I‘ve read many personal finance articles that claim you can save big by ditching your car and jet-packing, hover-boarding, or *shudder* walking everywhere instead.
Monevator published a good one recently, which prompted car-swerving frugalista The Investor to claim he could have spun his savings into £300,000 to £450,000, just by ploughing them into a global equities tracker these past 30 years.
If that’s right, then hopefully he’s gonna cut us in because The Accumulators regularly ferried TI and his glow-sticks around sundry West Country amenities during the 1990s. If you’re thinking the bear-baiting and badger hassling, well, I can neither confirm nor deny.
So how big a payout did I forgo by keeping my pedal to the metal instead? Can you really rake in nearly half a mil in exchange for 30 years of hanging about for buses?
Put another way: can you buy yourself a nice house by investing your car money instead?
Real numbers
Let’s do the sums. Except this time, let’s use some proper hardcore FIRE numbers. We’ll skip the silly money that most finance bloggers claim Joe Average throws at their transport problems.
Monty Mercedes or whoever does not read FIRE blogs. Only aspiring money mavens are into FIRE, and they’re unlikely to be subsidising the car industry in the first place.
Instead, those pursuing financial independence on wheels will do savvier stuff:
- Buy used motors with a reputation for reliability and a global surfeit of spare parts.
- Avoid dick extensions that command a premium just for the badge.
- Drive ‘boring’ cars if needs-be. We’re on a mission here!
- Profit from other people’s depreciation.
- Drive the thing for as long as possible so you don’t keep resetting the depreciation curve (but getting rid once bits start falling off.)
- Don’t buy more car than they need. No armoured vehicles, no automated parking, no lane assist, no heated seat subscriptions. Just own a car you can actually drive, and stay on the right side of tax and insurance costs.
- Reduce their car habit by turning to alternative remedies like walking, cycling, and catching the bus, where possible.
All of which keeps costs down to a degree that can surprise hand-waving automobile avoidants.
So with the stage set, what can you really save if you don’t own a car when two budget ninjas 1 enter the ring?
In the red corner
Introducing the West Country Wonga Worrier: The Accumulator-tor-tor!
…Weighing in with annual car costs of 3,312 pounds.
Vital statistics:
- Mileage: 6,000 p.a.
- Next car cost: £1,000 p.a.
- Taxes, fines, breakdown cover: on request
In the blue corner
It’s the lift-cadging, thrift-meister himself: The Invest-oooooor!
…Weighing in at 1000 to 1500 pounds per annum.
Vital statistics:
- London Transport: A mystery
- National Rail: A mystery
- Global city home ownership premium: Let’s not worry about that
- Shoe leather: Sunk costs!
Judge’s ruling
The Accumulator’s annual poundage is a fully itemised, all-in figure. It’s the average of the last three years of car-related expenses, rebased to 2026 prices.
The Investor’s costs, meanwhile, are as impenetrable as the mask he wears.
A fully-qualified member of the finger-in-the-air school of expenses-tracking, we’ll just have to rely on TI‘s best recollections. He assures me he has an excellent memory.
Sounds reasonable. Ahem.
What I’ll do then is calculate the match-up as a range of outcomes and leave it to the reader to decide which is closest to the truth.
Fight!
Round One
TI’s car-free costs are deducted from TA’s motoring bill:
- £3,312 – £1,500 = £1,812 annual savings go to our Shanks’ Pony jockey at 2026 prices.
(I’ll do the top-end of TI’s range first, then come back.)
Round two
Calculate the saving in 1996 prices. Or rather outsource the task to the Bank of England via its excellent inflation calculator.
- £1,812 in May 2026 = £877.46 in 1996.
Okay, so horseless carriage hater TI would have trousered £877.46 some 30 years ago with his strap-hanging ways.
Round three
How much then would TI be sitting on now if he’d committed the inflation-adjusted equivalent of £877.46 per year for 30 years into a global tracker fund?
- £74,298.77 at 1996 prices
That number comes from dividing the annual saving by 12 to get a monthly contribution of £73.12.
Compound that by 6.06% for 30 years.
6.06% is the 30-year real annualised return of the MSCI World GBP. 2
The final round
Now we have to pump up £74,298.77 to 2026 prices to goggle at the size of TI’s treasure chest in today’s money. 3
- £74,298.77 in 1996 is worth £153,429.98 in May 2026.
Or, if TI’s low-ball £1,000 annual costs are accurate: £195,774.30.
Post-match analysis
It’s not quite the jackpot The Investor imagined. On the other hand, who would say no to an extra £150,000 to £200,000 in their account?
Driving is the norm in the UK so few people are likely to consider designing a lifestyle that squeezes it out.
But what if a wizened savings sensei told your younger self that a tidy six-figure sum was at stake?
Maybe they could make it work?
Take it steady,
The Accumulator
Bonus caveats
The Accumulators’ costs are shared between two. In theory that means TI’s savings are only worth half as much per person in a two-person, single-car household.
Then again, if TI diverted the dosh into his pension pot he’d earn tax relief unavailable to the rubber-burning Accumulators.
TI’s commuting costs were low to minimal for most of his life but so were The Accumulator’s. Let’s say that balances out.
There surely is a premium to pay for living in an area well served by public transport. (On the other hand, if you own your home then TI would argue it’s an investment.)
But you may be able to offset that outlay some other way. Perhaps you can dispense with having a garden, or living near great schools, or some other ‘must-have’ lifestyle choice that, for you, just isn’t.
TI would also likely claim a health benefit over most drivers – because his favoured mode of transport is his own fine pins.
FIRE in the whole
The compounded number is much less impressive if you’re dashing for FIRE in ten years. However, the money will continue to compound for so long as you’re saving.
One way to look at it in those circumstances is to divide the saving by your sustainable withdrawal rate, then subtract that amount from your target figure.
For example, car savings of £1,500 per year enable you to reduce your FIRE number by:
- £1,500 / 0.04 = £37,500 (Assuming a 4% withdrawal rate.)
How dependable is the investing route?
Inflation-adjusted equity returns can vary a great deal – even over 30 years.
The current 30-year real annualised range is 2.4% to 9.9% (1900-2025). The mean average is 5.7%.
For the record
Finally, my full list of car-related expenses includes:
- Maintenance (repairs, service, MOT)
- Insurance (including breakdown cover)
- Taxes (car tax, drivers’ licence renewal, registration fees)
- Petrol
- Parking
- Fines (2023 was a bad year)
- Cost of the next car (£1,000 per year)
Right to reply by TI
The Investor here…
Okay, I hope we’ve all had our fun, but I’m commandeering the reins – perks of the publishing button – to add a final bit.
When we discussed this piece, I asked gas-guzzling petrolhead The Accumulator to include a nod to typical car ownership costs in his attempt to ridicule substantiate my six-figure savings claims.
Looking back, it was a poor sign that he shouted something back down the line about not being able to hear me as Mrs TA had the hairdryer on and by the way he was “off on a mini-break, starting now, bon voyage!” before terminating the call.
So for the record, the latest Pension Living Standard’s report puts ‘motoring’ costs in the range of £4,000 to £5,000 a year.
That’s for typical retirees, remember, not for wannabe Jeremy Clarksons.
Moreover it’s easy to find estimates – such as this one from breakdown cover specialist AutoHome – that put the annual cost of a car in the £5,000 to £8,000 ballpark, all-in.
Now I’m not going to second-guess TA’s figures, nor gainsay his frugality.
I’ve waited too many times in vain at the bar for that – coughing and waving an empty pint glass around while TA has taken an unusually deep interest in his shoes / WhatsApp messages / something in the distance a few centimetres above my head.
So yes, as a globally recognised titan of the FIRE movement, TA’s numbers should look good! And no doubt those following in his footsteps can keep their costs down, too.
But I still stand by my benchmarking against the average car owner, not a savings ninja. That’s what we do when we’re weighing up other FIRE lifestyle choices, after all.
Not owning a car saved me a fortune. Albeit at the cost of some friends’ patience, surely.
Bonus bonus BONUS bit by TA
Somebody forgot they gave me access to the publishing button for “emergencies”, eh?
Fortunately I’m the bigger man around here.
Plus I’m right and TI smells yahboosucks!
THE END.
- In every sense.[↩]
- May 1996-May 2026.[↩]
- Because we compounded in real-terms, that £74,298.77 does not include the inflation froth that your investing returns actually include. We want to know how much bigger a non-car owner’s investment account would look after 30 years, so we need to add inflation back in.[↩]
> TI would argue it’s [extra costs of a flat in London] an investment.
No. It’s a lifestyle consumption expense. Just like the car, but in a different space.
There’s no shame it that, it costs money to live the good life in a country with a high cost of living, and you can’t take it with you.
It’s not an investment because unlike your share portfolio you can’t sell it to realise the investment without moving to somewhere cheaper, and perhaps getting a car 😉
The best you can say is the depreciation is probably lower. Great, but that does you no good until you move out.
Funny article.
I do think there should be some recognition of the sheer usefulness of having a car, especially if one has kids. For me it’s totally worth 3K/year for the flexibility and ability to move heavy things around when necessary.
We cut down from 2 cars to one and buy used and run them into the ground so our costs are probably in the same ballpark as the article. Also ours is electric so charging costs buttons compared to petrol.
TA, I think you might want to add a few hundred £ for Car Insurance as a ‘car-related expense’ unless you were implying this under ‘Taxes’?
@ermine — You’re consistent, but consistently wrong IMHO 😉
Two young high-flyers come down to London after graduating. One rents an apartment for 25 years. The other buys an equivalent apartment over 25 years.
We can assume that buying the apartment was cheaper over the 25 year term, because otherwise the landlord would not be renting the apartment out for 25 years, in pursuit a profit.
After 25 years, they both move to the countryside.
The renter has zero equity. The homeowner sells their apartment and realises some cash.
The home owner now has (say) £500,000 to go towards their new home in the province. Except according to your thinking they don’t, because all that money was a lifestyle cost.
I guess the money that they get from selling is some kind of extremely generous cashback rebate? 😉
The homeowner buys a place in the provinces for cash and pays no more rent or mortgage costs.
The renter must continue finding the money for rent for the rest of their life.
One can mess about with these numbers to take into account the difference between the savings element of a repayment mortgage versus a landlord’s interest-only mortgage, and (perhaps, in the early years) some extra cashflow to the renter that they might invest. On the other hand, the home owner has levered up returns via their mortgage, which I know from bitter experience is extremely hard to keep up with.
But anyway it’ll end up in the same place. If it didn’t then the landlord industry would never have existed, rather than existing for thousands of years. 🙂
When you buy your own home you are investing in a property lending business, with one tenant — yourself. Naturally, this is profitable.
https://compass-signal.live/why-you-might-be-your-own-diamond-of-a-dream-tenant/%3C/a%3E%3C/p%3E
p.s. Perhaps some of the cognitive dissonance arises because professional types like us tend to rent cheap and buy (more) expensive.
But a flat share for four is usually not the same as a home bought for one. My place would cost over £3K to rent, versus just over half that on my I/O mortgage. Of course there’s a lot of equity invested in my letting-to-me business too.
I don’t claim it’s an amazing investment. It might even be a bad investment (particularly the way London property has been going!)
But that it’s an investment is a hill I will die on every day. 🙂
I think the timing piece is an interesting one. Sure, if you’re 50, earning £90k p.a. and have a salary sacrifice car, getting rid of it probably isn’t going to move the needle on retirement or a house upgrade. But if you’re 20, it’s potentially huge.
You’ve got a young person who is spending say £400 on a car loan / PCP, and maybe £150 on insurance per month (not cheap at that age!), and after other costs they could have stuck £10k in an ISA. Given that’s a use-it-or-lose-it opportunity, it’s a huge one to forsake.
But at the same time, no-one has an alternative-universe-crystal-ball to see what happened in that world where they didn’t buy the car or didn’t invest that cash. I know I’d be worse off now if I hadn’t sold my rolling junker a couple of years after passing my test, but no idea to what extent!
“The Accumulator-tor-tor” – worth the entry price all by itself 🙂
There seems to be a slight assumption in both pieces that the only reason to regularly travel anywhere is to commute to a workplace.
Most of the city-dwelling twenty-somethings I know have needed to rent a vehicle in the recent past, either for the annual flat move (hopefully a thing of the past now), or to visit family/ attend weddings/ go on holiday to somewhere in the vast swathes of the UK where public transport barely exists. Of course, you can choose not to visit friends and family who live outside London, and you can choose to holiday abroad instead. As my son likes to point out, by public transport alone, he can get to New York or Dubai several hours sooner than he can get to our house in Yorkshire.
@Ash G – Completely. The utility of car ownership is always missed by these types of articles. I tried to imply that with the tongue-in-cheek reference to 30 years of hanging around for buses. But really that’s no small thing. If I had my time again, I’d own a car again.
I do think there’s a strong argument for using the car as little as possible though and am interested in lifestyle discussions that centre on minimising the role of the car.
@Gil – Thank you. I knew someone with eagle eyes would spot a category I’d missed. Happily insurance is in the existing overall figure, just missing from my break down of the components.
@Jonathon Marsh – Commuting used to account for the bulk of our mileage but no more! I think you’re right though, a trendy car refusenik needs to account for the very scenarios you describe in their costs. UNLESS they just cadge lifts from their VERY GENEROUS friends all the time 😉
“As my son likes to point out, by public transport alone, he can get to New York or Dubai several hours sooner than he can get to our house in Yorkshire.”
This is insane! I’ve thought much the same when travelling to my Dad’s in Scotland.
@TI To realise your ‘investment’ you have to move out of London. Picture that life for a moment – you have gotten used to the pleasures of the Great Wen and all of a sudden you realise your financial win in your late fifties, say. Now you’re living somewhere you have limited options because you don’t drive and the last bus leaves at 22:55*, you didn’t realise you can’t just magic up an uber to get back from that delightful rustic country pub at 23:30 so you walk back five miles in the rain, and anyway you are drinking on your own because you don’t know anybody, hopefully yet rather than for years. Sure, you can realise a property investment by moving from a HCOL area to a LCOL area, but you are going to eat a hit in lifestyle. HCOL areas are HCOL precisely because loads of clever people congregate in that area, jacking up the price of everything because they can pay more. That gives you lots of choice and high-end entertainment too, because the cost can be amortised across lots of affluent people.
As I get older I am much less prepared to put up with a lifestyle suck to save money, but each to their own. So it really isn’t as simple as your thought experiment. It’s not your logic I am challenging, it is the lack of big picture. There is a very good reason that banks qualifying high networth individuals make that qualification on your liquid assets rather than including your consumption assets like your penthouse flat. Optionality matters. There’s a very serious practical difference in nature between to realising your ‘investment ‘ in your London flat and realising your investment in TSLA or whatever.
while it is about risk and not the original point
> which I know from bitter experience is extremely hard to keep up with.
and I know from bitter experience can burn most of the first few years of salary 😉
* I chose that example because it applies to me returning from the Fat Cat in Ipswich, which is a town of 130,000 souls. In some ways Somerset was more honest, there just weren’t buses after about 20:00 on some routes, and particularly at weekends. Honestly, you Londoners have no idea of just how crap public transport is in the rest of the country, and most of what is there is targeted at getting people to and from work/shopping in the workday.
Re: “This is insane! I’ve thought much the same when travelling to my Dad’s in Scotland.”
It took us 7.5 hours (door-to-door) to do such a journey of c. 200 miles a couple of weeks back. At most one hour was not driving. A week or so earlier the opposite journey took about 3.5 hours driving. I seem to keep coming back to things with c. 2:1 ratios!
@Ermine — You write:
No I don’t. I just have to sell.
To go back to my example, after 25 years our renter and our homeowner decide to stay in London and not move out to the countryside. However the homeowner decides to monetise their asset and rent for the rest of their lives PUTTING THEM IN THE SAME POSITION AS THE RENTER ANYWAY.
The renter who didn’t have — to use your quote marks — an ‘investment’ carries on as before.
The former homeowner rents an identical house to the renter (that’s the point of this illustration) but has, say, £500,000 to go towards the rent for the remaining 30 years. 🙂
Feel free to tell them it wasn’t an investment.
Most of what you’re writing is just colour describing some other lifestyle issues.
You may say “a homeowner wouldn’t want to sell and rent after 25 years” to which I’d reply (a) it’s not relevant to whether the home was an investment and an asset and (b) by your terms, you’re kind of reinforcing my point for me.
@Jonathan Marsh — It’s true that non car owners might choose to hire a car now and then.
For my part I’ve never had to do so to visit family (pretty regularly) in the semi-provinces. (Three figures from London but there are still cranky bus services, provided you’re prepared to ‘hang around’ for 20 minutes, or, you know, turn up on time for when it leaves… 😉 )
I have occasionally rented a car for a holiday or whatnot. Maybe once every 18-24 months, averaged out.
Clearly if you’re renting a car every month, say, that would change the maths.
But by the same token, I imagine it’s a rare car owner who doesn’t get a train at least a couple of times a year (or in London a tube a few times a month). Which is fine, just pointing out that works both ways. 🙂
p.s. While I’m here, buses are much better than they were back in the day, if you’ve not used for a while, principally because the apps tell you when the next one is due. Even outside of London! They pretty much work and hugely reduce the waiting around factor. Though not the smelly kebab eating two rows back factor. 😉
Yeah I’ll give you that. It’s possible to concoct a situation where you can utilise property as an investment 😉
> I imagine it’s a rare car owner who doesn’t get a train at least a couple of times a year
I was that guy, never used a train for 8 years since leaving Suffolk. Largely because to get a train I had to drive to the station, in which case I may as well carry on, but also because: Mick Lynch and his endless strikes. All my travel is leisure and a good break doesn’t start with having steam coming out of my ears that this arrogant punk could spoil my day
Great article. I think TA’s running costs are reasonable. My own total motoring budget – using TA’s 6k mileage figure – is £4,860 per year, BUT that’s with a much higher allowance of just over £3k per year saved towards my next car (with any repairs taken out of this pot). That’s based on buying a very nice, nearly new Audi A3 every 10 years or so.
So, there are many different levels of comparison here, including between different tiers of car ownership. The difference between my budget and TA’s is almost exactly the same as between TA’s and TI’s examples in the article. And I’m reasonably frugal – someone buying new cars via PCP would spend that same amount more than me, and buying ever fancier cars would do the same again and again.
The overriding message for me is that cars are a massive cost, and the potential savings from either managing without or making do with something less expensive are enormous. So, compared with many car buyers, l think you could argue TA has saved enough for a house even with his car!
> I imagine it’s a rare car owner who doesn’t get a train at least a couple of times a year
Around 60% of UK residents used the train in the past year (up quite a lot – was 48% in 1999). I suspect that means that a majority of car owners never use the train. Over 60% of total rail journeys are within London and the South East.
>buses are much better than they were back in the day, if you’ve not used for a while, principally because the apps tell you when the next one is due.
Buses here (except on Sundays) are run entirely by volunteers, and there is no need for an app, you contact them and ask what time the bus can pick you up tomorrow.
Very much agree with the point being made – best to have as little car as you can get away with. But not really an option in much of the country.
@Jonathan Marsh — That’s an interesting stat about train use, cheers. There seems an interesting rabbit hole to go down further with all this. (For my personal curiosity, not for an investing blog I guess!)
I think I disagree (sort of) with both @TI and @ermine. Clearly, if you have bought a house that then appreciates (after knocking off operating and maintenance costs and inflation), you have made an investment compared to someone who rents.
However, if you sell it, you now need somewhere else to live. In the scenario of selling in a HCOL area and downsizing to a LCOL area, you end up realising some profit. If you live in a LCOL rural area, and downsize into an accessible/adapted property in a local small town (‘cos driving and walking are getting more difficult), you may end up with no profit at all, or even a loss. When planning our future as a (hopefully) aged couple, we realised that was our situation. Breaking even on the transaction was the best we could hope for. Of course, sprogs may still do well out of your ‘investment’ in the end.
The problem is how many of my relatives and friends believe that they do not have to make more provision for retirement because the value of their property has gone up so much. They look at the £150k they spent on buying their house and listen to the estate agents telling them it is now worth £1m and think they can swap it for a smaller bungalow, you know, in a nice location with a good garden and easy access to the shops and train station, and still have a large wodge in the bank.
That’s why I refuse to think about our house as an investment. It does not help me to manage my portfolio or plan our financial future. It is a fairly illiquid asset that must almost uniquely be replaced with something that may or may not be somewhat cheaper.
It is a pervasive error that allows an awful lot of people to think they are much richer than they are. As my Dutch colleagues used to say, it is too easy to “reken jezelf rijk” (calculate yourself rich).
We should in principle be able to run the same calculation for renting vs owning as for driving vs Shanks’ pony.
Estimate the savings made over 25 years of renting – redirected into a global equities tracker.
I’m doubtful it would look good for the renters because surely the landlords can only make money if the full cost of ownership is borne by tenants?
Unlike public transport you can’t spread the cost across many consumers.
@TI – Perhaps we already have a post like this somewhere on Monevator?
Regardless, I would always buy if I possibly could. As a country, I think we’ve inflicted a great wrong on younger generations by making home ownership so difficult.
@Jonathon Marsh – Amazing and heartening to hear about the volunteers. What part of the country is this? Is it unique to your area or quite a widespread community initiative?
After more than a couple of decades of car ownership (and for a good few years owning two at the same time – one fun, one sensible) I’ve been trying not owning one for the past two years after my last banger finally got too expensive to be worth repairing.
I live in a city so walk, cycle, take public transport (always did these anyway), use the local car-club a few times a year and get a traditional rental when I want a car for longer trips.
So far the ongoing costs of not-owning vs owning are roughly similar. The difference comes from the fact I’ve not had to shell out the up-front costs of buying another car.
>Amazing and heartening to hear about the volunteers. What part of the country is this? Is it unique to your area or quite a widespread community initiative?
It’s in the Yorkshire Dales. There are some paid staff – notably the mechanic, but it’s mostly retired men who do the driving. We do have normal, county council funded buses on Sundays, but if you want to get to school or college, to the railway station, the supermarket, or another village, it’s volunteers.
I assume it’s not unique to here, but my only other personal experience of something similar was in the Hebrides.
That’s fantastic. One to put on the list of great ways to use your time post-retirement.
@Scott – It’s great that you’re making it work. One thing I never used to do when I worked but do now that I am at home, is pop out on 10-minute trips to get something we need. Quite often it’s for something for the house that I wouldn’t cycle home with. In truth, I could get these items delivered, so don’t really need to be doing it.
I’m going to chime in on the “buy-vs-rent” (housing) debate, TI’s EMH like argument that landlords must make a profit therefore you should own…. is alluring. But a bit backwards looking? What if landlords for the next 10years are going to actually lose money? You’d be better of renting. But this ignores taxes – just the fact that imputed rent is tax free should clinch the argument in favour of buy – a landlord has to earn nearly double your imputed rent.
@Finumus — Well it’s true that the current tax regime is unfavourable to landlords who own outside limited companies, yes. But that’s going a bit into the weeds as a general principle versus thousands of years of history in which we’ve seen property be a solid investment class, no? It’s not like I’m saying people should always buy instead of rent an altcoin here 😉
A landlord could buy a bad flat or overpay or buy before a crash etc, of course.
Any investment might prove to be a bad investment. That doesn’t by force mean it wasn’t an investment!