This month AMP Financial Planner Claire Esmond* looks at how changes in travel methods can help build wealth in the long-term.

Western Australians are among the worst in the world when it comes to walking and cycling, with only 12 per cent walking and three per cent cycling as their chosen method of transport, according to Department for Planning and Infrastructure statistics.

And each day in Perth nearly one in ten car trips are less than one kilometre – a distance most people could comfortably walk or cycle.

Contrasted against the non-existent costs of walking or the modest costs of cycling or using public transport, running a car can be an expensive mode of transport.

By walking, cycling or using public transport instead of driving, people can stand to save a significant sum and could use these extra dollars to create wealth over the long-term by investing wisely.

For example, the owner of a car with a 2 to 3 litre engine could be around $10,300 better off after five years, simply by employing this strategy.

The average cost of running a car for one year (15,000 kilometres) is estimated at $10,300, according to the RAC 2007 Vehicle Running Costs Guide.

This figure includes costs such as petrol, insurance, registration, financing, tyre depreciation, servicing, repairs and other variable costs.

Whereas, if a person takes public transport every day for a year, traveling across three zones to their destination and three zones back each day, the annual cost of travel would be around $2,600.

To put this into perspective, a three zone travel distance allows a person to travel from the Perth CBD north to Joondalup, south to Atwell or east past Kalamunda.

By switching from driving to using public transport for a year an approximate saving of $7,700 could be made.

Investing this in a high interest savings account of around six per cent interest per annum could see the savings build to around $10,300 over a five year period.

While some people may find it hard to let go of their cars, considering alternative methods of transport could have a significant impact on their financial situation.

Driving a car is also an expense that’s easily misjudged. People often consider the regular costs, such as petrol and parking, but fail to recognise the one-off or irregular costs such as maintenance and registration.

A small saving in the short-term can make a surprisingly big difference in the long-term, with the effects of compound interest gained from a high interest savings account.

And, while saying goodbye to the fuel guzzler is good for the back pocket, it’s even better for the environment.

For more information contact Claire at Perth Financial Services by e-mailing claire_esmond@pfps.com.au

*Claire Esmond of Perth Financial Services Pty Ltd, is an authorised representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706. Email claire_esmond@pfps.com.au or call (08) 9228 2833. Any advice given is general only and has not taken into account your individual objectives, financial situation or needs.