If you’re like me, then taking a taxi feels like a treat: being picked up and dropped off right at your location without the fuss of driving and parking – it’s like having your own (albeit temporary) chauffeur and valet all in one. For this experience, you exchange a chunk of cool hard cash, which is an extravagance mostly indulged in by rich people, right?
What if it could actually be frugal to take taxis for city living, and it’s car ownership that is the extravagant choice?
Owning a car is not only the norm in our society, but practically a rite of passage. It’s such a strong default that many of us don’t really consider the full range of alternatives. If the bus isn’t a good enough option, we go buy a car. But we don’t usually consider the convenience of taxis which, when combined with other modes of transportation (public transit, biking, walking etc.), can add huge convenience to car-free life, because we think taking taxis is so expensive.
But is that really true? To know for sure, you have to run the numbers. When we compare the real costs of car ownership with that of taking taxis, it just may be that for some of us, taking taxis, even lots of taxis, is the more frugal choice.
When calculating the cost of car ownership, people tend the think of the cost of the car, or more commonly, the cost of monthly payments on a car. But that’s only one factor. To get a more realistic picture, you need to also account for taxes, financing/interest costs, car insurance, licensing and registration fees, emissions tests, repairs and maintenance, fuel, parking, and tickets – I have yet to meet someone who has not received a car-related fine. And these are just the inevitable costs of owning a car; we’re not including the doodads many of us purchase to adorn or customize our cars, like back rests, smart(er) systems, great audio, etc.)
It’s omitting these hard costs that lead most people to grossly underestimate the cost of car ownership. While costs will obviously vary depending on a range of circumstances, CAA estimates that the annual cost of a compact car is $9,500. This amounts to $791 per month or $183 weekly. How many taxis can you take for $183 per week, especially now that Uber makes rides much cheaper (and we can feel better about using it now that that CEO is gone). In this scenario, taking ten $15 taxis per week is still 20% cheaper than owning your own car.
To say nothing of the other benefits, like the environmental savings of declining the manufacture of another two tonne machine which sits idle most of the time in our garages while it depreciates. Or the positive impact on your health – research shows that car-free people live longer, as they have more physical body movement (walking – even to the bus stop, biking) necessarily built into their lives. And sweet, blessed time. You can work, read or relax while enjoying your private driver. There is plenty more to save than money.
So if you are wondering whether to buy a car or go without one, make sure you add taxis to the list of viable alternative modes of transportation, and don’t worry about the “indulgence” of taking the occasional or the frequent taxi until you run the numbers. Car ownership is a normalized extravagance for many of us, and taxi-riding can be a fantastic, frugal choice.
ps. Want to calculate the true costs of your car ownership? Check out this calculator but note that it doesn’t include costs like parking and tickets – add these to the miscellaneous category. Also, while this calculator suggests that car ownership costs should not be more than 20% of your income, many people feel that it should be a much lower percentage than that.
pps. I am very aware that for some of us, neither car ownership nor taxi taking is an affordable option. I’m casting taxi rides as potentially frugal in this article only in comparison to car ownership.