The Exhaustive Work-from-Home Cost Savings Calculator

Theory is good, but numbers are better. Follow along and create your personalized version of the work-from-home savings calculator to see 5-year of benefits across a multitude of factors.

Introduction – Why do remote/hybrid work expense savings matter?

If you worked 20 days on-site per month and then started going in 3-4 days per month, your bank account looks more padded than before. We all know that working from home can save you money, but how much exactly, and why does that matter?

It matters because as you continue in your current role, you may be asked to return to work more frequently, and you will want to know how much savings you are giving up to meet your company’s on-site work mandate.

This may lead you to search for other jobs that pay more, which may also mandate more frequent on-site presence. So, in the end, are you pocketing more savings, less, or breaking even? Pre-tax savings are essential when comparing alternative jobs and will be explained further in the article.

This business case will estimate your annual and 5-year savings by working from home. It will compare your on-site work option with your current (or expected) remote or hybrid work option.

This in-depth work-from-home savings calculator includes the cost categories of public and private transportation, vehicle expenses, one-time savings or expenses, food costs, clothing spending, social obligations, childcare impacts, and more. It will even estimate the days that you get back in your life.

Table of Contents

My Scenario and Savings Summary

This scenario will take my personal scenario and assumptions into account, which are:

• I used to work full time on-site, then post-covid, we moved to a mandate of once per week. Therefore, a commuting change from ~20 days per month to 4.
• I do not use public transit, and I drive 50 km roundtrip for work using a gas-powered SUV.
• I would drive about 3,000 non-work KM, which factors into the depreciation estimate.
• I have three young, school-age children I can drop to school in the mornings versus paying for before-school care. I still use after-school care.
• I keep two older kids home for a few weeks during the summer since I work in the house.
• My average tax rate is about ~25%

In summary, my Year 1 savings are ~$11,320, including ~12 days in time. I’ll dive into each spending area as we go through this article. In short, my spending will change from ~$28,356 per year to $17,036 when working four days on-site.

1. Public Transportation Spend

Public Transit Passes and Transit Lots

The monthly or annual transit pass is necessary for those reliant on public transportation. With the switch to remote work, these transit pass expenses may be eliminated, which includes the cost (and race for a spot) of transit parking.

Ride Share and Taxis

Many professionals use ride-sharing services or taxis for commutes in today’s busy world, not only for convenience but also to avoid the public transit system overcrowding and delays that may occur. However, these options come at a premium cost, with fares that can add up over time. By working remotely, there is no need to rely on these services for transportation, resulting in significant cost savings.

My scenario: I use neither above, so I flipped that option to ‘No,’ and the calculator skipped over this section.

2. Vehicle and Driving Costs

Gas and Electricity Consumption

Commuting daily eats up your time and fuel and electricity consumption. However, with the switch to remote work, your car’s gas or electricity usage decreases significantly. The calculator allows you to input the options for a gas or hybrid vehicle as one option or an electric vehicle as another. The plug-in hybrid option is excluded since those efficiency measurements are much more complicated to nail down accurately.

My scenario: The related questions popped up once I confirmed I have a vehicle by picking the drop-down option for ‘Yes – Gas / Hybrid’. Since I own my gas-powered SUV, I added my travel, maintenance, and fuel efficiency estimates.

Vehicle Maintenance and Depreciation

With decreased mileage driven, vehicle maintenance is reduced and experiences a slower depreciation rate. This has a long-term financial benefit as vehicles age slower due to reduced usage, which preserves the vehicle’s resale value over time.

A quick search on maintenance costs will show reliable cars around $500 per year and less reliable cars over $1000. Use your best estimate based on your history of maintenance expenses.

For depreciation, the make and model of your vehicle play a large part, as well as the mileage, condition, and keeping up with maintenance. This option is only calculated if you own or finance your vehicle. An average vehicle driving 15k-20k KM per year will depreciate at about 15%. If driving is reduced significantly when working mainly at home, consider using a lower annual depreciation percentage. This depreciation calculation creates an estimate based on your work-related mileage, which is why ‘personal use’ mileage is captured.

My scenario: My maintenance is relatively low on my vehicle since it’s a reliable Toyota. My estimated personal driving distance was captured in the earlier screenshot. This will help evaluate the depreciation related to my work commute.

Insurance, Parking, and Tolls

Insurance: As you transition to working from home, you should contact your insurance company and update your driving information. You may be eligible for a reduction in your insurance premiums, given the decrease in your annual mileage, which reduces the risk of accidents. 

Parking and Tolls: In most downtown or populated office locations, employees often have to pay for parking in the company lot or other private lots. Regarding tolls, we all enjoy the time saved and the smoother commute. However, those daily toll charges catch up with you at the end of the month.

My scenario: My insurance had a noticeable drop in my insurance due to my driving each year. My on-site parking is free, so there is no impact there. However, I used the tolls daily on the way home, so those additional savings were significant once I moved to 4 days on-site.

3. Sales of your Vehicle (Do you still need it?)

As more people work from home, it’s natural to consider whether you should sell your car. With less commuting and a reduced need for transportation, owning a car becomes less practical and more expensive. Before deciding, it’s essential to consider your specific circumstances, including any future changes in employment, access to other modes of transportation, and family activities. Ultimately, selling your car is personal and should be made after carefully considering your lifestyle and plans.

If you’re using your car less due to remote work, selling it could save you a lot of money. If you choose ‘Yes’ to the option below, input your one-time sale proceeds and any savings from removing a monthly lease or finance payment.

My scenario: I own my vehicle, and this is something we considered during the COVID-19 pandemic when I started working remotely. My wife was on leave with the kids. However, with three kids and her plan to return to work, there was always a need for a second vehicle, whether for appointments, kid’s activities, or to make drop and pick-ups easier.

4. One-time Setup Expenses

Working remotely allows you to create a productive home office space. The more frequently you use the area, the more you want to invest in ergonomic furniture, technology, and comfort. Optimizing your workspace is a wise investment for productivity and peace of mind.

My scenario: The frequent use of my home office led me to buy a bigger desk, electronic legs for a standing option, a dual-monitor stand, a wireless mouse, a keyboard tray, improved lighting, and some other office supplies. It was worth the investment since it’s also used for non-work activities.

5. Food, Social, and Tech Spend

Here is how my monthly spending changed for this group of expenses. Let’s go through them.

Coffee and Beverages

Many office workers tend to visit coffee shops or use vending machines regularly. Although these expenses may seem small, they can accumulate and cause significant financial loss. Working from home promotes sustainable practices, both environmentally and financially. People can reduce their daily coffee expenses by making their beverages at home, save money, and help the environment with reusable cups and spoons.

My scenario: I hit all the criteria by making coffee with the coffee ground every morning. My office does provide free coffee, so the savings are smaller.

Meals, Snacks, and Restaurants

When working in an office, lunch breaks often involve going to nearby cafes or restaurants, which can be expensive. However, with remote work, people can cook and eat at home, which is much healthier and can save much money in the long run. Preparing meals at home instead of eating out results in significant savings over time.

My scenario: I would buy lunch at least once, mostly twice weekly. Being at home forced me to use the food in the house, which was healthier and cheaper.

Wardrobe refresh

A professional wardrobe is usually a must in a traditional office setting. But with the increase of remote work, there’s been a change towards more relaxed dress codes. This means the necessity for a range of tailored suits, dresses, and formal shoes has decreased, as well as the dry-cleaning expenses. As people prioritize comfort while still being professional, it’s a welcome break for their budgets.

My scenario: Not having to wear dress shirts and pants daily was not only a cost-saving but also a comfort benefit. I used to buy at least 3-4 new dress shirts yearly to refresh my wardrobe, and that is down to 1 or less now.

Dry Cleaning

The reduction in formal work attire will reduce your use of dress or business casual clothing. Also, when working from home, people are in and out of their dress clothes if they have long gaps between meetings or are off-camera. You will benefit from this spending reduction if you dry clean your work attire regularly.

My scenario: Dry cleaning was a regular expense as the attempt to wash and iron dress shirts myself never worked out well. With four days on-site, dry cleaning is infrequent and is more of an exception than the rule.

Grooming Costs

Working in an office often leads to spending more money on cosmetics, haircuts, and grooming products. However, when working remotely, people feel liberated from these conventional grooming pressures and tend to embrace a more natural appearance. As a result, the associated expenses naturally decrease, which can contribute to overall cost savings.

My scenario: The truth is that I’ve been a bathroom barber for 10+ years, who shaves my head to a very low and even hair length. So, grooming was never a considerable expense for me, but I appreciate how those with extensive routines can take advantage of these time and cost savings.

Internet or other tech subscriptions

When working from home more frequently, your job may require you to improve your internet or phone service quality to meet your work demands. If you need to improve them at your own expense, capture those differences here. You may benefit from those savings if your company pays or subsidizes your internet.

My scenario: My existing internet met the need for frequent conference and video calls. So, there were no added costs or savings from my company reimbursement.

Other activities / social

This option is left open to capture anything specific to your situation, such as going out for dinner or drinks after work, participating in social outings, etc.

My scenario: This was minimal for me due to the after-work demands of the kids. In my days before kids, I would have seen a lot of savings in this area, as it was common to hang out after work a few times every month.

6. Family and Child Care Spend

Many working parents struggle with the expensive cost of childcare services. However, remote work provides the opportunity to balance work and family responsibilities. Supervising children while working from home can lead to substantial savings on childcare expenses. This includes avoiding or minimizing before-school, after-school, daycare, and summer activities expenses.

My scenario: This option provides sizeable savings for my family. With three kids, working from home allowed me to drop them off at school and not pay for before-school care per child. We still use aftercare since the kids are all under 8. As they get older, they can just take the bus home, and I will be able to supervise them while working and remove that cost from my budget. The same applies to summer activities when school is out. Instead of having them booked for all 8-10 weeks, the older kids stay home for a few more weeks and hang out with their friends.

7. Monthly Hours Saved

Second to the cost savings, the time savings when working from home are very hard to trade in and quantify the mental health benefit. You don’t have to commute or get ready in the morning. Instead, you can use that time to be more productive and allocate time back to yourself, family, friends, kids, hobbies, passions, etc., collectively leading to an improved quality of life.

My scenario: I cannot overstate how much my kids and family benefit from the balance this creates. My wife works 100% on-site, so being able to drop off the kids, help pick them up, handle appointments and emergencies, and get ahead for the evening is a benefit that would be hard to trade up for another job.

8. What about the Taxes on my Salary?

Returning to the question of ‘Why does the number matter?’, it matters the most when considering another job opportunity or arranging hybrid work with your employer. For example, is it worth it if you are offered a job that pays $10k more, but you have to incur an extra $10k in annual expenses to be on-site 100% of the time? Now factor in the fact that you may lose 12 days per year of your time.

The last piece to consider is salary and taxes. In this example, let’s assume that your paycheck taxes average 30%. That means you must earn 14,285 dollars, then pay $4,285 in taxes (30%) to net out $10,000 and pay your commuting expenses. So, in reality, the new position will have to offer at least $14,285 over your current salary simply to break even.

My scenario: With my expected benefits of $10,960, I must generate $14,614 in salary before taxes to cover my expenses. That means if I’m considering another job that requires me to be on-site more, I need at least $14,614 more than I make now before I would even entertain the discussion. Said differently, if my workplace forces me to return to work on-site full-time, I will better understand the negative financial impact on my home budget.

9. Conclusion

The changing job market has brought remote work to the forefront as a way to grow your wealth faster and achieve a better work-life balance. By eliminating commuting costs, reducing transportation expenses and changing spending habits, remote work offers a clear path to saving money.

Use this remote or hybrid work savings calculator to understand your savings and benefits across these critical factors. Knowing the cost and time contribution to your budget and personal life will help you decide about your financial future and negotiate with your current or future employer. Take the time to learn the theory, but more importantly, understand the numbers.