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Can You
Afford To Work?
If you are one of the individuals who
wants to stay home but needs to contribute to the family income, YOU MUST READ THIS
SECTION. I truly believe that if I had had this information when I first began my quest to
work at home, I would have been successful 3 years earlier and I probably wouldn’t
need to work now. How is that possible? Do you realize that it costs you to work? Do you
know how much of your income actually contributes to the family? Please look at
the example below:
Sally earns an income of $20,000 per year.
Sally’s expenses related to working are:
Subtracting the work-related expenses from Sally’s salary
we discover that Sally contributes only $3,500 per year to the family income. That equals
$292 per month or even worse $1.78 per hour!
The following activities will
help you calculate how much you pay to work and determine how much you
will need to make working at home.
HOW MUCH DOES IT COST YOU TO WORK?
Here is a list of typical work-related expenses.
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Federal Taxes: Two salaries likely put you in a higher
tax bracket which ends up costing you even more!
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State Taxes:
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Local Taxes:
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Social Security:
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Child Care:
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Commuting (toll, parking, 2nd car):
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Gasoline and mileage:
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Car insurance (extra car, nicer car):
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Clothing expenses (cleaning, new):
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Gifts, special friends at work. etc:
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Convenience food for meals:
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Eating Out:
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Housekeeping help:
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Grooming needs (hair, nails etc):
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Guilt items for kids and family:
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Extra cost related to lack of time to research cheaper
prices for new items:
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Extra cost related to hiring help instead of making
repairs yourself:
Add your total work-related expenses and subtract that amount
from your GROSS income. This is the amount you actually contribute to the
family's financial money-pot. What did you discover? Do you spend more to work than you
actually keep? Does ½ or ¾ of your income go to work-related expenses? When I did this,
I found about ½ my income paid for work-related expenses which meant my family relied on
at least ½ of my income to live.
This exercise is meant to show you one of two things; 1)
perhaps you don’t need to work because your actual contribution is minimal or 2) if
you do need to work, you probably don’t need to earn as much from home as you
currently do with your job.
Don't run out and quit your job just yet!
In today’s world, it is not uncommon for people to be living beyond their means. If
you find you are running out of money before you run out of month or you are paying bills
hoping the check won’t be cashed before you get paid, you are probably living beyond
your means. Even if you are not having the above mentioned problems, it would still be
wise to have a detailed understanding of your finances as you start your new venture.
I hate budgeting because I don’t seem to be very good at
it. The numbers never seem to match. But, without budgeting, I would probably be in the
red and looking for a "regular" job. Having a general even if not accurate
understanding of my family’s spending is critical to my being at home and it will be
for you too. Below is a list of typical family expenses. Use this list as well as your
check book or bill statements to help you get a good grasp of your monthly
income and expenses. Because
some expenses vary month to month, go back a couple of months to get an average of total
monthly expenses.
Household:
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Mortgage/rent
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Homeowner association fees
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Taxes (usually included in mortgage)
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Insurance (usually included in mortgage)
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Electric
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Gas
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Water
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Sewer
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Telephone
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Maintenance
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Other
Insurance
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Life
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Medical
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Dental
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Eye
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Other
Automobile
Loans or Debts
Other obligations such as taxes
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Other Obligations
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Child Support
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Alimony
Other Expenses
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Clothes
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Food
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Grocery
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Dinner out
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Lunches
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Medical
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Fun Stuff
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Cable
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Videos
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Excursions
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Magazine subscriptions
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Vacations
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Hobbies/interests
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Grooming (hair cuts etc)
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Dry Cleaning
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Gifts
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Cash
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Emergency
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Savings
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Other
Now go back over your budget and
determine areas you can save. Can you use the library instead of buying books or
magazines? Can you hold off on making your long distance calls until times with
cheaper rates? Can you eat out once per month instead of once per week? Can you
save on groceries or utilities? By making big changes to your spending, you will need
to earn less and will get yourself home that much faster. Look at your budget again and
determine areas you may be able to cut expenses. There are a host of terrific books
including Frugal Families and Miserly Moms by Jonni McCoy, and Myth of the Two Income
Family by Andy Dappen (see the Resource section) that give
great tips on cutting your budget by 20% or more.
Some tips to help you start saving:
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Start with categories that aren’t set such as
groceries and utilities.
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Find ways to reduce in other areas. Can you refinance
your home for a cheaper mortgage rate. Can you reduce your taxes. Do you really need a
second car or a second car with a payment?
Learn how to research and shop
cheaper. -
Learn free and cheap ways to have fun!
Take advantage of coupons and
discount shopping (be sure to research actual savings.) You can now get
coupons online. Please visit Free
& Cheap for resources on free products and services for home and
office. Also,
visit Moms
At Home Success, join free and download the Afford to Stay Home
manual.
I have found the more desperate people are to find a
way to be at home, the more they are willing to cut out of their spending. Still, you
don’t have to live like a hermit. I found it a challenge to locate the cheapest ways to
do everything from buying clothes to going on family outings. By looking at frugal living
as a positive way to spend more time with your family, you will find that it will be that
much easier to avoid the temptation to buy on a whim.
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