Reaping the Financial Benefits of Working from Home
Working from home comes with some great benefits, including more control over your schedule and not having to spend time commuting. But remote work also brings changes to your budget, and planning for these shifts will help you make the most of your new situation.
To reap the financial benefits of working from home, it's important to understand the added costs involved as well as the areas where you can save. With this knowledge, you can adjust your budget for maximum savings.
Financial benefits of working remotely
Every budget is different, and the amount you'll save by working remotely depends mostly on how much you spend to work in an office. However, 2020 data from Global Workplace Analytics suggests that employees could save between $2,500 and $4,000 per year when working from home.
You may be able to mostly or entirely cut out many expenses related to working from an office, including:
- Commuting fees, such parking, tolls and gas
- After-school and before-school childcare
- Professional wardrobe costs
- Convenience foods, such as lunches out and vending machine runs
Additional costs to consider
While working from home has financial benefits, there are potential costs associated as well. You'll need to prepare yourself and your budget for those new expenses.
For example, now that you're using your own lights, internet, computer and temperature control, your utility bills will likely increase. You might also need to upgrade your home Wi-Fi speed to manage video calls and increased digital traffic.
If you need to purchase new pieces of furniture or equipment for your home office, factor these costs into your budget as well. And while you won't be as tempted to pick up a morning latte you haven't budgeted for, your grocery bill will likely increase now that you're preparing more meals at home.
How to shift your budget
To prepare for working remotely, consider increasing your grocery and utility budget each month to account for any extra costs. Then, look for places in your budget where you can cut other costs to account for those additional expenses. You may find that the day-to-day savings from working at home offset the extra costs naturally, but crunch the numbers to be sure.
In addition to shifting your budget, there are also some deals for remote workers you may be able to take advantage of. Look into any tax benefits available to people who work from home. A home office tax deduction or writing off the additional utility and internet expenses may be a option for you, depending on the nature of your work and whether you own your own business.
Now that you'll be driving a good deal less each month, call your auto insurance company and see if they give low-mileage discounts. Then, look into purchasing ingredients for your at-home meals in bulk from wholesale clubs. This can include not only items you're used to buying in bulk—like coffee, grains or paper towels—but also meat and other staples that you can easily freeze.
Even after you subtract out the additional costs, you'll likely feel a net financial benefit to working from home. Making these proposed budget shifts can increase your monthly cash flow even more. With some careful planning, your savings might even be enough to make you feel like you've gotten a pay raise.
A few financial insights for your life
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.