Budget Ahead For Gas
If you enjoyed this post,
I am in a situation where I am debt-free but will be dealing with gas expenses now that I purchased a lease on a new car. I am fortunate to have a car that gets 26 city MPG and 32 highway MPG which will stretch my mileage a little further.
Since my car is a lease, I chose a 20K miles per year option for 3 years which means a total of 60,000 miles to account for. If I use the minimum MPG which is 26, that means a total of 2308 gallons of gas for the entire lease.
While the price of gas literally is changing on a weekly basis, I thought it would help to see if I can create a budget by estimating how many gallons I will need each month at $5.00 a gallon.
Why $5.00 A Gallon?
The reason for accounting for $5.00 a gallon is so that I can give myself a little breathing room for price changes. I would not be surprised to see the price of gas go over $5 at some point in the future. When that happens, I will certainly adjust my budget to reflect $6 a gallon.
- At 20K miles per year, that means I will be expecting to drive no more than 1667 miles per month.
- At 1667 miles per month, I can expect to be purchasing 65 gallons a month.
- By accounting for 65 gallons a month at $5 a gallon, I can expect to pay $325 a month for gas.
(Note that all these figures have been rounded up to err on the side of caution.)
$365 A Month For GAS???
That is more than the total monthly payment and insurance I will pay on my car. A huge shocker here. Fortunately, I am not planning to drive that much. There are many ways to cut down on the cost of driving, such as car-pooling, combining multiple trips into one trip, etc…
The sad fact is that one day we will see $5 per gallon.
While I will be starting to budget for this expense this month, it will be minimal because of other expenses I have to account for. I will need to figure out how to balance my budget and where to put the unused funds away for the day $5 gas comes.
It is possible I will put this into my savings account at the same bank where I have my checking account and meter this expense out on a weekly basis. It is the most logical choice. I am not just quite sure how effective this would be.
How do you budget for gas? Do you budget as if gas will be $5 a gallon?
Another thought I just had is to budget for gas by rounding up the latest diesel prices to the next dollar. If diesel goes up to $6.50 you can bet $6 gas will be coming your way soon.
Comment by Brooke on 3 June 2008:
Gas is killing me - food prices have gone up because of diesel going up as well (truckers). I have a secret - I don’t budget. I’m extremely frugal in nature, and all my leftover money only has to go to one place - the mortgage. So I pretty much eat the extra cost for the gas. Less money to go to my mortgage. But I’m getting a raise next month!
Brooke’s last blog post..Sponsored Post: Apply for Best Credit
Comment by passivefamilyincome on 3 June 2008:
Mark - As I commented in your poll yesterday, we currently budget $200 / month for two vehicles and are putting away whatever we have each month to use in future months when we will probably go over $200. Once $5 gas hits (which I agree with you we will see this summer), my wife will probably drive less. She currently stays home with the kids and does not have a paying job (staying home with the kids is a full time job though). She goes out a couple times per week to do errands. We will probably at first try to curb her driving into doing all errands on one day and limiting our weekend trips. After that, we will have to adjust the budget and put less into savings to account for the difference.
I have thought about riding my bike to work (~15 miles one way) which would be great exercise. I have no problem doing that except for fearing for my life on some of the local roads. They are all very narrow and curvy and people driving like crazy. At this point it is not worth that risk.
passivefamilyincome’s last blog post..May 2008 - Family Budget Review
Comment by Christine on 3 June 2008:
I usually only need a half tank of gas to get me through the week. Currently, that means that I only have to pay $25.76 ($3.86 * 6.6 gallons) for a half tank. But I always add about 10 more cents for budgeting purposes in case the price changes before the week ends. Sooo… that means I would be budgeting for $3.96/gal which would come out to a $26.14 budget for this weeks gas…. but since it is summer time, I will probably bump it up to 30 or 40 bucks since I might go somewhere farther like the beach or something.
When I do my monthly budget, I target for 40 bucks a week because that is usually the max I need. Then I adjust my budget throughout the month as necessary.
That explanation was kind of convoluted… hope it made sense. ha ha
Christine’s last blog post..June 2008 Budget
Comment by Mark from TheLocoMono on 4 June 2008:
Passive and Christine - You both brought up interesting points about gas prices versus mileage useage. I am going to post a poll tommorow for this.
I am curious about something here.
Mark’s last blog post..SEO Improvements by Young Entrepreneur
Comment by Dividends4Life on 5 June 2008:
Brooke nailed it. Gas prices has an effect on everything we buy.
Best Wishes,
D4L
Comment by Ralph on 7 June 2008:
We handle gas more like Brooke. Our overage monies go directly into our savings/investments, so we eat the different. Currently, we’re fugal d.i.n.k.s so we have gotten away with it for it. By the same token we do try to minimize the gas usage by combining trips and avoiding trips altogether if possible.
Ralph’s last blog post..Food Budget Tight? S t r e t c h - i t - o u t (Part 2)
Comment by Johnnie from Auto Insurance Quotes on 21 June 2008:
Well, $365 for gas is really not that much at all. Matter of fact, you should be happy that’s ALL you would have to pay…lol. Based off of recent reports from CNN, they say that gas prices will peak at an average of $4.25 this summer, so hopefully we will not be paying $5 a gallon for gasoline any time this year.