for the car commuters out there.


  1. 10 miles of commuting takes 15 minutes (U.S. Census commuting study)
  2. Your free time is worth $10 per hour
  3. You commute 50 weeks per year, 5 days a week
  4. Each mile costs about $0.40 for car commuting (AAA estimates)
  5. Savings grow at inflation-adjusted rate of 4% per year


*Update: I recently revised my cost per mile estimates down from 50 cents per mile to 40 cents per mile because certain driving costs are fixed, not variable depending on how many miles someone drives.  Specifically, insurance (5 cents per mile) and a little bit of depreciation (5 cents per mile) are going to happen to some extent regardless of how much you drive.

Leave a Comment