How Lower Gas Prices Could Mean an Additional $27,000 in Savings for You

June 14, 2017

A recent article in the New York Times pointed out that according to GasBuddy, gas prices are the lowest they’ve been in over 10 years – have you noticed? But more importantly, what are you doing with that extra money in your budget?

Unless you’re a professional driver, have a ridiculously long commute to work, or live in Southern California where my colleagues laughed when I shared this fact with them (taxes make up the majority of the price of a gallon of gas in that area), chances are that any savings at the pump have been casually absorbed into your everyday spending, offering little effect on your long-term finances.

In fact, lower gas prices may even compel you to spend more money on things like vacations, as the article points out – the people interviewed say that they’re planning to take more road trips due to lower gas prices. That kind of defeats the purpose, don’t you think?

A different way to think of it

You can get really technical in calculating how much you’re actually saving compared to last year – you’ll need to know the size of your tank, how many times you fill up per month and the actual difference in your spending on gas this year versus last year – but that’s not really the point. The point is that many of us have a fixed mindset about our inability to save due to a tight budget, and we miss opportunities that could painlessly help loosen things up.

The little things add up

The article estimates that a driver in the Midwest should be saving about $5 per fill-up. If you fill your tank once per week, that’s $20 per month or $240 per year. It doesn’t sound like much (it’s not), but it adds up. Increasing your 401(k) contributions by just $5 per week could give an estimated $27,000 savings bump to a 35-year old’s 401(k) balance over 30 years.

In other words, every $5 per week you can find in additional savings is a potential extra $27,000 toward retirement. With that in mind, what other ways can you find an additional five bucks per week?

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