How Much Money Can You Save Working from Home?

Kate Lister, co-author of “Undress for Success: The Naked Truth About Making Money at Home” and researcher for the Telework Research Network, says that about 40 percent of American employees hold jobs that could easily be done from home.

The Telework Research Network also says that at least 79 percent of American workers would like to work from home, if only part of the time.

And it’s no wonder. Working from home can save you time (goodbye, commute) and money. Telework Research Networks calculations say that a typical telecommuter could save between $2,000 and $7,000 a year by working from home.

Where does all that money come from? Here are the main ways telecommuters save money:

Transportation

The average U.S. commute is about 26.4 minutes one way. That is nearly an hour of driving, carpooling, or bus riding every day. Almost 600,000 full-time commuters traveled around 90 minutes one way, or three hours of commuting daily.

Clearly, that’s costing a lot of money, whether you’re traveling by rail, bus, in a carpool, or on your own. Obviously, if you can take public transportation or travel with others, you’ll save some money, but working from home shaves the entire expense out of your budget.

How much can you save a month by cutting some or all of your commute? Check out this calculator from the Transportation and Parking Services.

For example, let’s say you drive 15 miles to work. If you normally go into the office 25 days in a month and drive a sedan with average operating costs, you’ll pay about $219 a month, or $2,628 a year for commuting. And that’s not including tolls or parking.

If you take public transportation or carpool, your costs won’t be quite so high, but you’ll still have costs to factor in.

All these costs are based on averages and guesswork. But it’s not hard to figure out how much you could save on transportation by working from home. Check out your spending in these categories in the past few months:

• Gas
• Vehicle maintenance
• Public transportation
• Parking
• Tolls

Sure, if you work from home, you’ll still have to drive some. But you can slice out the majority of those expenses, even the less noticeable ones like the wear and tear on your car. In fact, if you’re married and working from home, you may be able to cut out a second car altogether.

My husband and I are able to juggle life as a one-car family because I work from home, and we save a fortune in car payments, gas, maintenance, and insurance.

Clothing and Accessories

Confession: I am working in yoga pants and an old T-shirt, and it’s one of my favorite work-at-home perks. Recently, I went shopping for two professional outfits skirts, heels, the works for the rare times when I meet clients in person. I was floored at the cost of those two outfits.

Obviously, if you work in a dressy-casual office, you’re going to have to spend money on clothing and accessories that are appropriate. And you’ll probably need to have more outfit options than someone who works from home.

If you work in a dressy corporate environment, you’ll likely pay for more expensive clothing, as well as dry-cleaning and possibly tailoring services.

If you’re considering leaving your office-working life and working from home, savings on your accessories and clothing won’t be immediately apparent. In fact, you may feel as if you’re tossing money out the window if you downsize your closet or stop wearing your corporate clothing.

But how much do you pay for clothing in an average year?

According to the latest Bureau of Labor Statistics Consumer Expenditure report (from 2011), the average American household spends $1,740 on apparel and services. Some of that goes toward leisure clothing and clothes for the kids. But a good chunk of it is sure to be dedicated to professional wear in households where at least one person works outside the home.

Again, it’s tough to say how much you spend on clothing in a given year. Maybe you’re a savvy Goodwill shopper and spend next to nothing on your dressy-casual wardrobe for work. Or maybe you buy only the latest brand names and spend a fortune on every item in your closet.

Either way, transitioning from working in a suit and tie to working in yoga pants or jeans and a T-shirt will save money over the long run.

Food

A 2012 survey from Accounting Principles found that American workers pay more than $20 a week $1,000 a year on coffee and around $2,000 a year on lunch. Only about one-third of workers pack a lunch to save money.

Obviously, if you work at home you still have to eat, but it's much cheaper. I drink at least three cups of coffee and/or hot tea a day. But because I make it at home, I can buy more expensive coffee (Starbucks French Roast) and still pay less than $30 a month for my caffeine hit.

I also save on lunch. Unlike commuters, I don’t have to pack a lunch, and I usually make something at the last minute. Eating last night’s leftovers or fresh soup or salad doesn’t cost much certainly much less than $2,000 a year.

So how much are you spending on food and beverages because you commute? Multiply the average weekly cost of your daily caffeine and dining out habits by 52, and you’ll see how much you’re spending a year. You won’t eliminate that by working from home, but I bet you would save 75 percent.

Child Care

Some work-from-home parents avoid child care costs altogether, although this isn’t always true. A CNN Money article about telecommuters offers two perspectives. One mother was able to take care of her children while working from home, while another reduced her child care needs by working from home.

In my experience, it’s tough to work full time while parenting full time. It’s probably impossible if your child isn’t old enough to be fairly independent and self-sufficient. That’s why my family pays for two or three days of child care a week. But the days we don’t pay for child care save us a fortune.

The National Association of Child Care Resource and Referral Agencies found that in 2011, the average annual cost of full-time child care for an infant (the most expensive age for child care) ranged from $4,600 to $15,000. The cost of child care varies widely depending on where you live, the age of your child or children, and the type of care you choose.

If you can work from home while your children are in school, you can eliminate the cost of child care and after-school care.

Another way to save while working from home is to have child care part-time, as my family does. Because I don’t drive to the office and back, I can usually squeeze 10 work hours out of one day of full-time daycare. I can get other work done after bedtime or during my daughter’s nap times when she’s home with me.

Yet another option for many work-from-home parents is to hire someone to watch children in the home while the parent works. This can be especially affordable if you hire a high school or college student to play with your children while you work. Because you’ll be around and they won’t have too much responsibility, you can fairly pay a low hourly rate for these services.

Again, the savings you’ll experience for child care when you work from home will depend on your situation. But with child care costing $4,000 or more a year, saving 25-50 percent of your child care costs would put a lot of money back in your pocket.

Personal Time

The most recent Telework Research Network statistics show that the average worker would gain back two to three weeks a year of free time by cutting out the commute. Obviously, you’re not getting any more vacation time, but what could you do with an extra one to three hours a day?

And that’s just the commuting time. Recent studies show that work-from-home individuals could be more productive, up to 13 percent more productive. If you have a task-oriented job and don’t have to punch in a certain number of hours a week, this could mean less time actually working.

The personal time saved by working from home is a huge perk and can save you money in the long run. What could you do with an extra five to 15 hours or more of free time each week? Using this free time wisely could make you happier, and it could also save you money. For instance, you could save by:

• Cooking at home, planning meals, and clipping coupons to save on food.
• Doing your own housework and yard work, which you may have outsourced before.
• Completing DIY home renovations that could save you money.
• Starting a side business to bring in extra cash.
• Taking classes or working toward a degree that will boost your marketability and your income.

There are certainly more reasons to work from home than just saving money, but the savings could be huge. In fact, you might find that taking a pay cut to work from home makes you happier and puts more money in your wallet in the long run.

How much do you think you could save working from home? Would you love to work from home full-time?