Financial Planning for Geeks

How to Save Money Working from Home (and What to Do with It)

- Potpourri

A black-and-white drawing of a man and woman in 1800's garb, in a store full of decorative vases.
Step away from the vase, Geoffrey!

Well, it seems we’ve come to the point where working from home is the norm for a fairly large swath of people. Now might be a good time to talk about all the ways you can save money when you’re working from home, and what you might do with the extra cash. Many thanks to my husband for this idea!

If you’re not able to work from home, I see you. Please go ahead and read through the ideas below to see if there is anything in your financial life which needs to be re-evaluated. You may not be able to do away with all the items and services below, but you might choose to spend less on some of them.

Let’s get started with what you might be able to reduce or even eliminate as a result of working from home more often:

1.       Commuting: this is the first one which comes to mind for a lot of people, and it can be a huge opportunity. Gas prices are breaking records right now, and we can also save on maintenance costs and vehicle wear and tear if we cut down on commuting. We could even sell the car (and make top dollar on that scorching-hot used-car market!) if we’ll be working from home for the foreseeable future and/or we live in a city with solid public transportation options. If we’re already using public transit, we can certainly save money by commuting less.

2.       Food and drinks: the expenses in this category can really creep up on us all.

    a.       The first opportunity I see here is to cut down on the meals and snacks we’re buying on the way to work, or while we’re there. Since we’re home more, maybe we can prep and cook a bit more, too.

    b.       The second opportunity is to reduce or cut out the stops for morning coffee (or beverage of choice). Try making some coffee or tea at home, or buy that energy drink in bulk at the big-box store to avoid a few trips to the Circle K.

    c.       And I have one more: for those who hit the bar after work with colleagues, there is an opportunity to cut down on those post-work drinks. Our livers will probably thank us, too.

3.       Clothes: we’re on video calls a lot more now, so no need for that fancy pair of culottes, right? No one can see our shoes anymore, and frankly, I haven’t been wearing them for a good two years. Now is our chance to rationalize that wardrobe, donate what we’re not wearing, and think hard about buying anything new. We can also save on dry cleaning and laundry services since our clothes are less fancy, and we can always chuck a load in the machine between meetings.

4.       Childcare: those who have kids might need less after-school care, for example. Depending on our work schedules and who else is available to help, we might have more time to spend with the kiddos.  

5.       Taxes: for those of us who are self-employed, gig workers, or freelancers, there may be some home office costs we can write off on our taxes. Generally speaking, the IRS says we can deduct expenses like mortgage interest, property insurance, utilities, home repairs and maintenance, depreciation, and rent. For those W-2 employees, I’m sorry, but these deductions aren’t available to us. So get in there with that side gig!

6.       Gym: with The Great Resignation and COVID has come The Great Home Workout Transformation. A lot of us were barred from our gyms, and now that they’re back open maybe they’re not quite as convenient as they used to be when we were popping in before or after work. There are home fitness subscriptions and devices which might cost less, or we can go it alone if we prefer.

7.       Medical costs: with all that home fitness and lack of commuting, we’re probably rippling with healthy muscle and living stress-free, right? OK, I’m exaggerating, but generally less commuting means less stress, and there could be more time for working out and taking care of ourselves. The fitter and less stressed we are, the healthier we will be and the less we’ll need to spend on healthcare and medicines.

8.       Miscellaneous services: there are all kinds of subscriptions and periodic services we might be able to cut down on or eliminate now that we’re home more. Maybe we used to need these services to save time, but now we could do a few of them ourselves.

    a.       Meal kits and delivery: these services are very convenient and also very expensive. We definitely pay a premium to use them, and if we can prepare our own food even a little bit more there’s an opportunity to save a bundle. Or for those who have really been bitten by the prepared-food bug, why not try the new and improved Taco Bell drive-through experience instead (insert maniacal laughter here). I’m sure it’s pretty cheap.

    b.       Grocery delivery: during COVID it just wasn’t safe to go to the grocery store. Heck, maybe it’s still not safe, but if we’re going out again, why not shop? No more substituting a rutabaga for a mango, and no more peaches beaten to within an inch of their lives. Oh, and there is money to be saved on delivery fees. Some stores even charge more for some of the items they deliver (lookin’ at you, Costco!).

    c.       Dog walker and doggie daycare: what greater joy could there be than having little Bonaparte home with us all day? Even if we cut down the frequency of these services, we’ll save a packet.

    d.       Clothing subscriptions: the same reasoning applies here as above, for clothing in general. Is it still necessary to have a fresh batch of clothing show up at the door on a regular basis? For the most part, all my co-workers see of me is a slice of t-shirt. Pretty soon I’ll just be showing up as an avatar, anyway. Bring on the digital gold lamé!

    e.       House cleaning: when we were commuting all the time, it was easy for the housework to get away from us. House cleaning services helped with the overwhelm and, well, the grime. Now that we’re home more, we might have time to do more of these tasks ourselves or delegate them to others in the household. Even reducing the frequency by having the occasional deep-clean instead of a twice-monthly appointment can save some money.

    f.       Home repair and maintenance services: for basic home repairs and maintenance, may I recommend YouTube? There cannot possibly be anything left which has not been covered in excruciating detail (here’s your chance to find a counterexample!). For jobs where you feel confident, you might decide not to hire a professional. Just remember to turn the power off as relevant, my friends.

    g.       Hair care: COVID also necessitated The Great Return of the Roots. Hey, I don’t want to go back to those days any more than you do, but it might be possible to stretch out the time between appointments a little bit. Or maybe it’s just time to go gray (not for me, obviously).

    h.       Personal assistant: this service might be less common, but back in the day when we were commuting all the time we might have needed someone to do those little errands and tasks for us. Is that still necessary? Are there a few things we or someone in our household could take on?

Now of course there’s a tradeoff between saving money and protecting your time and well-being, so please feel free to keep the items and services which really serve you. Don’t forget to treat yourself now and then, too.

Now that we’ve saved all that money, what can we do with it? Well, the first step is to get a handle on how much we’re saving each month, and then decide how much we’d like to redirect to other areas.

Once we’ve decided how much we’re playing with, where could we spend it? I just covered this topic last month when I addressed what to do with a tax refund, but I’ll give you a quick summary here, in no particular order:

1.       Pay down debt: start with the highest-interest-rate debt and continue in declining order by interest rate. That probably means we’ll start with credit cards and end with the mortgage.

2.       Pad the emergency fund: set up a regular transfer to move extra cash to savings or some other liquid (easily convertible to cash) investment vehicle.  

3.       Increase contributions to retirement plan(s): bump up the 401(k)-contribution percentage or send chunks of money to the IRA or Roth IRA, as relevant.

4.       Save for a big goal: if we’re trying to save for a house or car, or for a wedding or remodel, we might redirect extra cash here.

5.       Donate to charity: giving money to the causes we believe in feels good for us AND the recipients. What a wonderful way to share the wealth with others.

6.       Start or add to a taxable brokerage account as another investment toward retirement: apart from our tax-advantaged retirement accounts, taxable investment accounts are another great way to save for the day we’re working less or not at all. Since we’ve already paid taxes on our deposits to these accounts, we don’t have to pay tax on those deposits when we take them back out. Only the investment gain is taxable.

7.       Do a home repair or improvement: maybe it’s time to remodel that avocado-green bathroom or get a garage door that doesn’t violate your city’s noise ordinance. If you’re a homeowner, bonus points for choosing a project which increases the value of your home.  

8.       Invest in the kid’s 529 or other education savings vehicle: those of us who have kids might set aside a little extra to fund their education.

9.       Get the estate planning done: yes, it’s important to have this done by a professional. That extra cash can help fund a will and other estate planning documents.  

10.       Get more insurance, as needed: what a great time to re-evaluate how much life, long-term disability, and long-term care insurance we need and start funding those goals.

11.       Fun: please don’t forget the joy. Of course it’s important to work through all the elements of your financial life plan, and some of those need funding. It’s also important to use our money on items and experiences we enjoy.

Please prioritize these ideas as you see fit; everyone has different needs and perspectives, so you are the best judge of what to do first.

And if you’ve been able to save some money while working from home, good for you! I hope some of the ideas I’ve shared here will help you capture that little bit extra and identify some ways to use it.  

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Penny Farthing

I, Penny Farthing (non-wizarding name Kerry Read ), actually have a day job in the world of finance. This blog came into being because of my deep and abiding love for geeks and Personal Finance.