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.

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9 thoughts on “How Much Money Can You Save Working from Home?”

  1. When I think of 70 minute commutes each way, decades ago, for a good 2 years, the gas and auto wear and tear cost me a pretty penny. Recent jobs before I became a pro blogger were not much different. Shorter commutes but plenty of overtime. Happy as a lark to save cash and make more money by working from home.

  2. How Much Money Can You Save Working from Home or Full time or any job? will actually depend upon individuals rather than the job they are working. I have seen people saving millions doing full-time job and no saving working from home.

  3. Depending on your job how much money can you save working from home.

  4. run 3 says:

    I save very little money from home.

  5. David says:

    I’m sure working from home would help save a lot, from transportation(gas) to other miscellaneous.

  6. Christina says:

    Making money is the ultimate things that are required of everybody but it is much easier to work from home and then save more especially for women with kids.it allows them to balance the responsibilities in the house and that of the kids.
    Thank you, Michael Kwan, for this article.

  7. Kalyani V says:

    Its an big issue to work full time at office if we have kids.. so many will prefer work from home in order to earn and stay at home…

    Thanks for sharing your ideas…

  8. It’s not just money you save, but also time. My time is worth, at the very least $75 per hour (based on my freelance business). Since I don’t have to spend the30 to 60 minute commuting to and from work, along with an unpaid lunch break, I save at least $150 per day just on time, alone.

    This doesn’t include the gas, the food I would probably eat at a restaurant for lunch, the vending machine snacks and the other things I would spend money on if I were going to a regular job.

    I honestly think more companies should allow workers to work from home, as it would save the employee and the employer so much cash. It’s a win-win, but too many want to micro-manage.

    I have been working from home for more than a decade now, all full-time, and I will never go back. I don’t care if I have to change careers a hundred times, I am never going back to the office/commute rat race our society trains people to accept as normal.

  9. Jon says:

    Goods points Michael. Added to all this is the sheer exhaustion felt after the weekly commute on a Friday evening. Whereas if you’re working at home this energy can be put into your business and not just wasted trying to survive. And all this effort to make someone else rich !

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