Is Working From Home Really Cheaper?

on June 8, 2010 in Finance, Working From Home
18
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Being a freelance writer and working from home are great. There are some obvious cost savings. For example, you won’t have to pay the cost of commuting to and from work, so you’ll save money on gas. Your clothing expenses might also go down since you don’t have to buy the more expensive business casual or professional clothes for to wear to work.

As you consider the move to becoming a full-time freelance writer you should also think about how your other expenses will increase.

Your utility bills will probably go up. You’ll be at home more hours during the day and you’ll be using your computer, lights, and the television more often. If you typically adjust the thermostat on your heating and cooling system before you go to work, you won’t keep getting these cost savings if you don’t continue to make the adjustment once you start working from home. The same thing goes for your water usage.

You may spend more money on food. You’ll probably be eating more meals at home, so your grocery bill may increase. Of course, this all depends on what you spend on lunch right now. If you switch from eating breakfast and lunch out everyday to eating those meals at home, your food expense may decrease. The opposite can happen if you typically eat at your work’s cafeteria where meals may be cheaper.

You must purchase your own office supplies. When you work for someone else, the employer typically pays for things like paper, pencils, etc. As a freelance writer, you bear the cost of these expenses. I wouldn’t expect to spend a tremendous amount on office supplies, but this all depends on how you work.

Regular household expenses might increase. You’ll be at home more throughout the day, so it makes sense that you’ll consume more of those everyday items like tissue, paper towels, and trash bags, which your employer furnishes. You should increase your budget for these items.

Fortunately, the increased cost of working from home can be deducted on your income taxes. You can count things like office supplies and the internet as business expenses. You may also be able to take the home office deduction, which helps compensate for the increase in utilities you face from working at home.

Which of your expenses have increased since you started freelancing full-time?

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LaToya Irby is a full-time freelance writer and a graduate of the University of Alabama. She primarily writes about personal finance, freelancing, and other self-employment topics.

18 Comments

  1. Clint Osterholz June 8, 2010 Reply

    Cable TV. That was probably a stupid move, too.

  2. Issa June 8, 2010 Reply

    It’s curious why you experience increase in costs doing freelancing. I experience the opposite. I save more on transportation cost and food. Doing an office job before is a nice excuse for me to splurge on a $3 cup of my favorite coffee brew. Now, I eat healthier at home while working in my pajamas. Nice sharing though.

  3. Allena June 8, 2010 Reply

    well, I don’t know if this would work for everyone, but I live in the cold north, in an old victorian house with very high ceilings which is hard on heating. During the winters when I work 9-3, I turn down the thermostat and lock myself in my office with both dogs and a small heater fan. this also keeps me IN the office, plugging away.

  4. Author
    LaToya Irby June 8, 2010 Reply

    @Clint, I’ve always had cable and I’m trying really hard to let it go. It’s not as easy as you’d think, especially when the service reps offer you their first born child to keep you as a customer.

    @Allena, that’s a good idea, not only to save costs, but also to stay focused.

    @Issa, I can’t say that overall expenses increased – some went up and some went down. Of course, I save on gas but spend a little more on food because the cafeteria food was cheaper. I can see how your food costs came way by dropping your coffee purchase.

    • Clint Osterholz June 9, 2010 Reply

      True. Although a firstborn son isn’t as great as you might think. He’s terrible at doing my laundry.

      • Rebecca June 10, 2010 Reply

        In fact – I swear those sons increase by laundry by at least three loads a week. :)

        We have the Cadillac version of cable – but I never get to watch it. Bummer.

  5. P.S. Jones June 8, 2010 Reply

    I can’t say that any of expenses increased. I will say that I’m probably buying a new laptop this year. Maybe if I was using someone else’s computer all day, I wouldn’t care so much about my home one. But I don’t really consider that an “expense.” It’s more of a “want.”

    • Jennifer Mattern June 9, 2010 Reply

      Most expenses are “wants.” But calling them by a different name doesn’t really change what they are. ;)

      • P.S. Jones June 9, 2010 Reply

        But an expense is something that I just have to have to work. I can’t continue working without it. A want is something would be nice to have. There may be some wiggle room because if the want is associated with my business, I can write it off. But if something is an expense and I don’t make enough money to cover it, I’m out of business.

  6. Stacey Abler June 8, 2010 Reply

    My expenses decreased as well. The last time I had a “real” job, I was driving 45 miles one way to work. Commuting to my home office saves quite a bit on gas. Not to mention eating lunch out every day. Even if I went for fast food at $5 a lunch, that still adds up by the end of the week. A sandwich at home is a whole lot less than that.

    Add in that I no longer have to have business suits, heels, hosiery, etc. and you are looking at a significant savings.

    We never adjusted our thermostat during the day when we would be gone because we have pets inside so that was not an issue for us.

  7. Carol Tice June 8, 2010 Reply

    I have plenty of expenses, but they’re all deductible now. Best one: the healthcare premiums. BIG writeoff. If you’re on a spouse’s plan, instead consider getting you both on a plan through your chamber, writer’s union, AARP or wherever you can, and self-insuring so you can write off the premiums. A lot of company healthcare plans are no great shakes these days anyway, so something to explore. You can also get on an HSA just like many companies offer, and pay your healthcare out-of-pocket costs with pretax dollars. So two ways to save there.

  8. Yo Prinzel
    Yo Prinzel June 8, 2010 Reply

    All things considered, I’ve noticed an increase. Furniture, electronics, subscriptions to financial papers and mags, research costs, social security, office supplies, continuing ed (which is a big expense that was once paid for)… I could go on, but I guess you get my drift.

    • Yo Prinzel
      Yo Prinzel June 8, 2010 Reply

      Forgot to mention–yes, these are business expenses and are deductible–but you still have to find and earn the income that pays for them. This goes well above and beyond what my commuting expenses were at RJ.

      • Jennifer Mattern June 9, 2010 Reply

        Same here. It was cheaper for a while. But once your business starts to grow, your expenses can too. In my case that meant finally hiring people — a lot of people — to get more done. That includes writers here, my programmers for tools, my site designer and coder, etc. The beauty though is that as those expenses increase, so does income because I now have more time for the billable work and more time and resources invested into my own projects.

      • Rebecca June 10, 2010 Reply

        Absolutely agree – the tax burden definitely increases once you hit a certain part and if I were to quit the day job and try to replicate the benefits that I currently get from school, I’d have to pay more for health insurance and cancer insurance. If I had a job in industry instead of education, I’d also have to give up the 3-5% match from the company on the 401K (Lost that more than a few years ago when I went to teaching, but would have been nice to keep.)

        Of course, if I worked solely at home, my childcare costs would drop by about $800 per month, but I don’t mind too terribly paying for childcare since it lets me have both careers.

  9. Carol Tice June 9, 2010 Reply

    Right on Clint. I’ve recently washed my teen and can’t do a thing with him. The great Erma Bombeck had this topic covered — bury them now and dig them up when they’re 25.

  10. computer consultant June 24, 2010 Reply

    Well Said! Being a freelance writer and working from home are great. The traveling time and cost expenditure will decrease when you work from your home as a freelancer.

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