The Catch-22 of Working from Home to Save Money

It's easy to buy into the fantasy of working from home to save money. Think of the daycare savings alone! And then there’s gasoline, eating out for lunch and office clothing. Before actually setting out to work from home, you should understand that most people working from home make less money than their office-based colleagues do. Employers know that working from home is desirable to many employees. They also know you will have fewer expenses and therefore compensate you less for your hard work. This catch22 makes it harder to make telecommuting work arrangements. 

To ensure the best possible pay, those seeking to telecommute should try to work out a telecommuting schedule their current employers at current pay rates. Unfortunately, very few workers are successful in this endeavor. Most of us must give up the day job, eek by for a year or two and pinch every penny along the way until we earn a high enough salary to make the switch worthwhile. Here’s a look at some more realities of working from home, including where you can expect to save money and which types of savings are pure fantasy. 

Daycare 

There are parents who work from home with children underfoot, but do not make the mistake of assuming you can be one of them. Children, especially those too young to attend school, need constant attention and supervision, except for naptimes. Unless you can handle working during the wee hours of the morning, during naptime and then for a few more hours at night, you will not be able to give up daycare. Do not try to work and tend to your kids at the same time. It’s a recipe for disaster. Your children could be injured while your attention is on your work. For most of us, even when we work at home, daycare is not optional, making this kind of savings pure fantasy. 

Dress Clothes 

Yes! This is a real savings. The fashion parade at the office is a constant temptation for us to spend money on trendier and more stylish clothes. We can’t resist a Kohl’s sale or a great TJ Maxx buy when the worker in the next desk just bought a killer suit for 75% off. When you work from home, you might need one suit…that’s it! You don’t go out much and may only need to meet with clients occasionally. Most workers will save $25 - $50 per month. 

Tax Benefits 

Another honest to goodness benefit of working from home is the tax savings. You can take deductions for your office space, some of your utilities, and possibly car expenses. Although you must pay the “self-employment tax,” you can also deduct half of that expense in figuring your adjusted gross income. Be sure to document every possible work-related expense throughout the year so that you can get the highest possible savings for tax-deductible items.  

Wholesale 

It’s a mistake to assume your tax ID will let you buy everything you need wholesale. While it’s true that some vendors will sell consumer-sized goods at wholesale prices, most require bulk purchases. Unless you can really move macaroni through your household, the savings may not be as great as you think. When assessing whether buying wholesale can help you save money, don’t forget to factor in the cost of gasoline in transporting the wholesale goods back home.  

Car Expenses 

Working from home means you will save hundreds on car repairs and gasoline. Some people can even get rid of the car altogether, especially when living in the city. This is a huge savings for telecommuting workers. You’ll save on gasoline, insurance, repairs, maintenance, parking, tolls and other vehicle related expenses that could add up to thousands in just one year.  

Save Through DIY 

The idea that you can do more things yourself to save money working from home is a farce. When you work from home, you often have to work more hours than your office-based counterparts do. The time saved in traveling is spent working. You’ll be lucky to gain a little extra time with your kids, but the idea that you’ll have time to make everything from scratch or fix broken items around the house because you are working from home is pure fantasy. Those who work from home generally spend more hours at work each week than their office-based friends do. Most home-based workers don’t even stop to take lunch. Expect to work more for the benefits of telecommuting, not less. 

While it’s true there are many ways to save money when you work from home, be realistic in your expectations. Understand that your biggest expense, daycare, will most likely continue even when you work from home. There is also a good possibility that your income will go down at the same time. Be sure the savings outweigh any changes of income before you make the telecommute switch.

Jessica Bosari is an Internet copywriter and blogger for various publications and her own blog. You can read more of Jessica's work here.