Save Over $175,000 Working From Home

When discussing the pros and cons of telecommuting, one of the tangible benefits is the cost savings of working at home.

With fuel prices reaching new highs, more and more people are striving to work from home and many claim they would even be willing to take a pay cut to telecommute.

But how much can you really save by telecommuting?

There are a variety of factors that will influence how much you can personally save by telecommuting but I thought it would be interesting to use my current situation as an example.

The first thing we need to do is look at how much it costs to commute each day. For now we will only be looking at the immediate costs of commuting such as fuel and tolls. Other costs to consider are the wear and tear on your vehicle, such as replacing tires and routine oil changes.

My cost to commute to work each day breaks down as follows:

  • Distance: 130 mile round trip commute
  • Fuel Economy: 31.5 miles per gallon
  • Fuel Consumption: 4.13 gallons per day
  • Fuel Cost: $4.23 per gallon (price paid this morning)
  • Tolls: $2.50 per day (six tolls, thank you Illinois Tollway Authority)
  • Total Cost: $19.97 per day

At a cost of $19.97 per day, commuting to work is not cheap and adds up quickly – $99.85 per week or $4992.50 per year assuming a 50-week working year.

In order to get a flavor for how much we can actually save by working from home, lets assume that we are able to telecommute only one day per week. Using our 50-week assumption, we can save $998.50 over the course of a year just by telecommuting once each week.

How much would that translate to if we saved that money?

After punching a few numbers into a financial calculator, we see that saving $998.50 per year could result in a nest egg of approximately $35,000 after 30 years assuming a somewhat conservative (historically) 6.00% savings rate.

Telecommute two days per week…$70,155 in savings!

Telecommute five days per week…$175,387 in savings!

When you bump the savings rate up to a slightly more aggressive 8.00% you would have over $215,000 in savings if you were to telecommute every day of the week. Add in the savings realized as a result of fewer oil changes and fewer tire purchases and you will soon be pushing $250,000 in savings.

That is a nice chunk of change!

At first glance, taking a pay cut in order to telecommute sounds like a silly idea and you might be wondering whether or not you can afford to take a pay cut.

After running the numbers, can you afford not to take a pay cut?

Comments

  1. says

    I live 3 miles from work so it’s not a huge difference to me. I did rent a place for $900 in order to be close to work though. Now, I could have lived at home but that would mean driving 60 miles round-trip every week day (which adds up to about 1.5 hours without traffic but maybe 3 in traffic), and I would rather have that time for myself. Telecommuting is nice, but sometimes it saves time if I can bounce ideas off co-workers. Of course, I’m talking about 6 miles round-trip and you are talking about 130 miles. That’s not a good comparison.

  2. says

    I was thinking that earlier this week. A few decades ago (back when horse-power meant actual horses) my rountrip commute was 141 miles. That would be a $70 fillup every other day!

    Working at home – much much better. :) Insightful article, btw – will stumble it.

    Enjoy, Barbara

  3. says

    Just to be a devil’s advocate here, but you didn’t factor any increased costs because of telecommuting or any other expenses that might be impacted. Other sites have really explored the issue further but extra energy used at home while you are there, savings from not eating lunch out, etc should all be figured into the overall decision too.

    crossn81s last blog post..Olympic Trials Follow-up

  4. Derek Semmler says

    @Kelvin :: My commute is a bit of an extreme, with yours being to the opposite end of the spectrum. An even better idea would be to save the $175k and earn the $177k for a double whammy!

    @Barbara :: That is pretty much my schedule, one tank of gas lasts me two to two and a half days of driving. Thanks for the stumble!

    @Chuck :: Thanks!

    @crossn81 :: That is correct, there are a lot of additional costs that I have not factored into the equation. Some of those would be minimal in my situation as my wife and kids are home all day whether I am working or not, but your point is well taken.

  5. says

    Wow Derek, 130 miles is quite the distance.

    I worked within 10 miles, so from a commute cost, it was pretty low. However, I save big in time. Working from home has allowed me to save about 2 hours a day just from the miscellaneous “getting ready for work” type stuff.

    Don’t get me wrong, I don’t look like a bum in my house, but I certainly don’t overdo it either. :)

    Lidia

  6. says

    I agree, you can save a ton of money telecommuting. I moved to a smaller town and was able to keep my job and telecommute. I now pay about 1/3 of what I was paying in rent and everything. It’s great!

  7. says

    That’s a brutal commute:)

    I walk to work and feel more productive when I leave the house. I also like some separation between work and home and the opportunity to talk with coworkers.

  8. says

    120 mile round trip commutes are the norm for many who work in big cities. I once drove 50,000 miles a year so now I choose not to drive at all.

    I didn’t set out to do that at first but when I realized I was only driving my car once or twice a month the high cost of owning one and especially insurance didn’t make sense any more.

    With the economy we can expect more and more people to work from home, work for themselves, or find ways for one member of the family to stay home, garden, maybe take in work while the other might still work outside the home.

    Internet Strategists last blog post..DoFollow Lists of Blogs, Social Networking Sites and Forums; DoFollow Search Tool; Understanding Do Follow, No Follow

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  1. […] already dream of telecommuting, now Derek makes it seem even more enticing by showing how you can Save Over $175,000 Working From Home. Posted at The Man […]

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