How Much Do Your Choices Cost You?

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To save money recently, I’ve been walking and biking for short trips in my neighborhood instead of driving. Suddenly I have a lot more time to think. And because I make my living by writing about personal finance, it turns out I often find myself thinking deep thoughts about money.

On a recent 2-1/2 mile walk home from the gym, I started wondering about trade-offs. What am I giving up by walking all of the time instead of driving? What am I gaining? (Besides time to think, that is.)

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Every purchase is a trade-off, of course. If you decide to spend $20,000 on a new car, you’re saying that’s worth more to you than 20 bicycles or four vacations to Europe or the down payment on a house. Every choice involves opportunity costs; when you choose one thing, you’re giving up others. Plus, what you’re giving up isn’t always financial. Or obvious.

These trade-offs are natural, and we make them every day. But how often do we crunch the numbers to see which choice would actually be best? I’m willing to bet it doesn’t happen often.

So, what am I giving up by walking all of the time? And what am I gaining? I made some quick calculations to see.

  • When I drive to the gym, it takes 20 minutes each way to make the 8.5 mile trip. (There’s a shortcut I can take on foot.) According to estimates by AAA, it costs about 58 cents per mile to run my car. That’s a total cost of nearly $10 every time I go to the gym.
  • When I walk to the gym, it takes 40 minutes each way to make the 2.5 mile trip. Plus I’m getting more exercise, and I can use my phone to read email on the quiet streets and paths.

So, when I drive, I’m essentially paying $10 but gaining 40 minutes. When I walk, I lose time but I’m “earning” $15 an hour. That’s not a lot — but it’s not peanuts either. There are other benefits, too. When I walk, I’m getting exercise. My five-mile round trip burns roughly 500 calories. And, of course, I have time to think deep thoughts about money.

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There’s nothing earth-shattering in this analysis, but it’s still interesting to see the numbers. It strengthens my conviction to walk when possible. (But it also helps me realize that it makes perfect sense to drive on days I’m pinched for time.)

Now I’m interested to run the numbers on other trade-offs in my life. What are the pros and cons of living in a drafty old house instead of renting an apartment? What are the costs — in time and money — of dining out instead of preparing meals at home? And what will I need to give up to make room in my budget for world travel?

What sorts of financial trade-offs have you made in your own life? How many of these are conscious decisions? How many are quiet, subtle things you only noticed after the fact? Have you run the numbers on these trade-offs? Would you make the same choices again?

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