Today’s article is going to be a little different as it will focus not on how to make money or how to use some wonderful software but we are going to focus on how you can free yourself from wage slavery… or at least a little less dependant on having to earn more.
The motivation for this article are two sayings that constantly float around my head and they are ‘There is a cost to going to work’ and ‘for every dollar saved is a dollar less taxed’. The first saying is pretty clear, it means that going to work actually costs you money which often means you need to earn more just to keep go to work.
The second saying basically means the same but is less clear, what it means is that if you save money instead of spending it you need to earn less which in turn means you pay less tax. Now this is pretty easy to understand and you might be thinking that it is a lot easier said than done and that you actually like earning money but not every job is actually ideal.
One of the reasons that we spend money on rubbish processed foods and drinks is because of going to work, we often do long hours, do long commutes and we have very little spare time to do a decent shop as well as make ourselves a tasty and nutritious lunch.
The Cost Of Going To Work
Many workers will buy a coffee from places like McDonalds, Starbucks or Costa Coffee each day maybe more than once and buy a sandwich from there or from a different deli for their lunch which will all add up.
If you need to drive to work everyday then there will be fuel costs and if you need to have a dedicated second car so that you can get to work and your family have another to get around then you will have the insurance, road tax and running costs of both vehicles.
For example if you earned £1500 a month from you job, you would have a tax free personal allowance of £10,600 per year and then say you were taxed at basic rate of 20% that would leave you with £1376.66 a month in wages. You have already lost £123.34 of your wages in income tax..
£1500 x 12 = £18000 – £10600 = £7400 – 20% = £5920 + £10600 = £16520 / 12 = £1376.66
(I have not included National Insurance Contributions)
So now let’s assume that you travel 30 minutes each way to work with a car that you bought specifically for the job. That is roughly how long it takes to drive the 18 miles from my home town to Lincoln which I know several people do each day for work.
The monthly cost of that could be between £100 and £150 per month when you take into consideration all of the costs such as insurances, road tax, MOT & works and fuel costs.
So for this lets assume that the running costs for the car for the month is a nice round £150, I calculate that the fuel cost is £116.40 a month alone for the drive to Lincoln from here which is a 34-36 minute drive.
If you left the house in the morning pretty early to get to work to either beat the traffic or because you are expected to start early then you may choose to buy food and drink from the shops close to your workplace instead of taking the time to make a pack up.
Let’s say that after parking up you buy one drink from a popular coffee shop for breakfast while walking to work and that drink is a Grande Caffe Latte at £2.60. Over 5 days that adds up to £13 which over the month is £52.
For food let’s say that you get a sandwich deal from another popular food establishment at £5 for a Footlong sub with a cup of tea/coffee and a bottle of water. That would be a weekly cost of £25 and a monthly cost of £100.
So for one month the basic costs of going to work would be:
That means that you are spending £302 of the money that you earn through working by actually going to work. Adding into the mix the £123.34 income tax that you have already lost that makes a whopping £425.34 a month of your wage already lost just going to work.
How Working From Home Can Save You Money
What that says to me is that if you could find a job that you can do online from home then you actually need to earn £425.34 less each month. Most people will automatically think that they will need to generate the same amount of money that they were getting paid via their job once they start working online from home.
This is really only true if you have the same spending habits which would not be the case when working from home.
Of course you would like to have the same money coming in without the £425 going out but if you are considering working from home then knowing that you need to earn £425 less each month makes the task less daunting.
Working from home can mean:
- Working less hours.
- Not having to commute and sit in traffic.
- Not needing a dedicated work car, travel pass or parking pass.
- You can do the hours that suit you.
- You can eat and drink all of the good food that you have at home as and when you want.
People have asked me why I liked to work from home, my answer to them always was ‘I am close to the kettle’ As an Englishman I drink a lot of tea and working from home means I can get a brew whenever I fancy it.
I also hate the ‘going to work’, being stuck in traffic and then getting to the job only to have to unload all of my tools out of the car and carrying them to where I was working. (I previously worked as a joiner/carpenter for many years)
When I was workshop based it wasn’t an issue as I could leave my tools locked up under the bench, similar to those who work in an office but site work can require a lot of tools and if I happened to be working upstairs then I would have to carry several boxes of tools and fixings up many flights of stairs which is what I had done when the above photo was taken.
All of that loading and unloading would eat into the working day and so to compensate in order to get the work done we would do do another hour or two each day.
Long Hard Days Can Mean Calling For Fast Food Options
Takeaway & fast food is responsible for people putting on a lot of unwanted weight and becoming unhealthy.
Many workers who are forced to work overtime and long hours because of work deadlines and responsibilities will stop off and pick up food on the way home or call to have some delivered because when they get home they cannot be bothered to take the time to make some food especially if they still need to get showered and do other ‘get home from work’ tasks.
These food ‘stop offs’ on the way home will also add to your monthly working costs. The above pizza and chips combo with delivery would cost around £8-£10. You do not need many of them to suddenly increase your monthly ‘going to work’ costs.
If you stopped and calculated all of the monthly costs that are incurred because of having your day job you might be amazed.
Not Every Wage Slave Job Is The Same
I know not everyone gets a basic wage, some earn a lot and can happily spend a lot going to work and it wouldn’t affect them much, others believe that they work hard and that they deserve a few treats otherwise why work so hard? This is very true and occasionally I think like that.
There are others who go to work and hardly spend any money, some will cycle to work and take a pack up with them including a flask. For them their monthly costs are low.
What this week’s article was designed to do was to make you think, if you really want to work from home then you can rethink the amount that you actually need to earn making the whole idea a lot more achievable.
Downsizing & Prioritising
If you do not like your job or you are wanting to start working from home but fear that you will not earn the amount that you need then you can always downsize and prioritise what you spend your money on meaning that you need to earn even less to live.
It is well known that the UK is expensive, it can be a lot cheaper living abroad. If you don’t believe me then read this article from the Daily Guardian about the man who works in London but commutes by flying from Barcelona because it is cheaper!
(Well.. he works in London and Barcelona but that is because he can work from home)
I am not saying that you should or could move abroad to work from home as there are so many things to consider with family being the biggest consideration of them all but it is something worth thinking about.
Here in the UK we pay a council tax that can cost us more in one or two months than what other people pay for the equivalent tax for the whole year in some countries like Spain. Rent for a 1 bedroom flat in parts of the country here can cost more than a 3 bedroom house in parts of Spain.
A few years ago I rented a 1 bedroom flat in Surrey for £699 a month with council tax of around £100 per month, compare that to this property in Spain that I found today looking on the Kyero website.
This is a 2 bed villa with access to a communal pool 20 minute drive away from the coast for €275 per month which is roughly £216. That is a saving of £483 each month on the rent, the Spanish equivalent for council tax might be as little as £10- 20 per month. Incredible monthly savings with the bonus of more sunshine, access to a swimming pool and another bedroom which could be your office.
So if you wanted to work from home working online and decided that you would make the jump to a cheaper property in Spain using the above pricing examples ie reducing the accommodation rent by £483, getting rid of the ‘going to work costs’ by £425 then you have reduced your ‘need to earn’ number by an incredible £908! And I haven’t even factored in the difference in utility costs or council tax.
“…then you have reduced your ‘need to earn’ number by an incredible £908!”
Now I appreciate that this is extreme and not plausible for many of you reading this but I wanted to plant this thinking in your mind and open you up to the possibility that you can change your way of life in more ways than one.
By downsizing, reducing your outgoings each month and maybe moving to a smaller property (or in this case a bigger property) you can make that transition to working online from home a lot easier and a lot less stressful… and maybe remove or at least reduce any fear that you may have.
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