How do I spend less on getting around?

Reducing transport costs — running a car more cheaply, and working out whether you need one at all.

Difficulty: beginner
Time: 1 hr
Read: 2 min

Short answer

Work out the full annual cost of running your car including depreciation, insurance, tax, servicing and fuel, then divide by the miles you actually drive. That per-mile figure is often a surprise, and it is the number that makes alternatives comparable.

Transport is usually the second or third largest household cost after housing, and car running costs are systematically underestimated because most of them are not the fuel. Knowing the real per-mile cost is what makes any decision about it possible.

What you'll need

Insurance, tax, servicing and fuel records
Annual mileage figure (optional)

Step by step

Total the full annual cost of your car.Insurance, tax, MOT, servicing, repairs, fuel, parking, and depreciation. Depreciation is usually the largest single item and is invisible month to month.
Divide by your actual annual mileage.That per-mile figure is the number that matters. It is usually considerably higher than people assume.
Check whether a smaller or older car would cover your actual use.Insurance, tax and depreciation all scale with the car. Many households run more car than their mileage justifies.
Shop insurance at every renewal rather than auto-renewing.Renewal quotes are frequently higher than new-customer quotes for identical cover.
Keep the car serviced and the tyres correctly inflated.Under-inflated tyres increase fuel consumption and wear out faster. It is a two-minute monthly check.
Change how you drive — smoother acceleration and anticipation cut fuel use noticeably.Harsh acceleration and braking is where a substantial share of urban fuel goes.
Compare against alternatives for your regular journeys.Season tickets, cycling, or car clubs for occasional use. The per-mile figure makes this a real comparison rather than a feeling.
Consider whether a second car is genuinely needed.The fixed costs — insurance, tax, depreciation — apply whether it is driven or not.

Tips

Fuel is often less than half of a car's true cost. Focusing only on fuel prices misses the larger part.
Cars depreciate fastest when new. Buying a car a few years old avoids the steepest part of that curve.
Combining errands into one trip saves more than driving economically, because a cold engine is substantially less efficient for the first few miles.

Common mistakes

Counting only fuel as the cost of driving — Depreciation, insurance and servicing usually exceed fuel. The per-mile cost is far higher than the fuel cost.
Auto-renewing car insurance — Renewal pricing is routinely higher than new-customer pricing for the same cover.
Ignoring tyre pressures — Under-inflation increases fuel consumption and tyre wear, and checking takes two minutes a month.

Questions people ask

How do I work out what my car really costs?

Add insurance, tax, servicing, repairs, fuel, parking and depreciation for a year, then divide by your annual mileage. Depreciation is usually the largest component and the one most often left out.

Is it cheaper to run an older car?

Often, because depreciation is much lower and insurance and tax may be too — but repair costs rise. The comparison only works if you include all the components on both sides.