Working from home has its perks, but it’s certainly not for everyone. This life takes discipline, plus the less distractions you have, the better.
It’s an adjustment period, but if you can make it work, working from home not only eliminates your commute time and saves your sanity, it also saves you money. In fact, those who work from home – either as a telecommuter, a freelancer or a business owner – save between $2,000 and $7,000 a year, according to calculations by the Telework Research Network.
Think of what you could do with extra cash in your pocket – pay off debt, reinvest in your business or pad your savings account.
So, where exactly can you save when working from home?
1. Transportation costs
Working from home – even if only for a few days each week – can greatly reduce your transportation costs. Think of how much you currently spend on gas each week. Now consider how much you’ll save by completely eliminating your daily commute or reducing it by half. A full tank of gas might last two or three weeks, and with gas prices basically staying put around $3 or $4 a gallon, who wouldn’t jump at the savings.
But the savings don’t stop with gas. The less you drive, the less wear and tear, which saves money on vehicle maintenance and repairs. Plus, if you drive less than a certain number of miles each year, you may qualify for a low-mileage discount, reducing your auto insurance premium by 30% a year.
2. Fewer takeout lunches
Bringing your lunch to work saves money during the week. But in all likelihood, your coworkers will grab takeout at a restaurant. Which is better: a cold sandwich at your desk or a hot meal at a nearby restaurant. And even if you pack a lunch, there’s always a chance that you’ll walk out and leave your food in the refrigerator.
When you work from home, there’s no pressure to hang with the group and spend money you don’t have on lunch, nor do you have to worry about rushing out the door and forgetting your lunch. Simply go into your kitchen when you’re ready and grab last night’s leftovers.
3. Limited child care
Working from home may not completely eliminate child care costs altogether, as you’ll probably need someone to distract your kids during the day, but it can certainly reduce how much you spend each month.
The average daycare center charges $125 a week. With two kids in care, you can spend a minimum of $1,000 a month on child care alone – ouch! But if you work from home, in most cases, you’ll no longer need full-time care or aftercare. A flexible work schedule gives you options.
For example, you might have a part-time nanny or babysitter come to your home a few hours each day – often costing you less than a center. Do you know other work-at-home parents? Perhaps you can take turn and watch each other’s kids.
4. Work Attire
How much do you currently spend on work clothes each year? $200? $600? $1,000?
Like most people, you want to look your best when heading to the office. And even with a closet full of clothes and shoes, you may occasionally add to your selection of business suits.
Saying “goodbye” to office life is great for your clothes budget. When you’re home working in front of your computer, nobody cares about your wardrobe. As long as you get through the day and meet your deadlines, it doesn’t matter if you’re wearing a three-piece suit or your pajamas.
And since the majority of your at-home attire will not have special instructions, such as “dry clean only,” working from home can slash or eliminate your dry cleaning bill.
5. Tax Breaks
Working from home might be the golden ticket if you need to lower your tax bill, as this opens the door to a variety of tax deductions.
Do you have a dedicated home office used exclusively for business? If so, write off the square footage of this space. You can also take a deduction for work-related expenses, such as office furniture, computers and other business equipment. And since you’re working out of your home, you can write off a percentage of other costs, such as your utility bills.
The requirements for deducting expenses for the business use of your home are specific. Speak with your accountant or a tax preparer to determine if you qualify for these deductions.
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