Marie Curie once said, "Nothing in life is to be feared. It is only to be understood." I find that true in so many aspects of my life, and lately one fear that has cropped up is all of the hype about gas prices (though lately they have been going down- yay!). So I decided to take it upon myself to, rather than fear the increasing cost, instead try to understand what exactly that price increase means for me, and to deal with it in a rational and constructive way. Just like ordinary budgeting and financial planning, you can stick your head in the sand and say "Woe is me!", or you can take measures to face it head-on and know exactly what you're up against so that you can cut out the worrying and start preventative planning. All it takes is a little more awareness on your part. Are you ready for some math?
The first step I took was to calculate my car's gas mileage. I wasn't sure how to do this- it seemed a little difficult to wrap my brain around- but I came up with my own method.
1. The next time you go to the gas station, allow the pump to fill your tank until it automatically stops. You can now assume for the intents of this calculation that your tank is full.
2. Reset the odometer or write down the number- if you have a trip odometer, you can set that to zero and it will work just fine. Don't touch the odometer again until the next time you fill up.
3. The next time you fill up, check the number on the odometer. If you are using your car's main odometer, subtract the number you wrote down the last time you filled up from the current number. Otherwise, just check the number on the trip odometer that you zeroed the last time you filled up. This will be how far you have gone since your last fill-up.
4. Next, allow the pump to fill the tank again until it automatically stops. Now look at the digital readout on the gas pump or check your receipt to see how many gallons of gas you purchased. That is how many gallons of gas it took you to go the number of miles you see on the odometer, and all you have to do is to divide the number of miles by the number of gallons.
Example: Your receipt says 15 gallons, the odometer reads 330 miles.
330 divided by 15 = 22 - the car gets 22 miles to the gallon.
It is also a good idea to do this a few times consecutively in order to get a good average, just because sometimes you will spend more time doing highway driving and other times you will be in the city more. This way you can get a good solid number that will be your guide to planning your trips. Now you have some good information you can use to plan them.
It is important to spend some time planning your trips, because every time you drive your car somewhere, you are spending your money. If you care where your money goes, you should plan where your gas goes.
The next step is to boil this down to the mile. This is easy- decide on an average gas price (you can be specific and adjust this each time you check your fuel economy, but I like to go with an average to make it simpler) and then divide the cost of a gallon of gas by your car's gas mileage.
Example: A gallon of gas costs $3.80 and my car gets 22 miles to the gallon.
$3.80 divided by 22 = approximately $0.17. Each mile I drive costs me 17 cents.
This number is now my measuring tool. If I want to decide, for example, whether to take my kids to the community pool that is 7 miles away where I have to pay an $8 admission fee per person, versus taking them to the beach that is 85 miles away but is free, I simply do the math.
Pool: 7 miles x 2 (round trip) = 14 miles total x $0.17 = $2.38 + $24 (total admission fees) = $26.38
Beach: 85 miles x 2 = 170 miles total x $0.17 = $28.90
With a difference of only $2.52, it's a pretty close call. But the funny thing is that there are probably a lot of people out there who, in a valiant attempt to save money on gas, are spending far more money doing things closer to home. It really just comes down to the math.
Now, you would certainly have to take lots of other factors into account in the above example- like convenience, wear on your vehicle, purchasing food on the way (I like a picnic lunch, myself), and the basic desires of the family. But my purpose in doing this little mathematic exercise is to demonstrate that knowing the numbers can help you make a truly informed financial decision when you're planning your everyday activities.
For me, this has been a very useful tool when it comes to my couponing and grocery deals shopping. How great is it to save $5 on groceries by going to a warehouse store when it costs me $6 to drive there? I have also started paying attention to combining my trips, and I have started thinking far more about the places I go, because as I said before- every time you drive your car, you are spending your money. Even a short trip to just "run out to the store" costs me $1.20, and when you're trying to save money, that's enough to make you think twice!
Do you try to calculate your gas down to the mile? If so, how has this changed your daily travel patterns? If not, do you think this is something you will try?