Bicycling can make you a Millionaire!
Wheel Life column - September 02, 2000
by Todd Litman and Suzanne Kort - Victoria Transport Policy Institute

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. David Copperfield, Chap. XII, by Charles Dickens.

Here are some ways to become a millionaire.

If you are clever and lucky you might win a television game show grand prize, but the odds are about one in 10 million. The lottery is a little better, but still pretty long. For every million-dollar winner there are hundreds of thousands of losers.

Another strategy is to try to earn a big income, for example, by becoming CEO of a successful corporation. But that is also a gamble, requires years of hard work, and may involve moral compromises to maximize profits. Not everybody is suited for such a career.

But here's a strategy guaranteed to earn a million with an average income, and it is enjoyable, healthy and ethical. Simply minimize your driving expenses and invest the savings. After a few decades you'll be rich. It's as simple as that.

Most households spend more than necessary on vehicles. According to the Canadian Automobile Association, an average car (Chevrolet Cavalier sedan) costs more than $9,500 per year if driven 24,000 annually and replaced every four years.

Instead, you can buy an old but reliable used car and minimize your driving by cycling, walking and using transit whenever possible. In this way you can reasonably keep your transportation expenditures to just $4,500 per year. Although you'll lead a less mobile lifestyle, you'll enjoy much greater financial freedom.

What happens if you take the $5,000 annual savings and invest it at 7% annual return? In ten years you have $71,500, in twenty years you have $212,125, and in less than forty years you have a million dollars! In other words, excessive car expenditures waste a million dollars in accumulated wealth over a typical working career.

Perhaps you have other priorities besides retiring rich. You can use the savings to buy a nice home, put your children through college, travel, or reduce your working hours in order to have more personal time. The point is that motor vehicles can be a financial trap. The average household devotes 15-20% of net income to car expenses. Many people waste a major portion of their working life paying for automobiles.

This alternative is not transportation deprivation. You can still have a household car that is available when you need it, you simply can't own a particularly flashy vehicle or lead an extremely automobile-dependent lifestyle. Our own busy household functions fine with a reliable, older-model car that we use for holidays and weekend trips, and when necessary for errands, but it often sits in the driveway for days. We walk, bicycle, scoot, ride transit, and do most shopping nearby.

Of course, the automobile industry doesn't want you to consider this option. We are inundated with flashy advertisements which assume that everybody dreams of buying a new car, and we just need to choose the model and colour. And by leasing new cars, the industry lets consumers minimizes their monthly expenses, but they gain no equity, and so own nothing after paying many thousands of dollars.

Here's a little exercise to help you avoid this temptation: Take a $20 bill and a $5 from your wallet and burn them. Do the same thing tomorrow, and the next day, and every day for a month. That is equivalent to what you will spend on a typical new car. If burning all that money seems foolish, forget the car and go for a pleasant, healthy and affordable bike ride.