With the constant uncertainty of global events and domestic economics, the need for companies and employees to save money is perhaps at an all-time high. A rising consumer pricing index adds to the woes of housing, food, and transportation costs. In addition, rampant inflation sits at 8% — the highest since 1982. As a result, both employers and employees are looking for ways to cut costs and maximize net income. But thanks to the rise of remote work, both parties are finding out that working from home saves money. Period.
Don’t Give Up Your Money for Remote Work
An interesting side note to the idea of remote work-based savings is that up to 50% of employees are willing to take up to a 5% pay cut to work from home. While the advantages of work-life balance are evident, this underscores the heightened opinion of the benefits of remote work. But as an employee, you need to see how remote work saves you money from both sides of the equation.
When you realize that this type of arrangement benefits both you and your employer monetarily, you may find that a pay cut doesn’t make a lot of sense. So before you agree to a pay cut, discover the cost benefits of working from home. This shouldn’t lead to a pay cut, but rather a symbiotic relationship of understanding and efficiency between employee and employer.
How Remote Work Saves You Money as an Employee
Working from home saves money in a variety of ways; it isn’t just that you don’t have to drive to the office anymore. While the total amount you save varies depending on your place of employment, lifestyle, and geographic location, the economic benefits of working from home are beyond reproach. Here are some of the top ways you can put more money in your bank account through remote work.
1. Limiting the Costs of Commuting
According to a study from Business Insider, the average American spends between $2,000 and $5,000 commuting annually. That’s up to almost 10% of your salary when you consider that the average wage of American workers is $53,383 per year. Even at the low end of commuting cost, you can still save 3.7% of your pre-tax income. That’s not exactly chump change. Add in the current gas prices of $4.24 per gallon (March 2022), and you may save even more throughout the year.
In addition to the savings on gas and maintenance, you also save money by maintaining the resale value of your car. Lots of factors play into the price of your car when you sell it or trade it in, but mileage plays the most pivotal role. By keeping lower miles on your car, you get more value when you want to trade it in.
And although you can’t truly put a value on your time, working from home saves tons of time you can spend earning more cash or spending time with family. With an average one-way commute of 27.6 minutes, you save almost an hour each day by working from home, or about nine days each year.
2. Tax Breaks and Incentives
When you work from home, you can also save money by not giving it to Uncle Sam. That’s right! Your remote workplace functions as an office, which can lead to considerable savings come tax time. Some of the things you can write off as expenses and deductions include:
- Home office deduction
- Office supplies
- Hardware and software (if it’s not furnished by your employer)
- Office furniture (even that comfortable office chair you’ve always wanted)
- Coworking center memberships
- Retirement plan contributions (IRAs and 401(k) plans)
3. Reduced Food Costs
If you’re like many American office workers, a formidable way to break the monotony of the day is to go out to lunch or grab drinks during happy hour. While there’s nothing inherently wrong with these social interactions, the costs can add up quickly.
Think of simply buying a $5 Starbucks coffee when you go into the office. That’s $25 a week, which can add up to $1,000 over the course of a year. Or if you spend $15 for lunch each day, that’s $75 a week, or around $3,750 per year. Throw in the price of happy hour drinks, and the savings on food and drink alone can net you almost $6,000 per year. So even if you’re a poor cook, working from home still saves you money. Why not take the time to become a culinary mastermind or a great mixologist? You’ll have the extra time to do so.
4. The Environmental Benefit
Although reducing emissions and power consumption from working from home doesn’t necessarily equate to more money in the bank, it’s a benefit you can pass on to future generations. According to research from Spain’s Institut de Ciència i Tecnologia Ambientals, greenhouse gas emissions could fall by up to 10% by working at home four days a week.
How Remote Work Saves Companies Money
As outlined above, working from home saves money for employees. But companies and employers aren’t exempt from the savings as well. As a business owner, you stand to save thousands of dollars a year by employing a work from home or hybrid work arrangement. Bottom-line savings are always a shot in the arm for companies and business owners. So if you’ve never thought of having your employees work from home, here are some reasons to consider it.
1. Reduced Overhead
Overhead is one of the costliest parts of running a business. According to statistics, most businesses spend between 25% and 50% of their annual expense budget on overhead alone. Overhead includes:
- Power, water, and sewer bills
- Internet bills
- Rent or mortgage
- Administrative costs
These are just a few of the many costs of doing business. Yet with a remote work arrangement, most of these costs can be reduced or eliminated altogether.
2. Savings from Worker Loyalty
Remote workers tend to be 22% happier than their onsite cohorts, according to a study from Apollo Technical. While this may lead to increased productivity, the most important facet for companies and businesses is the retention of employees and worker loyalty. When a business maintains the same staff, it can save thousands of dollars each year.
For example, hiring a new employee costs an average of $4,000. But when you add in the costs of training, onboarding, and other initial expenses, bringing a new employee into the fold is often one-half to two times the annual salary of that worker. That’s a ton of cash to spend, especially when implementing a remote work policy can cut these costs in their entirety.
3. Increases in Productivity
Happier employees tend to be more productive employees. While that means you can churn out more projects and satisfy more clients, it’s also a reward in the form of more revenue each year. When you can reduce the amount of time that a given project takes without reducing the charges to a customer, it’s the perfect win-win scenario.
And that’s just what remote work does. Happiness leads to productivity which leads to more business opportunities for income. In this sense, it’s a no-brainer for employers.
The Added Savings of Working From Home
Working from home saves you money, but it also provides other advantages than trudging into the cubicle every day. More social and family time, the ability to transform your schedule to suit your lifestyle, and a healthier lifestyle overall top the list. And with the added finances in the bank, working from home provides little downside. If you haven’t joined the ranks of the remote workforce, you’re missing out not only on increased income, but the ability to become a better person, spouse, or friend. Don’t miss the boat.
What other ways have you found that working from home saves money? Connect with Virtual Vocations on Facebook, Twitter, LinkedIn, Instagram, and YouTube to share your thoughts and tips. We’d love to hear from you!
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