Don’t Forget the Financial Costs of Working from Home


Don't forget about the financial costs of working from home

Having a job where you can be your own boss, work the hours you want, stay home, work in your pj’s (if you want to), etc., sounds like to a dream job to lots of people. Who wouldn’t love to escape the commute to and from work? No more being stuck in a bus or train beside someone who’s sick and coughing all over you. No more traffic or weather to fight each day, costing you precious hours and minutes you could be doing something else.

Working from home may sound like a dream job, and in many cases, it is. But there are downsides to working from home too. One of which is the financial costs of working from home when you are self employed. Before you consider leaving your current job to go it alone, make sure you weigh the financial costs of working from home.


It’s easy to forget about paying Uncle Sam his share of your earnings when everything comes off the top and is calculated for you by your employer before you get your take home pay each pay period. However, it’s not as easy to forget when you have to calculate and pay the taxes yourself out of your own pocket from your hard earned money. Self-employment taxes are quite high, and if working from home sounds appealing, you should check with an accountant to make sure you are saving enough for taxes. Although paying taxes isn’t fun (trust me!), keep in mind that it is an indicator that your business is doing well and making money.

Time Off

One other down side to working for yourself is that you don’t get to call in sick or simply not work if you don’t feel like it. If you take a day off, you’ll likely have to make up those hours (or complete those tasks) before or after your time off. There are also no paid vacations, so when you don’t work, you don’t get paid.  If you are planning to take some time off or think you could have an unexpected sick day, you’ll have to have a back-up plan such as working ahead to make sure you still get everything done on time.

Mommy/Daddy Daycare

Are you working from home so you can save money on daycare costs? Putting your kids in daycare can easily cost $1,000 a month per child. It’s no wonder some parents decide to work from home in order to keep those costs low. The big problem with this scenario is kids need a lot of attention. It can be very difficult to work with kids running around. This is especially true if you need to be on the phone a lot. It’s hard to run a business with kids screaming on your sales calls. The savings can be nice, but don’t forget about the need to run your business or do you job from home.

Don't forget the financial costs of working from home

Health Care

With the rising costs of health insurance, having even a portion of it paid for you is a major benefit of working for an employer. Unfortunately, if you work on your own you won’t be able to enjoy this perk, and it will hit you where it hurts – your bottom line. You can expect a sizeable chunk of your income to go toward health insurance and other medical expenses, like doctor’s visits, unless you are taking the chance of not carrying any, which I don’t recommend. You’ll also be on the hook for a penalty come tax time if you don’t have health insurance.

Business Expenses

You probably already recognize there will be some expenses when running your own business, but you should remember to include not only supplies and higher utility bills, but also equipment and advertising costs as well as anything else you may need to run your business while working from home. Additionally, depending on what type of business you have, you could run into outsourcing costs. Of course, these business expenses can be taken off of your taxes, but they are still expenses that must be considered, and paid for, if you are a business owner.

Sometimes it’s easy to forget there could be a downside to being your own boss and working from home. So, if you are considering it, you should keep in mind how the financial costs of working from home will affect you and your family as well as all of the positives it could bring too.

Can you think of any other financial costs of working from home?

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  1. Thanks for the reminders, Kayla. I think work from home is really advantageous and like what you said, when everything is secures, we could have as much as income we want and there’s really more security when it comes to financial freedom, when handled well.

  2. Working from home is really advantageous for so many especially for moms. I think those who do this should start taking care of their 401k and secure enough savings as some work from home cant be guaranteed on a long-term basis.

  3. Ha, I did a piece on this last year. One big one: bathroom. We live in the desert, so I drink a lot of water. A lot. That’s a lot of extra flushes (even if you let it mellow every other time). Not to mention toilet paper. Two people home all day… It adds up.

    And in Arizona it means a much higher electric bill in the summer. Most people can turn up their thermostats during the day to save on cooling costs. Ours has to work all the time. It’s been 109 for the last three days, so even keeping it at 79 is a lot of work for our HVAC.

    1. Yes! These are things I think people forget about. On the water note, I have had to buy more filters for my fridge since I’m home drinking water all day now.

  4. My neighbor recently quit his corporate job to do his work from his home. He said his family constantly hits him up to help do things because “he is home all the time.” Biggest costs are healthcare and losing out on other work benefits, but he had already had that calculated and the savings in daily transportation and hours compensate for it.

  5. Working from home ofcourse always saves you more than it costs to have some office. Literally everything. And do not forget that because you have your office at home, also many of the things you buy can be used as a business investment allowing for tax returns. Things like your internet or even your TV can be uses to get tax returns / pay less taxes.

  6. Some of the costs can be outweighed with the savings in commuting, and wardrobe expenses. Also the 401K match is a big financial freebie to consider if its worth losing as well. Good luck

    1. I definitely agree! Although I considered the things in this post, I also thought about the savings I’d have from not having to buy new dress clothes for work and the savings I’d have on gas too.

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