Would Working from Home Save You Money or Cost You?
The idea of working from home is something which is interesting more people each year. There are a few different financial aspects to take into account before you do this, so let’s take a look at some of the main ones.
Probably the biggest reason which many workers find for not going ahead with the home working approach is the fear of earning a much lower salary. It is fair to say that it is relatively common for people to earn less at home than in a conventional job but it is becoming increasingly difficult to generalize and suggest that it is some sort of step backwards in your career. If you want to look on the positive side how about this example; a guy works in a job he hates so quits it and starts doing an online job he loves. Which do you think would pay better? It depends what the jobs are, clearly, but there seems little doubt he would put more effort, more hours and more talent into the home working position, so there has got to be a chance that it will pay him more. This point isn’t even an issue if your boss lets you do your current job from home. There’s no harm in asking, right?
A big saving on transport can be made by many workers who decide to stay at home to do their jobs. If you add up how much you spend in a year just on travelling to work and back it probably adds up to a tidy sum. By switching to commuting from your bed to your home office you cut out this expense at a stroke. There is also another benefit to be found here which you might not think of at first; by saving commuting time you have the option of earning more by working a longer day.
The Home Office
A reasonably big expense you might have to face up to is that involved in setting up your home office with furniture and equipment. To be fair, a lot of us now already have most of the components of a decent home office anyway. Even if your computer is quite old and your chair has seen better days, as long as no one is coming to visit you there is no reason to splash out on new equipment right away. Even when you need to buy a few things it doesn’t have to cost a fortune. Second hand office furniture and reconditioned computers and printers offer good value and should be enough for more home workers’ needs.
The Possible Tax Benefits
The expenses involved in setting up a home office and maintaining it leads us nicely onto the subject of the possible tax benefits of working from home. One great thing about working from home as a self employed person is that it could end up with you paying less money in tax than you currently do as you will likely incur business related expenses which can be deducted from your tax liability. Many people get scared by the thought of maintaining their own taxes but it really isn’t as difficult as you might think and there are many helpful online tools which can help you to work out your tax liability, like this free online tax estimator tool from TurboTax.
Each individual case will involve a few extras which are either savings or extra expenses for someone switching to the home office way of working. For example, you might find that eating your lunch at home rather than outside gives you a good saving as well as a healthier lifestyle. Another issue is that of your clothes. This can be a big expense for many people but by staying at home it should be something you save on. However, switching from a conventional job with a free uniform to a home job in which you wear your own clothes can mean slightly more expense. On the negative side, you will spend more on electricity if you are home working all day.
If there is one thing we can say it is that each case is different. If you are considering working from home for the first time then it makes sense to think about all of the points we have considered here and come to a sound financial decision based upon your own situation.