There are two things I wish I’d understood when I first wanted to stay home with my children. One was how much it actually cost for me to work outside the home and second, how little I really needed to earn to stay home! This page will help you figure out both!
CAN YOU AFFORD TO WORK?
Would you send your children to childcare for 45 hours per week so that you could work 40 hours per week to make a measly $3.80 per hour? Of course not, you say. But how do you know you aren’t doing just that? I certainly never thought as a professional social worker that I would be making only $3.80 per hour. But that is exactly what I was doing.
When I worked as a social worker, I made about $28,000 per year. Not a great salary but, combined with my husband’s, was a decent income. So why was I always broke? Why did we have a good income but couldn’t afford to go on vacation? Worse, I couldn’t afford to take the full 12 weeks allotted for maternity leave when my second child was born. The reason was that I had no clue how much I spent to work outside the home.
Here is what I paid each year so that I could work:
- $3,000 for Federal and State government income tax, Social Security payments and Medicare tax.
- $6,000 for childcare
- $2,400 extra for car payments, car insurance, and personal property tax for a newer car.
- $1,700 for commuting 10 miles a day.
- $1,000 for clothes, dry cleaning and other items and services related to my professional appearance.
- $1,000 for lunches.
- $2,600 for convenience foods and dining out because I was too tired to cook.
- $2,400 for I-deserve-this-because-I-work-so-hard items and guilt treats (toys, special outings) for my kids.
Total cost of my job: $20,100!
I spent $20,100 to work! That equaled an income of $7,900 per year, $152 per week… a full $3.80 per hour!
How much do you pay to work outside the home?
Work-related Expenses (listed below):
- Federal Taxes:
- State Taxes:
- Local Taxes:
- Social Security:
- Medicare Tax:
- Child Care:
- Commuting (toll, parking, 2nd car):
- Gasoline and mileage:
- Car insurance (extra car, nicer car):
- Clothing expenses (cleaning, new):
- Gifts, special friends etc at work:
- Convenience food for meals:
- Eating Out:
- Housekeeping help:
- Grooming needs (hair, nails etc):
- Guilt items for kids and family:
- Extra cost related to lack of time to research cheaper prices:
- Extra cost related to hiring help instead of making repairs yourself:
Add all the items above and subtract from your GROSS income. This is the amount left over after you pay for work expenses. Depending on the results, you may find it much cheaper not to work or to work part- time from home. For many years I made significantly less than I did at my last traditional job, and yet we had more disposable income. Why? Because I didn’t have so many work related expenses, and I was able to save a lot of money by being home.
Hi,
I appreciate your blog,and provide more information on this?
Regards,
Jane
hi,
it is a cool atricle .. i understand every thing..
rayan
Hi, I’ve been lurking on your blog for a couple months. I like this writing and your entire website! Keep it up!
This is a great post that really breaks down where the money goes when your working. Sometimes its so hard to see how much money you are really earning,
I wish I’d known how much I was paying to work sooner than I did. I was amazed when I ran the numbers. Thanks for commenting Nay!
This is such a great way to make us realize how we are actually spending and earning from our office-based work. I never thought of it that way so it is a good eye opener. I’m glad I’m already starting out my own home – based business.
I wish I’d had the information when I first wanted to work at home. It shows that you may be able to get by on less by working at home, which was my case. Thank you for commenting.
What about the opportunity cost of your time getting ready for work, and going back and forth from work.
That all adds up as well.
I know for myself personally, I’ve gained about 10 lost hours a week.
Regardless of how you look at the costs, working from home is something that a lot of people should be seriously considering if they aren’t already
Hi Taylor, You are right that there is a lot of time spend just getting ready to work. There’s a lot of financial expense in it as well. You aren’t paid for “getting ready” time. In business, you can deduct things like mileage and pantyhose, but not in a job. Thanks for posting.
Working from home is a great way to earn a decent income. It’s not always true that you’ll earn more working in a private company. It’s usually the other way around. If you have the skills and experience, you can charge higher rates. In my case, I save more and earn more working from home…
I found that I earned a lot less initially, but I saved so much money by not working outside the home, I had more disposable income. I made less, but had more:) Thanks for posting!