How much money can you save by working from home?By Jason Mudd
March 26, 2020
Research shows that telecommuters can save at least $2K and often more than $7K
This is one story in our series on the benefits of working from home. Read about how remote employees can be more productive than office ones for more.
In addition to letting you avoid the stench of Payroll Stan’s microwaved fish, working remotely (like from home) can save employees a ton of time and money.
According to research from The Ladders, MarketWatch, and other sources, employees really want to work from home. In fact:
A report from GoToMeeting revealed that 60% say they’d be more likely to accept a job with a strong remote working culture. Schedule flexibility and work-life balance are now among the most important factors and biggest demands for recent graduates searching for jobs.
According to Dice, the ability to avoid an office is the most desired perk an employer can offer, ranking ever so slightly ahead of a solid health benefits package.
79% of U.S. workers want to work from home, even if it’s only some days.
85% of millennials prefer working from home all the time.
Meanwhile, less than 20% of employees actually get to work from home even occasionally.
67% of U.S. workers say they gladly took or would be happy to take a pay cut to be able to work from home.
The average commuter has a 32-mile round-trip commute, which can cost an estimated $219–$686 per month and $1,400–$2,600 per year, depending on location. Other research shows that the average commuter spends $868 a year on gas and $787 on car maintenance.
Assuming you drive your own car to the office, you can calculate how much it’s costing you by multiplying your commute miles by the IRS mileage rate, currently 58 cents per mile. So if you drive 20 miles to work one way, your math would be:
40 (round-trip miles) x .58 (current IRS mileage rate) = $23.20 (your cost)
So your commute is costing you $23.20 every day in wear, fuel, and depreciation costs. With an average of 22 working days per month – 262 per year – that comes to about $510 per month or $6,125 per year. Ouch.
More free time and less road rage: ~$500/month
Beyond the real cost of commuting and the health cost of stressful and sedentary commutes, research shows that work-from-home employees enjoy about four more weeks per year for personal time. How? Some calculate the time behind the wheel or in transit to and from the office to be as many as 3 hours per day, according to the U.S. census bureau. That can add up to about 800 hours in a year that you could be spending on infinitely more productive pursuits. More time for personal interests means a happier life and more money because when people have more free time, they’re able to save money by
- cooking at home instead of eating out
- clipping coupons
- exercising at home
- doing household chores themselves, thus eliminating the need to hire a
- house cleaner
- lawn service
- dog walker
- errand service
- pest control company
- and other services
What would having an extra month’s worth of time per year allow you to accomplish, once you shut down “the astonishing human potential wasted on commutes,” as a Washington Post article so aptly put it? One study claims that, aside from the time saved factor (a staggering 11 solid days in traffic), workers could be wasting $2,500–$6,000 a year on extra expenses. What would all that cash freed up allow you to do?
The average commuter reportedly spends $2,000 per year on meals and $1,000 per year on coffee. The research isn’t clear on sodas and other drinks.
Most jobs don’t allow parents to watch their young children while they work, nor do they accept the sound of kids in the background on calls and video chats. But the typical school-aged child is independent enough to allow parents to work without much interruption before and after school, allowing telecommuting parents to supervise their children and work at the same time, eliminating the need for after-school care. Reports say childcare costs $5,000–$15,000 per year.
In theory, telecommuters don’t need to dress up as much as their traditional counterparts, nor do they need to worry about their office appearance. Compared to commuters, research from sources below shows that, on average, WFH employees are saving:
- $125 per month on clothing ($1,500 per year)
- $83 per month on dry-cleaning and laundry services ($500–$1,500 per year)
- $33 per month on makeup and skincare products for work hours ($400 per year)
More time for yourself, more time for exercise, and avoiding the stress of a daily commute can increase your quality of life and decrease your health care risks and, subsequently, costs, as well as the time you spend on medical appointments. Inc. Magazine reports that WFH employees are also able to maintain healthier lifestyles, clocking an extra 25 minutes of physical activity each week. A 2011 study from Staples found that employees who worked from home experienced 25% less stress. When you ask people why they like to work from home, most respond that they find it less stressful, easier to have a healthier work-life balance, and easier to eat well.
Tax breaks ~$1K/year
If you work from home, you might be able to deduct your home office space at tax time. For 2019, the prescribed rate is $5 per square foot with a maximum of 300 square feet. If the office measures 150 square feet, for example, then the deduction would be $750 (150 x $5). And don’t overlook expenses for your high-speed internet service provider and smartphone, which allow you to do your work. Consult a tax professional.
Less peer pressure
Beyond having to consider dress and appearances at the office, research shows that commuters also face certain financial peer pressures. It’s not just about the car you drive and the way you dress: Commuting employees also encounter pressure to contribute toward school fundraisers and to chip in on team meals and gifts for coworkers.
More freedom and other perks to consider
- Working from home allows you to live virtually anywhere you want instead of worrying about being within a certain radius of the office. Some may prefer country living as opposed to urban living or living in a traditional suburban environment with a homeowner’s association-ruled community.
- Auto insurance: Many providers offer low mileage discounts to those who drive less than other customers. When you don’t have to report to an office every day, you drive less.
- Fewer meetings
- Fewer interruptions: 76% of remote workers believe that they are more productive because they don't have to put up with interruptions from colleagues. 69% associated better productivity with less frequent meetings.
- Better work-life balance
- Better health thanks to more time to finally hit the gym and fewer germs and viruses being spread around in your workspace
- Less stress
- More time flexibility
Sample savings: ~$5K/year
Depending on the research, reports say that telecommuters save as little as $2,000 and as much as $7,000 over commuters, with a median of $5,000. Breaking down common savings without the intangibles and without any childcare savings, we can easily document $6,000 in savings:
$686 on gas
$767 on auto maintenance
$500 on laundry and dry cleaning
$3,000 on meals and coffee
$1,000 on clothing
+ $750 in possible tax deductions
Hands down, research shows that employees want to work from home, and running the numbers makes the preference financially sound, too! Now, if only employers would pay attention to the overwhelming data supporting the higher productivity of WFH workers.
Sources: The Ladders, MarketWatch, DoughRoller.net and others.
Topics: public relations
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