Working may cost you more than you think!| Updated: |
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Did you think you were not spending anything to work? Many people do not realize this. But it is actually 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 step 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 actually 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 have to pay for public transportation, it is easier to compute exactly what you spend to work.
Personally, I always drive my car to work. For instance, I do 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. With my small car, that gives me around 475 liters of gas every year.
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 actually around seventy percent of the usage of my car per year. However, this is not so bad because I do not work very far from my 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 amount of gas you spend by using a more efficient car. Or you could opt for an electric car if it is cheaper for you. In some cases, you could also switch from a car to public transportation, or do the contrary, 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 you 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 if I stay home. This is really great because I do not have to buy special dresses for work.
Another thing that can weigh heavily on your budget is daycare! If you have kids and both parents are working, 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 are paying 11’000 CHF per year.
If you pay 100 CHF per day, that is 22’000 CHF per year. 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 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 go away. 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. You more you will 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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14 thoughts on “Working may cost you more than you think!”
Hi, You forgot a BIG item: the cost of your TIME wasted from A[home] to B[work] .
1. My time has a PRICE. Lets say is 10$/h [by showing my face to job, doing nothing in front of a computer]. Or someone [which I dislike as a person] offer me few free bears, which would cost me same 10$ to drink in an hour :)
Would you just drink those beers [win money] or let the money on the table by rejecting the offer, to just sleep on he beach, etc?
2. The price for my time is NOT LINEAR $/h. If I have 10 MM$ and 10 days to live until death, then 1 day worth for me over 1 MM$ [ I will gladly pay this price/day to live one more day!]
3. Some people can NOT stop the job duties [emails, thinking of solutions to job problems, etc] when at home, because of gold hand-cuffs their master [employer] have used to enslave them [employees], like laptops, mobile phones, etc.
Take care: Some [but not us FIRE fighters] can not see the forest because of the trees :)
You are absolutely right. One of the things you pay to work is that you waste a lot of going to it. And this is definitely something that should be considered when comparing works. If one work pays 2% more but you spend 2 hours more a day to go there, it’s not worth it!
Continuing to work at home is also a big problem! For now, I am very lucky because I never do anything for my work at home. And I hope I can keep it up like this.
Time is very valuable. Much more than most people realize!
Thanks for commenting!
Nice summary and impressive how little you got away with spending for work. I used to spend the same amount on transportation (about $1,000 per month) to and from work alone. professionaly looking suits, shirts, shoes to look half decent would probably be another $2,500 a year. Then there is my favourite part of work – socialising after work over drinks or dinner. $1,500 a month? I love traveling so for me the number one biggest cost was not to be able to go traveling when there is an opportunity. Got example now I’m paying roughly 10 times Less for air tickets because I snatch up last minute or unfavourable timing of flights up. It doesn’t bother me to have a 15hr layover in a city, it has 3 connections instead of a direct flight. I have the time since to fly around the world really cheap. The same goes with accomodation. I avoid peak seasons and travel through shoulder Seasons. Much cheaper. When I was still working I had no idea it would make such a huge price difference to fly on Friday evening instead of Wednesday noon.
Hi Financial Gladiator,
Yes, I am quite lucky to not have to spend so much on my work. I am especially lucky to not have to wear suits. Especially since I do not like to dress up.
As you said, there is also a big price of not being able to choose when to go into vacations. It is quite true that there are some days where flights are much cheaper and some seasons where hotels are extremely cheap as well. I did not consider that in my article. I will definitely do it in the next revision of the article!
Thanks for stopping by :)
I calculated as you. Subway payment + food (once per week out with colleagues) + special shoes (nope, I cannot go with my loved trail shoes :D ) + child day care + gifts for colleagues = 25% from my revenues.
(I still cook/ clean /iron my house alone, but it is not clean enough, but who cares? :D )
Another cost that I need to take in account is the health. My back problems are worse specially during the work days, I had nothing last holiday. Because of limited free time, I am going to an expensive massage place, just to relax.
Again, a lot of medical issues we ignore/postpone because of very important meetings /job /limited days off. I see my friend that she postponed 2 weeks her biopsy appointment because of the job … in her case, was a good result but that 2 weeks might cost the life for some people.
But some colleagues take a lot of pills/supplements to resist at work, no time to test the blood before/after intake to see is enough or take too much…just take and hope. I have to remember the second cause of death, after hearth problems, are related to drugs/medicines, with some more time and patience this area can be dramatically reduced.
Wow, 25% of your revenues is a lot indeed! Thanks for sharing that!
I did not think of health indirect costs. These are excellent examples! It is quite dangerous to postpone a biopsy for work.
As for taking pills to resist at work, it is a big problem indeed. But I think that it is just worse than the costs of the pills. If someone need to take drugs to be able to work, there is a big problem. I hope I will never be in that case.
Thanks for stopping by :)
A half of my colleagues have food supplements and pills that can be avoid with a better life style. Each time I opened discussions, I hear answer like: I have no time to cook properly / I sleep bad so I need extra coffees /, I have no time to sport and diet / I am sick and I cannot stay at home / I have 4 loans so i cannot take days off etc. . What can I say? i am very lucky to have a financial stability to afford quality local food, days off when I am tired, long holidays to relax and take care of my life. Ok, I have a great boss too, he approved me last year to have 7 weeks of holidays, a half unpaid :) – not coincidence but since these are improved, all my health is improved.
Indeed, your boss seems quite good :) In Switzerland, it’s not bad, we have five weeks of vacations, all paid. I cannot complain about that.
As for other people. For most of them, these are only excuses. I am sure some of them have very good reasons, but for most people, if they want, they can get out without pills, rest if they need and so on.
However, if you count coffee as food supplements, I’m probably a bad example!
Enjoy your simple road :)
In my opinion another big point of extra expenses is when you have a nice rise in your salary you will probably change your way of living. Perhaps is not your situation and not the situation of the people that follows this blog. But for sure is the norm, the more income you have the more you expend, for instance:
– having a more modern, bigger, fancier or powerful car.
– taking holidays in resorts instead 3 stars hotels.
– going holidays to expensive places (Bora Bora, Hawaii, Swiss Alps ;) ).
– changing your way of dressing (fancier brands).
– renting a bigger apartment.
– going out for dinner more frequently.
– traveling in business instead of couch.
As you can see, the list could be much longer, in other words the more you get the more you spend because at the end we live in a consumer society and we will try to fit in.
The good thing is that you can avoid all of the extra expenses that I mentioned. And the bad thing is that at the end (my experience and my friends experience) you will fall in one or more of the situations listed abobe.
Yes, you are absolutely right. Lifestyle inflation is a big cost of working and earning more and more. I did not want to include it because it is a more indirect cost. However, I am going to talk about this in a future post. I just do not know exactly what to include. I will surely use some of your examples!
This is also a big problem for people who try to have a fixed savings rate. It is doomed to lifestyle inflation if you get more money. That is why I think a fixed savings rate does not make any sense.
Thanks a lot for your comment :)
two big items of convenience price to mention:
– Dry-cleaning/ Ironing: 220 shirts at 4CHF per shirt is roughly 1’000CHF per year just for shirts
– House-Cleaning: 35CHF/h*4h each week*12months= about 6’000CHF per year
Both of these you could do if not working.
Another items more difficult to quantify would be:
– going skiing/biking/ hiking during weekdays: cheaper hotels and ski-lifts.
– living close to work. e.g. lots of people live in the Zürich area for being close to work which costs more than a little further out.
You make some very good points! I will have to complete the article now, thanks :)
Dry-cleaning is indeed an excellent point. As you said, there are some convenience things that you do because you do not have the time (or do not want) to do them after work.
I really didn’t think of the weekdays’ difference! That’s a very good point.
Thanks a lot :)
Good post! A friend of mine actually lowered her income going from unemployed to employed, because she has good unemployment benefits, and in order to work she needed to buy a car to get there and she needed nice clothes. She still decided to take the job because of the opportunity to get job experience, and doing nothing is boring and doesn’t look good on your resume.
Thanks Mr. Rumourts,
Yeah, unemployment has its disadvantages! But as you said, sometimes, it can be very expensive to work. Needing to buy a car only for work and some nice clothes as well can be really expensive and put you back.
By the way, my point was not to make people stop working! It is just important I believe to realize that working is not only extra income, it is also extra expenses.
Thanks for stopping by!