In the pre-apocalyptic world of 2019, when COVID-19 was merely a distant news story, somewhere around 8% of Americans were working from home five days a week.
Fast forward to the middle of 2020, and the percentage of people working from home hit 77%! The Global Workplace Analytics predicts that by the end of 2021 (the post-COVID-19 world), 25-30% of the workforce will forever remain working from home multiple days a week. That is a big deal!
Tripling the number of people working at home in a post-COVID-19 world will have far-reaching effects on many people’s lives and the economy. The big question for many of those 77 percenters is whether or not they should continue working from home when COVID-19 passes.
While there are certainly good reasons for both sides of the question, working from home has five main reasons that come with financial benefits making it the clear winner.
1. Reduced Stress
In a 2013 study, 83% of Americans said they were stressed out at work. In another survey, 16% of Americans said they’ve had to quit a job due to stress. Being stressed at work probably comes as no shock to you. You are likely stressed out yourself, and maybe even one of the 16% that quit their work due to stress.
However, what may shock you is how much stress from work harms your life physically, emotionally, and financially. And how much working from home can help you combat it.
So how does work-related stress hurt you?
Well, everyone knows life is hard, but it is so much harder when you are tired! In 2016 anywhere from 44%-75% of Americans were losing sleep as a result of work-related stress.
According to a recent Harvard Business Review article, stressed employees lose their critical and creative thinking skills, and they are almost three times more likely to leave their job.
The lost health, lost productivity, and a myriad of other side effects caused by excessive workplace stress are, according to a 2016 Stanford study, responsible for a staggering 120,000 deaths, and according to a separate Harvard study, nearly $300 billion in health care costs each year. That’s 6 times more deaths by work stress than by homicides in the US, and $50 billion more than China spends on its military, the second-largest war force in the world.
The massive harms of stress make it the bane of any employee. So how does working from home help combat it? When asked to rate (on a scale of one to five) whether working from home gave them more independence, employees’ average score was 4.09. On whether working from home reduced commuting stress, employees’ average rating was 4.11.
In a separate study, employees reported that working from home reducing distractions during the workday (75%), interruptions from colleagues (74%), kept them out of office politics (65%), allowed for a quieter work environment (60%), and gave them a more comfortable (52%) and personalized (46%) work environment. Working from home removes distractions and brings comforts that lower peoples’ stress levels, something 50% of all ads promise but never can deliver!
2. Reduced transportation time and expenses
Typically, Americans spend anywhere from $2,000-$5,000 annually on transportation for their work commutes. If you commute in your car, you can also add a large portion of your $1,186 vehicle repair and maintenance costs to your commute. If you were to start working at home today, you could cut all those costs, and plan on thousands of more dollars in your bank account every year.
While working from home does save you money by eliminating your daily commute, it also works magic for your time and health. In the US, an average commute is 26.1 minutes. That means you are spending about 13,000 minutes of your life every year in traffic. Multiply that by the number of working people in this country, and you get 2,041,000,000,000 minutes, or in other words, 3.8 million years! Think of what you could do with your annual 217 hours. You might finally get a start on your DIY project list, take an extra vacation with your family, or actually sleep the amount suggested by your doctor.
On top of gaining a mountain of free time, you would eliminate a massive list of adverse health side effects correlated with work commutes:
- High Blood Pressure
- High Cholesterol
- Increased Absenteeism
- Decreased Intelligence
- Back and Neck Pain
- 40% More Likely to Divorce
- Children developing emotional and social problems
3. Reduced clothing and apparel expenses
The savings on clothes for working at home are pretty straightforward. The average amount spent on apparel in 2015 was about $1,850. If we are modest and assume only $500 of that is spent on professional clothes working from home allows you to keep that money from retailers and put it into retirement! If you invested $500 into the stock market every year for the next 30 years, with a conservative 4% rate of return (the average is 7%), your money would double, and you would end with $30,000!
Don’t forget that working from home is also saving you lots of money from the dry cleaners. All our fancy shirts, suits, blouses, and skirts can cost an arm and a leg to maintain. Working from home lets you significantly cut down on the number of washings your fancy clothes will ever need.
4. Reduced food-related expenses
Before COVID-19 hit, another epidemic was sweeping America, and it is likely to return when our economy recovers. Its name is eating out. Pre-COVID-19, the National Restaurant Association projected that overall industry sales would hit a high of $863 billion in 2019, up 3.6% from last year. The number of people eating out is growing even though the cost of eating out has been rising at a rate 4-6 times more than the rate of the cost of eating at home. Twenty years ago, Americans spent almost 10% of their budget each year on groceries and about 5.5% on restaurants and takeout. Now they spend about 7.2% on groceries and at least 6% on takeout. 7.2% does not even consider how much Americans spend buying prepared foods at grocery stores. Things like salad bars, rotisserie chicken, macaroni and cheese, and the like. We are eating out more and more and paying more and more for it. Frugal Rules blogger, John Schmoll, even reported on a family that spent $30,000 eating out in 2016 alone.
Though ordering food to your door may always be a temptation, when working from home, there is no social temptation (50% of the time we eat out) to eat out. Not having that temptation will help you to significantly cut down on your restaurant bills, hopefully saving you about $1,300 a year! (The cost of spending $10 for lunch every other workday of the year.) People that make lunch from their groceries will spend half as much as those that just haft to eat out.
5. Childcare related expenses
The childcare benefits you gain from working at home are two-fold. First, I’ll cover the economic gains. According to Care.com data, weekly childcare costs have risen significantly over the past six years. The chart below will show that the cost of various types of childcare has grown anywhere from 11%-58%!
National Average Weekly Rates
|Childcare Center||$186||$215||+16% increase|
|Family Care Center||$127||$201||+58% increase|
|Au Pair||$360||$401||+11% increase|
The growing cost of childcare is taking very significant portions of families’ budgets. The most recent Cost of Care Survey shows that 72% of parents spend 10% or more of their household income on childcare, and in a previous year’s poll, 1 in 3 families reported paying 20% or more of their household income on childcare. And 52% of parents expect COVID-19 to drive up the prices even further.
Childcare is not an easy job, which is why providers charge such premium prices. But working from home and choosing to care for your children either part-time or full-time might increase your budget by 20%-30%. Look at it as an opportunity to take on a harder job to get a significant pay increase. What’s more, working from home and caring for your kids brings more bonding opportunities. You become a more meaningful part of your child’s life, especially during the most malleable part of their lives.
Though the benefits of working at home vary from household to household, the prospect of having less stress, no commute, more time, and more money makes working from home a lavish luxury. Let’s forget about all the non-quantifiable benefits for a second (less stress, more time, etc.) and pretend you are on the low, low—low end of the spectrum, and gain only $1,000 a year for working at home. These current facts about personal finances help put into perspective just how influential $1,000 can be in someone’s budget.
- 69% of households have less than $1,000 in emergency savings
- 38% of households have revolving credit card debt
- 78% of Americans are living paycheck-to-paycheck.
For most people having an extra $1,000 can make them prepared for most financial emergencies. $1,000 can be the first real step of getting out of credit card debt, or it can be the beginnings of a lifestyle not depending on each paycheck as a lifeline. We wanted people to make not only these goals but all of their financial dreams. Savology is here to help.
Your financial future starts today
Savology has helped more than 40,000 households across the United States improve their financial well-being by providing comprehensive digital financial planning. Users can get started with our free financial planning or premium monthly planning memberships, allowing them to build a personalized financial plan, holistic report card, personalized action items, and more. In addition to our consumer-facing platform, we’re helping employers across the country provide their employees with effective financial wellness benefits.