How much does it REALLY cost to drive yourself places, and is it worth it when there are so many great transport options these days? Let’s take a look:
Owning a car has long been a rite of passage for Australians. We start thinking about it just as soon as we start studying to get our L’s.
But I reckon with the cost of living and sky-high fuel prices, as well as having more getting-around alternatives, it’s time to ask yourself a question: is owning a car – especially a second one – really worth it?
In regional towns having a car is usually essential. Public transport isn’t always an option, and the sheer distance between places makes driving a necessity. But if you can easily take advantage of car-sharing services and public transport, then it might be time to crunch the numbers and see whether keeping that car in your driveway is really the smartest financial move.
The real cost of owning a car
If you’re thinking about buying a car, you’re not just paying for the car itself – there are a stack of other costs that quickly add up.
The RACV’s most recent Annual Car Running Costs Survey found that even the cheapest car to own – the MG3 Core – costs nearly $9,000 per year to run ($746.01 every month). That includes fuel, maintenance, rego, insurance and depreciation (but doesn’t even count financing costs if you have to take out a car loan).
If you drive the average distance per year (which is 15,000 km), you’ll be spending thousands of dollars on fuel alone – and that’s before rego and insurance, which could very easily add another few grand a year. Plus, the larger your vehicle, the higher the running costs.
Public transport vs owning a car
It’s easy to assume that public transport is always cheaper, but let’s put that theory to the test.
According to the Transport Affordability Index, from January to March 2024, the average Australian household in a capital city spent $41.10 a week on public transport, compared to $154.17 per week on fuel and tolls alone. That’s a saving of nearly $6,000 over the course of a year!
Now, there are some caveats here. Public transport is much cheaper for the individual, but if you’re ferrying your whole family around every day, those costs will start to really add up. Plus, let’s be real – even our major city’s public transport system isn’t always reliable, and in some suburbs you can be left waiting longer for a bus than for an Uber.
A case for car- and ride-sharing
If you only need a car a couple of times a week, this might be a smarter alternative to owning one outright.
A pretty interesting ABC article cited an American university study that showed every shared car on a car-sharing platform removed between nine and 13 private cars from the road. That’s not only good for your wallet – it’s good for the environment.
So how much does Ubering everywhere actually cost? One study compared owning a car with taking an Uber for all daily trips. If you drive five days a week, the total Uber cost was around $9,285 per year – cheaper than the $11,000 yearly cost of car ownership.
That’s more than $1,700 in annual savings, plus no stress about rego, insurance, parking or servicing. But if you regularly take long trips or live in a suburb with a general lack of ride-shares, it’s worth factoring in those costs too.
Do you really need a second car?
Some families have to ask not just the question of “Do we need a car?” but also, “Do we need TWO cars?” For some, the answer is a definite yes – especially if you have multiple drivers working different schedules or kids with packed extracurricular activities.
But if one car is sitting in your garage not being driven for most of the week, cutting back to a single vehicle could save you thousands every year. That’s a decent holiday fund right there.
What about EVs?
If you’ve got an electric vehicle and solar panels, you can cut your fuel costs dramatically by charging at home. But if you’re thinking about getting a second car and making it electric, make sure you’re factoring in the full cost – including installing a charging station, potentially more expensive insurance and higher upfront costs.
For city dwellers, an EV might still be overkill if you rarely drive. In that case, a mix of public transport, car-sharing and the occasional Uber could be a smarter financial strategy.
Let’s be clear
For many Australians, owning a car is non-negotiable. If you’re in a regional part of the country or work a job at odd hours, a car is – for better or worse – a necessity.
But if you’re living in a major city, especially one with a reliable public transport system and plenty of car-share options, I reckon you could cut down on car ownership and potentially free up thousands of dollars a year.
It’s certainly worth doing the sums for your circumstances … you could get a nice surprise.
