Weighing the Cost of Working Vs. Staying At Home
This Info Guide will help you take a look at how much you're spending to work. We'll uncover some of the most obvious costs and some not-so-obvious ones. You'll probably think of others as we go along. Be sure to write them down. They'll be important in evaluating your own family's situation.
We think about our work in terms of a salary or hourly wage. Some of us even remember to subtract out taxes before planning on how to spend our next paycheck. But how often do we think about our tax bracket? The U.S. government breaks our society down into segments of wage earners-those earning more pay a higher percentage of their income to Uncle Sam, those earning less pay a lesser percentage. By knowing which tax bracket
your family's total yearly income falls in, you can calculate the tax
"cost" of working.
Here's an example: Let's say your spouse earns $38,000 per year. Within this lower tax bracket, the federal income tax due on his salary is about $3,600. Now let's add your salary at, for example, $30,000 per year. Your combined income of $68,000 jumps your family into the next tax bracket with a total federal income tax burden of around $10,000. Your $30,000 salary is effectively cut by $6,400 instantly just because your added income increased your combined tax bracket.
Remember, tax laws change frequently, and nothing can substitute for the advice of a good tax advisor. Yet, it isn't hard to see that you might actually be farther behind at tax time by making more money.
Direct Work-Related Expenses
There are some obvious places where we spend money to make money. Working requires an output of not only our time and talents but a portion of our paychecks as well. Some expenses are easy to see, some are more obscure but nonetheless a cost of working. And some cost us in intangibles, like time away from family. Below is a listing of some direct work-related expenses. Think about your own situation and write down how much you might be spending on these things per month or year. Add in any
others that affect you. How valuable are the intangibles? Consider those as well.
We're all keenly aware that driving a vehicle and maintaining it costs us money. These costs rise if two vehicles are on the road regularly. And, depending on your driving habits, you may be at risk for other costs as well, like more frequent parking and traffic tickets. Below are just some of the ways you may be spending your hard earned dollars to commute.
2nd car payment $_______
car insurance $_______
car registration $_______
car wear & tear (estimate about 20-25 cents per mile depending on age of car) $_______
gas & oil $_______
traffic tickets $_______
There are some intangible costs of commuting as well. The time you spend going to and from work is time that could be spent with your family. Also, the stress and frustration of driving in traffic takes its toll on your nerves, which may leave you tired or short-tempered when you get home. Commuting probably creates other intangible costs in your life. Consider them all.
Wardrobe / Uniform
Most work environments have some kind of dress code. Depending on your type of work, it may range from casual, to executive suits and ties, to required dress. Whatever your situation, working requires a wardrobe beyond what you might wear around the house. Besides your clothes, remember to think about the little things that go into preparing you for your job.
Wardrobe / Uniform
more jewelry $_______
more frequent trips to the salon $_______
hair & nail $_______
hose / slips $_______
additional shoes $_______
products for work $_______
additional clothes for work $_______
One intangible cost of maintaining a "look" for work is the time you spend shopping for these items-it's time you could be spending with your family. It might even be time you could use for yourself, like reading a good book or taking a hot bath, so you not only look good on the outside but feel good on the inside as well.
Paying for the care of our children while we work takes a large chunk out of most mothers' paychecks. It can be an even bigger bite when we consider costs like the ones that are listed below.
daycare rate $_______
extra travel $_______
more childhood illnesses due to child's exposure in childcare: add
extra medical costs for child and other family members who get sick $_______
expenses associated with childcare provided by family and friends $_______
add lost time/pay at work for spouse (see below) $_______
If because you are working, your husband has taken on more parenting responsibilities such as: staying home with a sick child; taking children to doctor's, dentist's appointments; meetings at school; staying home with children due to "snow days" or other daycare or school "shutdowns", he may take a loss in income, bonuses or promotions due to this additional time off. Don't forget to consider extra costs to your husband's, and therefore your overall income, due to commitments to your job.
Eating out is the American way of life. With our busy schedules, taking time to prepare a meal often loses out to the convenience of fast food probably no more than a block away. Besides, who's got the energy, right? Our modern day conveniences can cost us a bundle, however. How much might it be costing you?
Meals-Cost of extra:
lunches out & snacks at work $_______
expensive convenience foods $_______
more frequent family dinners out $_______
Indirect or Hidden Expenses
We can't hide what taxes are costing us-the IRS sees to that. And the expenses resulting directly from our work are usually easy to spot. But just how many costs of working are still lurking behind our two-income blinders? The answer might surprise you. Below is a listing of seemingly subtle sacrifices we make in order to work, but that can actually have a significant impact on our financial picture.
Social Events At Work
There are all sorts of things at work we participate in that have
nothing to do with our jobs. They're typically fun, like a co-worker's baby shower or boss' birthday party, and might be a nice diversion from our work responsibilities. But they also cost us out-of-pocket.
Social Events At Work
chipping in for gifts/foods $_______
personal gifts $_______
Depending on how much socializing your job requires, you may spend your off-hours, like evenings or weekends, at company functions. This might cut into your family time. Too many social events could cut into time you need to get your work done as well, causing undue overtime and added stress. What are these intangibles worth to you?
The cost of working may include some out-of-pocket-expenses for tools of our trade, such as briefcases, computers, and other equipment with which we get our work done. And to keep up our knowledge and skills, we may also pay for classes or other education that isn't reimbursed by our employer.
cost of continuing education $_______
trade magazines and other publications $_______
tools/equipment not reimbursed by the company $_______
Your job may also require travel that takes you away from your family. Depending on how often or for how long you travel for work, there may be a level of stress and expense that grows proportionately. The intangible cost may be higher than you imagined.
There's no getting around it-the hours have to be put in at home in order to keep it maintained and livable. Someone has to do it. The question is often "who?". Whatever choices we make about who's going to keep the house up, it costs us.
hired cleaning help $_______
hired repair help $_______
hire baby-sitter so you can do it yourself $_______
An intangible cost of maintaining the household yourself is that you may find your evenings and weekends filled with chores rather than spending that time with your family. This may have an effect on your own level of stress and energy. Think about all the ways maintaining your household costs you and your family.
Your REAL Take Home Pay
You've added up both the direct and indirect costs of working. Now simply subtract them from your net income. Many couples are surprised at how little is left! When all is said and done-when you have considered both the hard cash and significant intangibles your family expends to maintain a two-income household-you may be surprised to find that working costs you more than you realized. Rather than getting ahead, some families actually find themselves farther behind!
There is one last step to understand what a second income is truly contributing to your total household income. If the second income comes with other benefits that you alone receive, and would have to be paid for otherwise, you must add this amount in to your real take home pay amount. Things to consider are: health insurance for the family that you alone receive, investment or retirement funds that are matched by an employer, and so on.