Does Taking a Telecommuting Job Save You Money?

by Thursday Bram · 10 comments

When you approach an employer about the idea of telecommuting, it’s not unusual that the employer in question can try to negotiate a lower salary in exchange for allowing you to telecommute. The theory behind this tactic is that it costs an employee less to telecommute than to come into the office on a daily basis. But the actual numbers may surprise you — it may not be worth it for you to take the pay cut.

Transportation, Clothing and Saved Expenses

One of the biggest reasons employers assume that telecommuting costs an employee less than coming into the office is the fact that you no longer need to pay for transportation. Some can truthfully save a significant amount of money, but rarely does a telecommuter’s transportation costs drop to zero. You may even still be expected to come into the office every so often for staff meetings and the like for example. You’re not going to be able to immediately sell your car or dump your transit pass the day you start working from home either. The actual savings varies significantly — and if you work from an employer who subsidizes travel on public transportation, it’s not out of question that your costs could actually rise.

Childcare is another area where it’s easy to assume that costs will drop when you telecommute. You can just have the kids home while you work, right? The reality of the situation is that most telecommuters quickly find that there has to be some sort of childcare plan in place during the time that they need to work. It may not be so much of a problem if your children are school-age and can keep themselves out of trouble from the time school lets out until you’re done with work. But for smaller children, you may need daycare, a parent’s helper or another childcare option.

There are opportunities to cut expenses when you’re telecommuting, of course. You’ll need significantly less professional wear if you’re not in the office. You can get by with mostly jeans and t-shirts, where you may have needed to meet a dress code before. You may also be able to cut food expenses. If you’re working just down the hall from your kitchen, the question of brown bagging becomes non-existent. Lunch is whatever is in the fridge.

Home Office Costs

There can be new costs that you have to face when setting up a home office. Depending on your employer, you may be expected to use your own computer and pay for a high-speed internet connection at home. Some employers are better about providing telecommuters with hardware and software than others. The cost of a computer that can keep up with the software you need to work can dramatically increase the cost of telecommuting.

If you don’t have an existing home office set up, it’s easy to spend money on creating an area you can work in. It’s not just a matter of putting a desk in the corner of the room. You may need to buy a good office chair — one with ergonomic capabilities — along with a printer, a filing cabinet, a lamp and anything else you need to be able to do your work. Before you start telecommuting, take a look around the office and see what tools and furniture you rely on.

It’s not just one time costs, either. Office supplies can add up when your boss is no longer footing the bill. Pens, paper and other supplies that you take for granted in an office won’t be in your home office unless you buy them. And while no one ever steals office supplies, it’s worth noting that you may find the rest of your household a little shorter on pens when you aren’t going into the office.

Your Employer’s Saved Expenses

When you’re running the numbers, it’s worth remembering that your employer can financially benefit from the fact that you’re working at home. He no longer needs to keep a desk and a computer for you, in most cases. He can often cut the amount of office space he needs, reducing his rent. He may even have a lower electric bill. But there are other little expenses that also disappear. There’s no longer a need to bring pizza into the office when everyone works late, if no one is working in the office. There’s no need to host a holiday party or even consider offering benefits like a gym membership.

Depending on your employer, relying on telecommuters may even be seen as an opportunity to rely on contractors, rather than full-time employees, bringing down costs further. This is something of a shady strategy, but due to the IRS’ rules on how an employee is classified, some employers have decided to reclassify employees who work from home on their own schedule.

It’s easy for an employer to say that, if you telecommute, you should be prepared to take a lower salary than your in-office peers. But the fact of the matter is that an employer can benefit financially by encouraging you to work from home.

Using this Information

There are many benefits that go along with telecommuting. It’s just important to make sure that, financially speaking, everything balances out before you make the switch. If you know ahead of time where potential problems are, you can negotiate questions like who will provide your computer when you work from home.

If you’re considering making a switch to telecommuting, run the numbers for your job before you bring it up. Those numbers are going to be crucial to your ability to negotiate a fair deal. If you can get numbers from someone else at your company who works from home, do it — the more information you have, the better equipped you are to make sure that your paycheck doesn’t take a hit.

David’s Note: Whenever I hear the word “fair”, I wince. If there is a place that tops the list of “unfairness”, it has to be in the corporate world. Companies will pay you a certain salary because they can, not because it’s necessarily fair. If you want to telecommute, think of all the benefits that your employer is getting of this move, like how most people actually end up working longer hours, the cost savings and less chit chat with office workers etc. You should paint your boss a good picture of this scenario because a) this helps get your agenda approved and b) it increases your potential salary.

There are no hard and fast rule that says you MUST take a lower salary. The fact that you are saving some costs does not mean you need to give in on your pay. In any negotiation, it’s a matter of getting as much as you can while keeping the other party happy. The good news is that while every dollar you get is something you keep, the other side of the negotiation (your boss) isn’t even footing the bill, giving you an edge. Play your cards right and you may even get a raise for telecommuting.

Prepare your speech and make the best of it. Your wallet will thank you. Your family will thank you and your finances will thank you.

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{ read the comments below or add one }

  • Michael Douglas says:

    There are different telecommuting jobs and your salary will depend on that. But we all know that all employer and employee will make use of this jobs or any jobs except if you are the owner of the company.

  • Jill says:

    I think there are many variables to consider when telecommuting. It all depends on your lifestyle and current situation. I telecommute, I love it. Less traffic, less work gossip and I am more functional. At times I do work longer hours, but I am comfortable. Your Own Retirement does bring up a good point about usage of utilities and grocery, but we keep our house pretty cool in the winter and warm in the summer, so it depends on how you manage it.

  • Your Own Retirement says:

    People don’t realize that sometimes it balances out. For example if you are on your computer all day your electric bill will be higher, also if don’t typically heat or cool the house during the day because nobody is home that will now changes as well. Sometimes people will even eat more because their office is 10 feet from the kitchen leading to increased grocery costs.

  • Donna says:

    After 25 yrs I convinced my employer to allow me to telecommute part time while working for them full time. I loved it. I did not miss the 3 hr daily commute, the gas consumption, costly lunches, and now the ability to enjoy my job more. Later just before I retired I was back to less & less telecommuting due to I was teaching. They had me traveling all over which I hated so the chance to retire early came and I grabbed it. Now I work part time only 1 mile from my home but still telecommute as well. Heaven at last.

  • Investlongandshort says:

    Many people do part time telecommuting. I guess this combines best of both sides. I also feel that most people are not as productive working from home versus working in the office. But I also know some people (very few) are more productive working from home because they do not have to deal with long commutes.

  • Briana @ GBR says:

    It would definitely save me money, since I spend about $9 a day on gas, and I could really do my job from home. One day, I’ll be able to work from home, or at least live closer to work

  • Jenna says:

    When I worked from home I spent a lot more money on entertainments stuff, doing out to coffee and happy hour with friends so I could be social rather than being at home (again) in my sweatpants. Just another thing to consider.

  • Mark says:

    It really depends. Employers often feel as if they are doing you a favor allowing you to telecommute so they expect you to accept at a pay decrease. Avoiding rush hour traffic is a big benefit but it is not worth taking a pay cut.

  • Steve Jobs says:

    I guess telecommuting job benefits both the employer and the employee. The employee might have a lower salary but he/she can accept another job to augment his/her income. That makes the employee more flexible of his time and can have two jobs for that 8 hour work.

  • retirebyforty says:

    In this uncertain times, there is no substitute for face time. I guess I’m a bit old fashion, but really if your boss need to cut one person. Who will he cut considering everything else is equal. A guy at the office or a guy telecommuting. When the economy is solid, maybe…

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