9 MIN READ
Want to Work from Home? Better Think About These Hidden Costs First
Whether you’re opening up shop as a freelancer or telecommuting as an employee, when you start working from home, you often think of all the money you’ll save.
No more commutes! No more business casual! No more $12 sandwiches!
Well, I’ve worked from home for four years now, and I’ll tell you it’s delightful to not have to commute and wear special clothes.
However, I also know working from home comes with a lot of hidden costs.
You’re not just saving $12 on a fast-casual sandwich; you’re also buying extra groceries so you can eat lunch at home.
You’re saving on the daily commute, but you’re also paying to travel downtown and meet with clients.
Here are nine of the biggest hidden work-from-home costs, as well as tips on how to avoid them.
1. Computers, Laptops and Smartphones
Nearly all of us use our personal computers, laptops and smartphones for occasional business, like checking email in the evenings.
Once you start working from home, those devices become essential tools for communicating with bosses, coworkers and clients — and those tools need to work just as hard as you do.
If your laptop or smartphone is old and slow, you’re probably going to want to replace it.
You don’t want to be the team member who can’t join the Google Hangout because your laptop keeps crashing. (True story!)
Keeping up with the latest technology can be a huge hidden work-from-home cost, but those purchases can also be significant tax deductions for freelancers and independent contractors. Talk to your tax adviser to learn more.
You can actually avoid some upgrade costs by taking excellent care of the tech you already have.
Practice good computer hygiene, and keep your tools free of both crumbs and viruses. Lifehack has eight tips to help you keep your tech going for as long as possible.
2. High-Speed Internet
Sometimes you can’t join the Google Hangout because your laptop is too old — and sometimes you can’t join because your internet’s too slow.
A lot of us already have high-speed internet at home, but if you don’t, you’ll quickly learn it’s practically a necessity for today’s fast-paced work-at-home environment.
Upgrading your internet speed comes at a cost, but you might be able to deduct a percentage of it on your taxes.
Keep records of how often you use your internet connection for business and personal use, and share those records with your tax adviser.
3. Office Supplies
Even though we live in an online world, you’re going to need some basic office supplies.
I go through notebooks and sticky notes very quickly, and I also use office supplies many people probably don’t already have in the house, like bankers boxes.
You may need to buy software, a new lamp or a chair you can handle sitting in all day long. Office supplies can be so expensive, we’ve got an entire post with tips for saving money on home office gear.
Here’s one more tip: If you live near a FedEx Office or print shop, do your printing and faxing there instead of buying your own printer and fax machine — but first, make sure the per-page costs are worth it for the amount of printing you need.
If you already have a printer, you can earn back some of the costs by selling your used ink cartridges.
You might assume working from home will save you money on food costs because you won’t be tempted to go out to eat every day.
Instead of saving money by packing a lunch, you can save money by opening your refrigerator.
The problem? There has to be something in your refrigerator.
When you work from home, plan your lunches and leftovers just like you were planning to take them to work.
After all, the same basic conditions apply: When lunchtime rolls around, you’re going to want something you can quickly put together that tastes great. If that’s not what’s in your fridge, you’re going to end up paying extra for prepared food — just like you would at the office.
Same goes for dinner, by the way. Doing those evening grocery runs is a little harder if you work from home.
You’re not stopping at the grocery store on the way home from work. Instead, you’re finishing your workday, going to the grocery store and coming back home.
Some nights, it’ll seem like too much trouble — or you’ll be too hungry — and you’ll just order takeout. (Trust me, I’ve been there.)
So keep your kitchen stocked and learn how to plan and prep meals in bulk. You want to always have food when you need it, without spending work hours on cooking and cleanup.
I started my freelance career in a tiny apartment, where my “home office” was a desk 3 feet from my bed.
Guess how many steps I took in a typical day?
Once I got my Fitbit and committed to a regular exercise routine, more than 10,000. If I weren’t tracking my steps, it might have been a lot closer to 2,000.
Fitbits aren’t free, and neither are gym memberships, yoga classes, running shoes or any of the other accessories and tools we use to stay fit.
If you’re an employee working from home, you may still have access to company benefits like reduced gym memberships. If you’re a freelancer or independent contractor, those costs are all on you.
If you’re looking to save money on workouts, we have some low-budget, high-impact ideas.
Travel is the biggest line item in my freelance budget.
Even if you’re not the kind of person who regularly flies across the country to speak at conventions and conferences, you’re still going to find yourself on the road more than you realize.
Those little trips to visit the office or meet a client add up, even if you’re only traveling a few miles.
Here’s a quick example of the costs involved in a standard hourlong “meet a client” trip.
First, you need to pay to get there (car, bus, Uber). If you have a car, you probably need to pay for parking. If you’re meeting the client at a coffee shop, you’re paying for your coffee and maybe even the client’s, depending on the relationship.
Yes, you can deduct many of your travel expenses if you’re a freelancer or independent contractor (as always, talk to your tax adviser to learn what you can and can’t deduct).
However, travel is also costly because it prevents you from getting your other work done.
If you live in an urban area, an hourlong client meeting can easily stretch to three hours when you count transportation both ways. That’s a big chunk of the workday — gone.
If you’re a salaried employee working from home, you got paid for those hours. If you’re a freelancer, you probably didn’t — and you’ll have to figure out how to make up the cost of your time.
7. Social Activities
When you work at an office, going home feels like a relaxing end to the day.
When you work from a home office, sometimes you feel like you’ll only relax if you go somewhere else!
Some people who work from home find they spend more money going out with friends, taking evening classes or just getting out of the house.
Other people are happy to be homebodies and don’t mind seeing the same four walls day in and day out.
Know which person you are more likely to be, and adjust your budget accordingly.
8. Professional Development
Think of professional development as “social activities that help your career.”
If you do professional development right, you meet new people and build your skills at the same time — and both of those benefits will help you land your next job or new client.
But — you guessed it — professional development costs money.
Employees may get a little help from their employers, but you still may end up paying for the cost of the course, the transportation to get there, the drink or coffee with your new friends after the course is over, and so on.
You also may want to buy a new outfit, print new business cards and make yourself as professional as possible before your activity begins.
You don’t want to avoid professional development costs completely, but you can make sure you’re spending in the right way.
Before you sign up for an event, thoroughly research it.
Is the event going to add to your skill set? Who else attends these events, and are they at the same career level as you? Are there YouTube videos of previous events? Reviews?
Even something as simple as checking on how many Twitter followers an event has can help you determine whether this professional development opportunity will be worth your time.
9. Missing Out on Tax Deductions
I’ve mentioned tax deductions a few times already, but I want to give them an entire section.
If you don’t take advantage of all your available tax deductions, you’re leaving money on the table — money you earned, by the way.
Your laptop, smartphone, internet package, office supplies, travel expenses, professional development costs, home office’s square footage, even the electricity your home office uses — all of these items have the potential to be tax deductions.
They also have the potential to not be tax deductions, depending on your situation, so talk to a tax professional to find out what you can deduct.
If you’re a freelancer or independent contractor, your deductions are likely to be more significant, but even employees who work from home can often deduct some home office expenses.
Your Turn: What are your biggest work-from-home expenses? What advice do you have for other telecommuters and freelancers who want to keep their costs down?
Nicole Dieker is a freelance writer focusing on personal finance and personal stories. Her work has appeared in The Billfold, The Toast, Yearbook Office, The Write Life and Boing Boing.