How to cope with higher gas prices. Permanently.

With gas prices inching higher and higher, the commute to work can take thousands out of your annual salary. High gas prices can be a  good motivation to start considering more long-term changes in your lifestyle.

I’m lucky. I don’t commute to work, unless you consider a stroll across the house to be a commute. I don’t put daily miles on a vehicle, though I do need to travel to the library and the post office for different work-related tasks.

My wife, Sarah, does commute to work, though. She drives about 35 minutes each way every weekday. Even though she’s driving a Prius that gets her nearly 50 miles per gallon, the price of fuel adds up, as does the price of car maintenance and other concerns.

It’s not exactly a secret to know that gas prices are inching upwards. The nationwide average is $3.67 a gallon as of the writing of this post.

So, let’s say you have a commute similar to Sarah’s (say, 20 miles) and you’re driving a typical automobile that gets 25 miles per gallon. If you drive to work five days a week, forty eight weeks a year, you’re going to gulp down 384 gallons of gas a year. Under current gas prices, that’s $1,400 a year just to commute to work – and that’s just for gas. It does not include maintenance, parking costs, or insurance.

If you compare this to gas prices even a few years ago, you’re talking an extra $700 a year just for the commute. If you’re making an average salary of $35,000 a year, that’s 2% of your salary gone. That’s the real cost of higher gas prices for the average person.

There’s also the secondary cost, which pops up (for example) in the form of increased prices at the store as companies pass along the increased price of shipping to you, the customer.

The “Band-Aid” solutions for this problem are well known. Carpool. Use public transportation if you can. Buy a more fuel-efficient car. Ride a bicycle to work.

What are the long-term solutions to the problem, though? To me, high fuel prices are a good motivation to start considering some other changes in your life.

For starters, consider job opportunities or career shifts that require less commuting – or none at all. Telecommuting works in some professions, but not nearly all of them. For many jobs, a more local option is well worth investigating.

One of the motivations for my own career switch to self-employment was the cost of the daily commute. I estimated that between the fuel costs, the maintenance costs, the parking costs, and the vehicle depreciation, my daily commute to work was costing me about $3,000 a year. That was after-tax money, too, meaning that the actual impact on my salary was around $4,000 per year.

In other words, I could get a job paying $4,000 less per year that was very close to home and see no negative impact in my financial life. I would see a positive impact in terms of my daily time, though, because I would no longer be investing the time in my commute.

One effective way to do this is to start developing a side business right now that can supplement your income, but don’t give into lifestyle inflation.

When I started The Simple Dollar in 2006, it slowly built itself into a side business that I channeled into debt repayment, a house down payment, and other needs. Our lifestyle did not inflate at all – if anything, it deflated. It was because of this reasonably strong income stream from a side business, our vastly improved debt situation, and our lack of additional spending that I was able to start working from home. Nothing more, nothing less.

Working from home has made our family feel the pinch of the gas price increases far less than other families. We’re affected by it, sure, but the impact is pretty small. We have one person who commutes and that person commutes in a very fuel-efficient car. We have the effort put into building a side business to thank for that.

Another option is to consider moving closer to your place of work. If you’re living in an apartment, this move is actually rather easy, as you just need to find a rental unit closer to your workplace.

Flipping the calculations above on their ear, if I found a place near my work, I could actually spend $300 a month more on my monthly housing bill and still break even because of the savings due to the minimized (or eliminated) commute. This likely would have resulted in much improved housing, particularly if I liked the area, plus it would have meant less time commuting.

The only thing that held me back from this solution is that our housing location was central between my workplace and Sarah’s. We commuted in opposite directions, so a reduction in my own commute meant a direct increase in the length of her commute.

In the end, the best financial solutions are the ones that leave you less reliant on the fluctuations of prices around you. The less driving you do, the less you’re impacted by changes in fuel prices. The same is true for other things: the less heating and cooling you do, the less you’re impacted by fluctuations in home energy prices, for example.

Carpooling, using mass transit, and telecommuting are strong steps you can take immediately, but don’t disregard longer-term solutions like these. They provide savings in terms of both money and time, and those savings often last for much longer.