Set Up a Budget for Commuting Costs

The home seemed like a dream. A huge backyard, cathedral ceilings and a finished basement. Now the American nightmare is setting in: an hour and a half drive to work in either direction! One of the biggest buyer’s blunder is not counting the commute!

Neglecting to consider the cost of commuting from your job to your house or apartment is foolhardy. You’ll probably pay for it in more than one way. This happens to be one of the items homebuyers most often forget to add into their monthly budgets. They often fail to take into account the impact of commuting on their quality of life as well.

It’s not a bad idea therefore to start budgeting and saving by looking at daily transportation expenses.

You can save money with your employer’s Commuter Savings plan. The Commuter Benefit Plan helps reduce the bite that commuting expenses take out of your budget by letting you pay for eligible expenses with tax-free dollars, up to $255 per month for transit and $255 per month for parking. Eligible expenses include public transportation, such as trains, buses, subway or ferries. Vanpools are also included. Parking at or near your place of employment, or at a location from which you commute to work, is also part of the plan.

Your tax bracket impacts your savings. For example, if you have a combined Social Security and local/state/federal income tax rate of 40% and spend $200 per month on transit passes, you will save $80 in taxes. That means your pass now impacts your take-home pay by $120. Over the course of a year, you would save $960 in taxes!

Most plans are relatively simple. Sign up at work with your Benefits Coordinator. Order your transit passes, vouchers, direct parking payments or fund your debit card or cash account using the online Web site by the tenth of the month. Your passes and vouchers will be mailed to you and/ or your account funded before the end of the month for you to access commuting services for the following month

If you factor that extra money into your monthly budget, the slightly less expensive house farther from your job may not really be less expensive. It’s in your best interest to do the math. But keep in mind that even after you run the numbers and factor in the commuting costs you still may be getting much more home for your money and a lot more of your must-haves and should-haves.



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