Remote work remains a hot topic for both employees and management alike. COVID-19 may have pushed many to first take the leap, but countless remote workers have decided to remain away from the office. Others are trying to find new remote work opportunities as their bosses call them back in full-time, and there are some who have decided to adopt a hybrid approach.
If you’re new to the work-from-home, work-from-anywhere (WFH, WFA) lifestyle, you may have concerns about finances. Can you make enough money working remotely? How much will it cost to set up your home office? We’ll consider these questions and more below.
Consider this as another vital work-from-home survival guide as you navigate remote work finances.
Plan Ahead for Business Expenses
Working remotely can save you thousands a year on transportation costs, but outfitting a home office isn’t free. You must plan ahead to be able to pay for them.
How much will you need? You probably already have much of the equipment and subscribe to the necessary services. For example, you likely have a desk, a computer, a printer, electricity, and internet service.
Some jobs, however, require other tools. Also, technology will need to be replaced as often as every three years. Finally, as the below list explains, there may be other expenses you haven’t yet recognized. Consider putting back one-third of your income for expenses. Keep good records, and you can make adjustments to this record in time.
Common Business Expenses
What expenses can you expect your remote work to incur? Consider the following.
- Utilities, including internet access and electricity. If you work from multiple locations, you may also need to invest in a mobile Wi-Fi hotspot.
- Office space, even if a home office. You may need to invest in office furniture such as an ergonomic chair or a standing desk. If you don’t have the space at home or need access to special equipment, consider renting at a co-working space.
- Technology, including but not limited to a desktop computer, laptop, smartphone, camera, printer, or specialized equipment necessary to your job. You will also need to upgrade or replace equipment from time to time.
- Services, such as necessary software, cloud storage, or the delivery of office supplies.
- Taxes are often an overlooked expense for new remote workers. If you’re a salaried employee, your company will take care of taxes just as they did when you worked in the office. But if you’re starting your own business, working as a freelancer, or as part of the gig economy, you will need to pay estimated income tax quarterly. The federal self-employment tax rate is currently 15.3 percent. Also, there are initial and annual fees associated with your business license, state and local taxes, property taxes, and, if you sell physical items, sales tax. Consult with a tax professional to make sure your business remains in compliance.
Remember to keep good records of your business expenses. Many of them are tax-deductible.
Live Within Your Means
Switching to remote work can include a pay cut. Some forms of remote work are erratic, coming in spurts and making it impossible to accurately estimate your income. It’s important to create a budget and stick to it when money is scarce.
List Your Needs
Make a list of your needs and how much they cost each month. These can include:
- Rent/mortgage
- Food
- Insurance/Healthcare
- Other necessities
Compare this list and its total to your monthly income. Dedicate money to covering your needs and those of your family before spending on wants.
You can also evaluate your expenses to see if you could “cut back” in one or more categories. Could you move to a smaller house or apartment? Trade in your car for an economy model? Prepare meals at home rather than eating out?
Of course, you shouldn’t let this section scare you. Many remote workers enjoy ample, stable incomes. But it is valuable to be prepared for economic upsets.
Whether your work is bringing in much pay or little, you need to enjoy yourself by maintaining a good work/life balance. Consider these creative thrifty strategies.
Get Creative with Money-Saving Strategies
Living on a budget doesn’t mean you have to be all work and no play. You can employ creative strategies (such as coupons, credit card points, or bartering remote services) to enjoy entertainment, restaurants, and vacations. Examples include:
- Fun, discounted activities from Groupon
- Coupons for restaurants and attractions from City Saver
- Credit card points redeemable for flights, hotels, and other vacation essentials
- Reimbursed “mystery shops” at restaurants
- Pet-sitting or housesitting in return for accommodations at vacation destinations
- Bartering business-to-business services, for example, promoting a product or attraction on Instagram in exchange for product samples or attraction admission
Key Takeaways
Millions of remote workers enjoy the freedom this work style affords. You can prepare for economic ups and downs by planning ahead for expenses, budgeting, and living within your means. In the meantime, enjoy a healthy work/life balance by employing creative money-saving strategies while at play.
