How You Can Afford to Quit Your Job to Work At Home


When I started my work-at-home journey, I erroneously believed I had to replace the income from my full-time job. As a social worker, I wasn’t getting rich off my $28,000 per year, but it was a substantial amount to replace by working from home. In the mid-1990’s, there weren’t as many opportunities to work from home, and those that existed weren’t easy or affordable to start. This was before Google and PayPal. Amazon was still a fledgling online book retailer run from Jeff Bezos’ garage.

Quite by accident, or perhaps by divine intervention, I saw an article about the myth of the two-income household. It talked about the expense of working, and that in a two-income household, especially with children, the cost of that second job might be higher than what is earned. The article referenced Andy Dappen’s book, Shattering the Two Income Myth, which is out of print, and probably a bit out of date. Still, if you happen to come across a copy, it might be worth checking out, as it provides tips and ideas for affording to quit the second job.

This concept was eye-opening, and I immediately pulled out a sheet of paper, a pencil and my calculator to tally up the expenses related to my job. What I discovered both shocked and excited me. Nearly 75% of my income went towards work-related expenses! Of that $28,000 I made a year, only $7,900 came to me as usable income. The other $20,100 went to expenses so I could work. While it was shocking to learn that I was keeping only $3.80 per hour of my income, I was excited because it meant that for me to stay home, I needed to get rid of or reduce my work-related expenses (quit my job), and earn $7,900 a year from home. Earning less than 10 grand seemed a whole lot more doable than earning my social work salary.

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!

The only problem was, even with two full-time incomes in my house, our finances were tight. When I ran the numbers on what it cost for us to live, I needed to make over $10,000 a year. That was a more doable number than $28,000, but it still felt like a lot. Then it occurred to me, that work expenses weren’t the only area I could save in. By being at home, I had the time to research and implement strategies to live on less.

Aside from the money immediately saved by not having an outside-the-home job, there are many areas you can cut back on your spending. For example, while I never became an extreme couponer, by learning savvy grocery shopping, I cut my grocery bill by 20%. I made use my library for books and DVDs, for free. I found lots of free family activities in my area, instead of an expensive outing. I sold my newer car, and bought a used one, reducing my payment, insurance, and personal property tax. I learned to cook from scratch, which cost less than packaged food. The end result is that in order to afford to work-at-home, I had to earn $575 a month, $6,900 a year, to afford to work at home.

Interestingly enough, my first years at home, I made way less than my social work job, and yet, we had more disposable income. A few years after leaving my job to work-at-home full-time, we bought a bigger house and I got a new car.

Below I’m going to show you how I did all this. At the time, I was a mom with two young children at home, however, you don’t have to have childcare expenses to reap the benefits of this exercise. My kids are grown up and in college, but I still prefer to keep most my money, and therefore continue to cut and save on expenses wherever possible. I use, search online for sales and discounts, go to the library, and I use a slew of phone apps to save and earn money.

How You Can Afford to Work At Home

But enough about me! Now it’s time for you to figure out how you can afford to work-at-home. It all starts by running the numbers.

What does your job cost?

If you have a job outside the home, calculate the expenses you have in order to have that job. This includes:

  • Federal taxes
  • State taxes
  • Local taxes
  • Social Security
  • Professional fees/licenses
  • Childcare
  • Commuting (toll, parking, 2nd car)
  • Gas and mileage (wear and tear on car, new tires, etc)
  • Car insurance
  • Gifts, special events at work
  • Convenience food for meals
  • Eating out
  • Housekeeping help
  • Grooming needs (hair, nails)
  • 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

You won’t be able to get rid off all these expenses by quitting your job. If you work at home, you’ll still need to pay taxes. But most expenses you can’t get rid of, you can at least reduce.

What can you save by working at home?

Many people email to tell me they’re discouraged by how little many work-at-home jobs pay, but like me, they’re working on the assumption that their expenses will remain the same once they’re home. The truth is, working at home can save you a bundle. There are the obvious savings from commuting and childcare. But there are other potential savings as well. Lower income means lower taxes. Work-at-home attire costs less and is cheaper to maintain than professional attire. Eating at home is less expensive than eating out or from vending machines.

There are many other areas you can save money as well. Staying home means you don’t have to pay for after-hour professional services if your plumbing or heat pump goes out. Because you leave the house less, you probably spend less.  Make a list of all your current expenses (so you know how much you have to make from home), and then figure out if there are areas you can save (I’ve got some tips and resources to help you with this below).

  • Mortgage/rent
  • Homeowner association dues
  • Property tax (usually included in mortgage)
  • Home insurance
  • Electric/gas
  • Water
  • Sewer
  • Telephone
  • Cell phone
  • Internet
  • Home maintenance
  • Other home expenses
  • Life insurance
  • Medical insurance
  • Medical co-payments
  • Dental insurance
  • Vision insurance
  • Other medical-related expense
  •  Care payments
  • Car insurance
  • Personal property tax
  • Car registration fees
  • Car maintenance
  • Gas
  • Consumer credit payments
  • Student loan payments
  • Other debts
  • Child support
  • Alimony
  • Clothes
  • Grocery
  • Dining out
  • Lunch
  • Cable TV
  • Video rentals
  • Excursions (weekend fun)
  • Magazine subscriptions
  • Vacation
  • Hobbies
  • Grooming (haircuts etc)
  • Dry cleaning
  • Gifts
  • Cash withdrawals
  • Emergency fund
  • Savings and retirement
  • Other

Tips to saving on your expenses!

Some areas to save will be obvious. For example, do you dine out too much? Can you cut or reduce your cable bill (we cut ours in half using Sling, Hulu, Netflix, and Amazon Prime to stream TV)? One of the biggest areas you can save is in grocery and buying household goods.  When I first hacked away at my expenses, the opportunities to save was limited to coupons (I still get online and in newspaper – I subscribe only to the Sunday paper). I also really like Thrive for organic, non-gmo products that are delivered (plus it offers a $25 referral if you share with your friends!)  Today, with apps and savvy shopping, you can not only save, but sometimes even make money on tasks you already do. Here are some of my favorite resources that continue to help me save money (the more I save, the more money I get to keep for fun stuff!)

Check out 58 Apps that Pay for a list of shopping apps that help save plus pay, as well as other apps that allow you to make money.

What do you need to earn from home?

Now you know how much your job costs, and what you’ll be able to save by quitting. You also have calculated what you need to live on, including identifying areas you can save. Now it’s time to calculate what you need to earn from home.  If your spouse or partner works, subtract his/her income from your expenses. If your expenses are $3,000 per month, and your spouse earns $2,000, you’d subtract $2,000 from $3,000 to get $1,000 as the amount you need to earn. If you’re in a single-income household (you’re single or your spouse doesn’t work), you need to earn the entire amount to cover your expenses.

However, there are a few work-at-home expenses you need to consider. You still need to pay taxes on work-at-home income. If you’re earning less than you did before, the amount of taxes you pay will likely be less. Plus, if you’re working as a self-employed person (contract worker, freelancer, home business owners), you have some extra deductions you can take, such as business use of your home, and Internet service.  Some things you need to consider related to work-at-home expenses include:

  • Are taxes deducted from your earnings or do you need to set them aside yourself?
  • Estimated tax and social security contributions
  • Health insurance (if you’re leaving your employer-based health care)
  • Equipment, supplies or services needed to work at home
  • Dues or fees related to your work-at-home career
  • Childcare (if your telecommuting employer wants you to have it)
  • Any other expenses related to the work you do.

While the above seems to defeat the purpose, odds are your work-at-home-related expenses will be far less than your traditional job ones. Further, depending on the type of work you do, many of the expenses might be tax deductible as part of the cost of working (for contract, freelance, home business).

Add this number to your regular expenses to get the amount you need to earn at home. If you’re like most people I’ve met who do this activity, the amount required to afford to work-at-home is far less than you thought. As I mentioned before, instead of having to replace my income at $2,300 per month, I had to earn less than $600 to afford to work at home.

What about you? Have you discovered that you don’t have to earn as much as you originally thought?

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