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Did you think you were not spending anything to work? Many people do not realize this. But it is not free to work. You are probably spending more than you think to work and earn an income. This may sound counter-intuitive. But many people are spending a lot on their work without realizing it. For instance, work often forces you to commute.
Of course, you (hopefully!) earn more from your work than what you are spending to work. But you may be surprised by how much you can save by stopping working. For some people, this could mean that it is better to have only one income than two in a family.
In this article, we see exactly how much we spend on our work. I also discuss some of the ways you can mitigate these costs. You will see you can reduce some of these items. The first step is to realize this, and the second is to act on them.
Transportation is the most direct cost of working you can find. You need to move from your home to work every day. And you have to do that twice a day. Some people even go back home for lunch, which means they have to do the commute four times a day.
If you take your car to go to work, you consider the fuel and also the depreciation of your car due to this usage. If you must pay for public transportation, it is easier to compute what you spend to work.
Personally, I always drive my car to work. For instance, I go about 18 kilometers (11 miles) to go to work. That means 36 kilometers per day (22 miles). If we account for around 220 days per year at work, that gives us 7920 kilometers per year. This sums up to around 475 liters of gas every year with my small car
Finally, with the current gas price, this is 760 CHF per year I spend on working. And this is not counting the depreciation of my car. This is around seventy percent of the usage of my car per year. However, this is not so bad because I do not work far from home.
There are ways to mitigate this. The obvious way is to take a job closer to your house or move closer to your job. Another way is to work remotely. However, this is not possible for everybody. You could also reduce the gas you spend by using a more efficient car. Or you could opt for an electric car if it is cheaper. In some cases, you could also switch from a car to public transportation, or vice versa, if it is cheaper.
Many people spend more on food when they are at work. Most people cook when they are at home. However, many people do not bring food to work. Meals at work are generally significantly more expensive than meals at home.
The best way to reduce this cost is to bring food from home. Avoiding eating out is one of the best ways to reduce your food budget. It is not really difficult to cook more. For each meal, you can cook one more portion for the next time. Some people do not like to eat twice the same thing in a row. In that case, you can bring food two days after you have cooked it at home. So you will always have one day between eating twice the same meal. This should suit most people.
I try to bring food to work every day. With that, I do not spend any money on eating at work (other than groceries, of course).
This one will highly depend on your lifestyle and your work. Some people pay a lot of money to have a nice wardrobe for work. It is not uncommon for people to spend more than 1000 CHF each year on their professional wardrobes.
On the other hand, some people wear the same thing regardless if they go to work or stay at home. In that case, it does not cost much to dress for work.
Fortunately, I do not need to dress, especially for work. I dress the same if I go to work or stay home. This is really great because I do not have to buy special clothes for work.
Another thing that can weigh heavily on your budget is daycare! If you have kids and both parents work, you are likely paying for daycare. And daycare is costly in most countries I know. And daycare in Switzerland is quite expensive.
In Switzerland, you are likely to pay at least 50 CHF per day per child in daycare. And you could be paying more than 100 CHF per day if you have a large salary since daycare is subsidized based on your income. If you have one child in daycare each weekday for about 220 CHF, you pay 11’000 CHF annually.
If you pay 100 CHF per day, that is 22’000 CHF annually. That is a lot of money. And you have to multiply that amount by the number of children. If you have two children and a large combined income, you must bring in at least 44’000 per year, after taxes and work costs, to justify it.
One main way to reduce this cost is to have one parent stay at home to take care of the child. It could be both parents at different times, but this is often more difficult for a career. Another way is if you have family members that could take care of the children. But that is becoming more and more unlikely those days.
For now, we do not have children, but we plan to have children. We have not yet planned how we will manage that. I am not in favor of daycare every day. But at least one day a week in daycare is good for children, in my opinion. We will have to see when we have children.
Taxes are a very direct cost of working. It is probably the most tangible of the working costs. The more income you have, the more taxes you will pay. And something important as well: the more income you have, the more extra income will be taxed. This is because your marginal tax rate will increase with your salary so that each extra dollar you earn is taxed more.
You cannot do much about that. You can invest some money in tax-deductible accounts, for instance, to reduce your tax bills. You can also deduct as much money from your tax declaration as possible. Or you could move to another place with a lower tax rate. But that is not convenient.
In the end, taxes are something we always have to pay when we work. But as soon as you stop working, most of these taxes will disappear. So you should pay less in retirement. As Benjamin Franklin said, nothing can be said to be certain except death and taxes.
When working every weekday, you are often left with doing things only during the weekend. You may not realize it, but this has a high cost. Most things are more expensive on weekends. It will be more difficult to find a cheap flight on the weekend. Hotels will be more packed and thus more expensive. Moreover, some activities are much nicer when fewer people are on weekdays. For instance, in Switzerland, skiing is much more enjoyable on a Tuesday than on a Saturday.
Moreover, by working, you are also not able to choose last-minute deals. You could decide to go tomorrow on a short trip because the plane tickets are extremely cheap. It is unlikely that you can do that if you are working. And it is possible that having more time will let you choose longer flights that are cheaper. If you have 52 weeks of vacation per year, you can afford to lose a few hours, no?
This is something that is directly impacting me. Due to my work, I only fly on weekends at a higher price. If I were not working, I could fly on weekdays.
This one is a very indirect cost. When you work, you have less time on your hands. You may take the convenience route a few times to save some of your precious time left. And convenience has a price.
For instance, if you go shopping after work, will you go to the shop on your route even though it may be 10% more expensive than the one you need to spend five more minutes to reach? And will you check five different websites to find the cheapest sweater or order the first one? All this comes down to convenience.
Another example is that most people want to save time on cleaning when they are working every day. I know many people who use a cleaning service each week to save time. I completely understand this. When you work at least 40 hours a week, you probably do not want to spend your time cleaning at home. The same is true for people using dry-cleaning services.
It is challenging to evaluate how much you spend on convenience to save time because of your work. I know that a few times I go to the small shop on my way instead of the cheap shop. All of this saves five5 minutes. But I prefer to get home early than to make a detour. I never do that for big groceries, only for small things. But I could save some money every month by not doing that. I believe that is the only convenient price I am paying because of my work. But I may be mistaken in that.
There is only one way to save on convenience, do not choose the way of convenience. However, I believe that you may afford some convenience if you are working. You need to be aware of this and choose based on this.
As you can see from this post, working is more expensive than we think.
You have to spend some money to earn some money. That means that these expenses directly take some part of your salary. In the end, you may earn less than you think. This is very important to know.
For me, there are not many expenses to work. It costs me around 1000 CHF per year to go to work. I bring food from home, so this does not change our expenses, and I dress the same, for now, at work and at home. Of course, there are taxes. It is difficult to estimate them since I have just started working in my new company. But they probably account for more than 12’000 CHF of my salary. And they will increase next year.
The most important is to take these items into account when you compare two jobs. If you get 200 CHF more per month on a new job, but you will have to spend 4000 CHF a year for it, you should not take it. It is an important part of comparing two jobs. And many people do not do that.
How much you spend to work is highly related to lifestyle inflation. The more you earn, the more you will be tempted to spend. To learn more about this, read my post about Lifestyle Inflation and how to Fight It.
What about you? How much do you spend on your work?
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