Are there Any Financial Benefits to Work From Home?
- Working from home can save you money in several ways.
- Expect to spend less on transportation, your wardrobe, lunches out, and taxes (if you deduct a home office).
- Use what you save to accomplish a financial goal.
Even before shelter in place orders were issued, tech giants in Silicon Valley and Seattle moved their employees to work from home. And now, despite the fact that many states are now opening back up, companies like Google, Facebook, and Zillow are still asking their employees to continue remote work until 2021 — and they are not alone.
According to a recent survey by HR Executive, 62% of employers plan to keep their workers at home until they feel it’s safe for them to return.
So if you’ve been working remotely as a result of the pandemic, there’s a good chance you won’t go back to the office for a while. Although working from home is safer in these unprecedented times, it could also be helping you save money. Let’s take a closer look at the financial benefits of working from home.
How remote work saves you money
The amount of money you could save by working from home depends on your unique situation. However, a study by FlexJobs found that the average worker can save about $4,000 a year by working remotely. According to FlexJobs, if you work from home, you’re likely to spend less on the following:
Gas and car maintenance
When you work remotely, there’s no need to get in your car and drive to and from work. Therefore, you’ll probably save a lot of cash on gas, especially if you are one of the Americans with an average commute of 26.1 minutes. Less time in the car also means less money on routine maintenance and repairs.
Coffee and lunches
It’s pretty common to swing through the Starbucks drive thru for a cup of joe on the way to work. Going out to lunch with coworkers is the norm as well. Even if you only go out to lunch three times a week and spend about $8 each time, you can save $96 per month or $1,152 per year by eating at home.
Professional wardrobe
If you don’t work in an office where you can get away with jeans and sweatshirts, you probably spend a lot of money on your wardrobe. After all, even business casual isn’t cheap, especially if you get your work clothes dry cleaned or laundered on a regular basis. The average American spends about $1,866 on apparel each year but if you work from home, you probably won’t spend anywhere near as much.
Taxes
There’s a home office tax deduction you may qualify for if you’re working remotely due to coronavirus. To be eligible for it, you have to “regularly and exclusively” use part of your home for work. You don’t necessarily need a separate room but you do need to dedicate a certain area of your home solely for work.
So while your kitchen table doesn’t count (because your family likely eats there as well), a nook in the corner of your basement could make the cut. There are two deductions you may be able to choose from:
Standard deduction: With the standard deduction, you can deduct a portion of some overall expenses based on the area of your home that you use as your home office. If your home office is 8% of the total square footage of your home, you can deduct 8% off expenses like your mortgage, rent, or utilities.
Simplified deduction: The simplified deduction can allow you to deduct $5 per square foot of your home office, up to 300 square feet, for a maximum deduction of $1,500. If you go this route, you won’t have to keep records of your particular expenses.
How to save even more money by working from home
When you work from home and no longer have a commute, you’ll have more time for yourself. The Telework Research Network discovered that cutting out a commute would give the average employee two to three weeks of free time each year.
Not only can this extra personal time do wonders for your mental health, it can give you the opportunity to save even more money by doing some of these things:
Eat at home: You’ll be less tempted to eat out when you have more time to plan meals and cook at home. Since the average American household spends about $3,000 per year dining out (in a non-shelter at home situation) this can lead to significant savings.
Clip coupons: Coupons can save you money on groceries, household supplies, clothing, and more. So if you have the time, it’s a good idea to look for them in newspapers, magazines, receipts, and online. While $2 off here and there may not seem like a lot of money, it can really add up in the long run.
Pick up a side hustle: With more time on your hands, you can look for other opportunities to earn cash outside of your full-time job. You may want to deliver meals, mow lawns, sell a craft, or start any other side hustle that piques your interest.
Complete DIY repairs: When you’re busy, you may call someone up to fix a leaky toilet, replace a faucet, or install a light fixture. But with more free time, you can watch some YouTube videos and take care of at least some of them on your own.
Expand your knowledge: If you want to excel in your career and potentially earn more money down the road, you may want to take classes at a community college or earn a certification. Believe it or not, Ivy League colleges like Yale and world-class universities like Stanford are now offering free courses you can take online.
As long as you use the extra time you gain from working from home wisely, you can save hundreds or even thousands of dollars on a variety of expenses.
Learn more on how to save money and improve your finances
Learning how to deal with debt, money, and planning for your future doesn’t need to be hard, you might just need a little extra advice. We have developed a simple to follow guide to help you find the tools you need to move to a better financial future during the coronavirus pandemic and beyond. Get started by downloading our free guide right now.
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Learn a New Language During Quarantine: The Language of Money (Freedom Debt Relief)
How to Create an Emergency Fund by Snacking and Watching Movies (Freedom Debt Relief)
How to Prepare for a Recession If You are Already Struggling (Freedom Debt Relief)
The Insane Money You’d Save if You Worked from Home (MarketWatch)