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.
Of course, you should still 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 actually mean that it is better for the budget to have only one income rather than two in a family.
In this post, we are going to see exactly how much we spend on our work. I am also going to discuss some of the ways you can mitigate these costs. You will see that some of these items can be reduced. 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 need to take into account 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 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 the very small engine of my car, that gives me around 475 liters of gas every year. Finally, at the current price of gas, this is 760 CHF per year I spend on going to work. 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 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. That means that meals at work are 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 simply 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 simply 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.
Personally, I bring food to work almost every day. And my work is paying for a few meals each year. So, I do not spend anything on food at work. All my meals at work are either free or cooked at home by me or Mrs. The Poor Swiss.
This one will highly depend on your lifestyle and on your work. Some people pay a lot of money to have a nice wardrobe for work. It is definitely not uncommon for people to spend more than 1000 CHF each year on their professional wardrobe.
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 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 work. I only need to dress better when I go into our U.S. office or on special occasions. But I have enough dresses to cover these days without needing any special clothes. This may change in the future since Mrs. The Poor Swiss would like me to dress better since I actually dress quite poorly. We will see how that goes.
Another thing that can weight heavily on your budget is daycare! If you have kids and both parents are working, it is likely that you are paying for daycare. And daycare is extremely expensive in most countries I know.
In Switzerland, you are likely to pay at least 50 CHF per day per children 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, that means you are paying 11’000 CHF per year. If you pay 100 CHF per day, that is 22’000 CHF per year that is gone. That is a lot of money. And you have to multiply that per the number of children. If you have two children and a large combined income, that means you need to bring at least 44’000 per year, after taxes and work costs to justify it.
There is one main way to reduce this cost, have always 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 are going to 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 are going to 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.
There is not a lot you can do about that. You can invest some money in tax-deductible accounts for instance to reduce your tax bills. You can also make sure to 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 really 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, in this world, nothing can be said to be certain, except death and taxes.
When you are working every weekday, you are often left with doing things only during the weekend. You may not realize it, but this has a big cost. Most things are more expensive on weekends. It will be more difficult to find a cheap flight on a weekend. Hotels will be more packed and thus more expensive. Moreover, some activities are much nicer when there are less people in the 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 small 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 more expensive price. If I were not working, I would be able to fly on weekdays.
This one is a very indirect cost. When you work, you have less time on your hands. That means that 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 need to go shopping after work, are you going to 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 are you going to check five different websites to find the cheapest sweater or just order the first one you find? 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 very difficult to evaluate how much you are spending on convenience to save time because of your work. Personally, I know that a few times I go to the small shop that is on my way instead of going to the cheap shop. All of this to save 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 a few bucks every month by not doing that. I believe that is the only convenience 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 just need to be aware of this and make the choice based on this.
As you can see from this post, working is more expensive than we generally think. You have to spend some money to earn some money. That means that some part of your salary is directly taken by these expenses. 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 cost 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 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.
I believe that the most important things about these items is to take them 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?