How Much Money Can You Save Working from Home?
There are innumerable reasons why you might want to quit your day job. Maybe you’ve got a horrible boss who keeps “voluntelling” you to come in on the weekend to finish up those TPS reports, because that’d “be great.” Maybe you want to take matters into your own hands, take ownership over your own career, and enjoy the limitless income potential of entrepreneurship.
Maybe you want the freedom to work when and where you want, on your own terms, doing your own thing. You want to steer your own ship and have more time to spend with your family. These are all valid reasons. Another big reason? It’s not just about the possibility of more income; it’s also about how much money can you can save by working from home, being your own boss.
Thousands of Dollars
I recently came across an article by Maddi Salmon on Quartz at Work. She’s not even coming from the perspective of striking it out on your own and working from home full time. She’s just talking about telecommuting into her day job “a couple of days each week,” and even under these much more limited circumstances, she is able to save thousands of dollars every year.
And this got me thinking, as I hadn’t really worked out the math in my own situation. How much money am I saving as a professional freelance writer and blogger who runs his own business from home full-time? Every city is different and every individual is different, but I thought some of you may find it helpful to peer into a real-world example of someone who could be in a similar situation as you are.
Let’s Break It Down
I’m not going to dive into the added matter of writing off business expenses and other related considerations, as that’s a whole other can of worms. Let’s just talk strictly about the money saved when working from home as compared to working a more traditional job in a more traditional office.
First, there’s the commute. Right now, my total commute consists of rolling out of bed and walking down the stairs to my home office. Total commute time of less than 30 seconds for a total cost of nothing. Because of this, my wife and I are able to share a single vehicle. If I drove to work, we’d need a second car.
Conservatively, the costs involved with having that second car would include insurance, depreciation, gas, and maintenance. Here in Vancouver, that’d be about $1,800 a year in insurance, about $2,000 in annual depreciation, about a $60 tank of gas every week (so about $3,000 annually), and let’s say $500 in maintenance (it’s probably more than that). That’s about $7,300, not including the opportunity cost of the time I “waste” on a traditional commute.
Second, there’s daycare. Because I work from home full time, there’s always someone home to take care of my daughter. When my wife or my mom are around, I can work. When they’re not, I can be dad. If I worked outside the home, we’d likely have to invest in a nanny or daycare to some degree. In Vancouver, daycare (if you can even get a spot) is at least $1,200 a month, if not more.
Third, there’s food and coffee. Since I work from home, I typically brew up my own cup of coffee at a cost of about 25 to 50 cents. If I visited the local coffee joint almost daily working outside of home, I could easily spend $3 to $5 a cup. Multiply through by five days a week, 50 weeks a year, that’s an annual savings of about $900. For lunch, I can make my own meal at home for less than $5 pretty easily, while a meal out is at least $10. Conservatively, that’s an annual savings of over $1,000. Combined with coffee, we’re now looking at about $2,000 each year.
Fourth, we’ve got wardrobe. I work from home and very rarely actually meet with clients face-to-face. As a result, I spend almost nothing on work-related clothing. If I worked in an office, I’d have some upkeep to maintain. Dress shirts, ties, suit jackets, shoes, plus the increased wear and tear on essentials. This will vary widely from individual to individual, but you can easily spend $1,000 a year to maintain a professional appearance, if not much, much more.
Tallying It Up
Remember that these are very conservative estimates and it’s naturally going to vary a lot based on who and where you are. Maybe your commute costs are way more or maybe you can find much more affordable daycare in your area. But here are the rough numbers for my situation over the course of a typical year.
- Commute: $7,300
- Daycare: $14,400
- Food/coffee: $2,000
- Wardrobe: $1,000
- Total: $24,700
Nearly $25,000 is hardly anything to sneeze at. That’s the equivalent of making about $100 more each workday or about $12 more an hour (based on a 40-hour week). When you put it this way, even if you take a temporary pay cut for quitting your “comfortable” day job to pursue online ventures from home, you could effectively still come out well ahead. And I’m not even factoring for all kinds of other potential savings and benefits.
Do the math. Working from home is worth it.