8/29/2011 12:49 PM ET|
5 ways your job costs you money
Your paycheck may look a lot bigger before you figure out how much of your spending is work-related. Here's how to cut those expenses down to size.
You may be working yourself into the poorhouse.
Holding a full-time job is the way most people earn a paycheck and make ends meet. The catch is that the very act of working is costing you in ways that go far beyond taxes. For those struggling to get by on lower salaries, the impact of what it costs to go to work can put a significant squeeze on household budgets.
A flaw in the nation's unemployment safety net is that sometimes it can seem more lucrative (at least in the minds of the less-than-motivated) to stay at home collecting unemployment checks than to take a low-paying job.
For example, someone who is laid off from a $60,000-a-year position may find it difficult to justify turning down unemployment benefits that add up to as much as half that when a paid job also offers only half the previous income. Once that $30,000 starts being nibbled away by the many costs associated with holding a daily job, sitting on a couch, eating pizza rolls and watching TV might seem like a better deal.
Here are five expenses that can eat away at wages, followed by some advice on cutting the cost:
1. Tanks for nothing
There are commuting costs to contend with. If you have access to public transportation, prepare to plunk down $60 to $100 a month for a train or bus pass in most major cities. If you drive to the office, the costs shoot up from there.
Nationally, most low- to moderate-income workers -- more than 85% -- drive to work in private vehicles, according to research by the Center for Housing Policy, the nonprofit research affiliate of the National Housing Conference.
According to data compiled by the personal finance website Bundle.com, the average American worker spends more than $6,000 a year on transportation. That accounting includes not only fuel costs but other auto expenses as well (insurance, inspections, etc.). It is not just gas that will affect your personal bottom line. The wear and tear on your car that goes with a commute, not to mention the purchase price of the vehicle, also must be counted.
Depending on where you live, that budget item -- significantly affected by the length and frequency of work commutes -- can go much higher. A study last year by the Urban Land Institute found that, nationally, transportation costs are a household's second-largest expenditure (housing was No. 1). In research focused on the Boston region between 2006 and 2008, transportation costs consumed 19% of income for the typical household, amounting to $994 per month, or $11,927 annually. Forty-one percent of workers in that region had one-way commutes of a half-hour or longer, and one in 10 commuted at least an hour each way.
Add to the mix the pricey problem of parking your car if your job site doesn't offer it for free. In major cities, be prepared to have daytime parking set you back $300 to $400 a month -- or more.
2. Child-care dilemma
If you have kids, prepare yourself for what may be the biggest budget buster of all -- day care.
More than 11 million children under age 5 spend approximately 35 hours per week in the care of someone other than a parent, according to the National Association of Child Care Resource & Referral Agencies. On average, preschool-age children of working mothers spend 36 hours in child care or nonparental care.
More than half (51%) of families with children under 5 say the economy has affected their child-care arrangements in some way, with more than three-fifths (63%) worried at least some of the time about paying their bills, the group found in a recent survey (.pdf file).
"For many families, the cost of quality child care is simply too high," says Linda Smith, the association's executive director.
How high? According to the association, the cost of day care can fluctuate widely among cities, with major metropolitan areas commanding heftier prices. Full-time center care for an infant was found to range from $4,500 to nearly $19,000 per year last year. Center care for a 4-year-old child ran between $4,460 and $13,158 annually. Before- and after-school care for a school-aged child in a center can cost upward of $10,000.
The cost is forcing some working families to make difficult -- and questionable -- decisions.
"More parents are faced with having to choose unlicensed and unregulated child-care settings in order to save money," Smith says. "If parents are faced with deciding whether to pay more for child care or buy other household necessities like groceries, child care is usually the first area where parents make adjustments to reduce costs," Smith said. "In most instances, families are likely to spend more on child care than they do for health care and food combined."
Even those who think of their pets as children will pay the price for being at work. A dog walker will typically cost $15 to $30 per half-hour session.
3. Clothes calls
What you wear to work will also tap your budget. Need to dress for success? A high-quality suit is going to cost at least $800, possibly more, depending on the designer and where you buy it.
Dress shoes will cost around $100 a pair (or much more, depending on the maker, style and quality). A nice blouse, a leather belt, a handbag, messenger bag, laptop case, raincoat, snow boots and umbrella are just a sample of the clothing or accessories you may need for an office wardrobe.
4. Eating away at your savings
Lunch and snacks will also have you reaching for your wallet throughout the day. If you shell out $10 a day for lunch, and an additional $5 a day for coffee or snacks, you can deduct nearly $4,000 from your take-home pay.
Tired after a long day at work? Rather than making an affordable home-cooked meal, you will likely spend $10 or more grabbing fast food on the way home at least two or three times a week.
Socializing after work is important for fostering teamwork and morale. But even a lone beer and a single appetizer once a week can subtract about $20 or so from your ever-dwindling paycheck.
5. Charity fatigue
The workplace also makes you a target for charitable pleas. It is hard to deny co-workers when they ask you to support their kids by buying Girl Scout cookies or magazine subscriptions. There are also walk-a-thons, road races and other charity-minded endeavors for which co-workers will pass the hat.
Gus from accounting is retiring? A cake for Carol's birthday? Helen from HR just had a baby? Choosing not to chip in is a cardinal sin in the realm of office politics.
How to cut back
Every work-related expense you can reduce is like getting a raise. Every dollar saved is one that can go to other household expenses, or be redirected to savings or a retirement plan.
Finding ways to save money each work day can be fairly simple. Pack a lunch each day instead of running to the local sub shop and try to prepare (and possibly freeze) some meals you can heat up once you get home on those days you are too wiped out to play chef. Using a slow cooker with a timer is another way to have a hot meal ready for you by the time you pull into the driveway.
Instead of paying $100 for a shirt at Brooks Brothers, avoid the boutique shops and malls and instead stock up with shirts, ties, blouses and dresses at more affordable retailers such as Kohl's, Target or even Wal-Mart. The savings can be huge, and odds are most co-workers won't even notice.
One way to reduce the costs of commuting or day care is to see if your employer is open to you telecommuting one or two days a week.
Your human resources department can also help you realize savings through pretax payroll deductions for such necessary costs as transit passes. Your company may also offer a dependent care reimbursement account.
These plans, similar to a health savings account or flexible spending account, allow you to make pretax payroll deductions to defray the cost of day care for children under the age of 13 (as well as adult day care for the disabled or infirm). Some can be used to reimburse for eligible daycare expenses for children age 12 and under or for adult day care expenses for a disabled spouse or IRS-qualified tax dependent.
The maximum annual deduction is $5,000 for a married couple.
This article was reported by Joe Mont for TheStreet.
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I feel really sorry for our kids.
I graduated HS in 1984, went to Community college that cost $900.00 per year and made $3.35 per hour. A movie ticket was about $3.00, gas was about $1.00 and car insurance was $600.00 per year
Today my kid makes $7.25 per hour, a movie ticket is $9.00, gas is $4.00 and the exact same college is now $5,500 per year and car insurance is $1,800.00 per year
I paid my own way through college, paid my own insurance, bought gasoline, paid for dates with my future wife and generally made it.
I fear that our kids will not be so lucky.
Too right, Kamity!
In the 1950s and even the 1960s, it took 1 earner to bring home enough to maintain a household - pay the mortgage, car loan and the utilities, plus that annual staple of life - the 2-week summer road trip. And the chances were high that that earner was a high school educated man. Nowadays, it takes 2 college educated earners to produce the same income stream. What that means is that although the food we buy and the junk we collect that is all imported from China costs less than ever, the big things that are the main part of our budgets: housing, vehicles, and utilities all cost twice what they used to as defined by the average US job income. Add to that the fact that both earners hve student loans to pay, and it is easy to see that the American Dream has become a hole of debt and stress. I GLADLY would go back to high prices for commodities if it meant that I, myself, could earn enough money with my degree to pay for all my family's needs and reasonable wants, as well as pay off student loans, and not need to involve my wife or government subsidies to make ends meet. And I feel even more sorrow for those who skipped college and are trying to get by working retail or whatever without a degree!! Their earnings won't even cover HALF the cost of living in their area, so 2 non-degee earners generally are still always in the hole. Screw China and India! Bring our jobs back now and give us the pay we deserve!
I'm hearin' all of you. As September the 11 said, the American Dream has become a hole of debt and stress. I really feel sorry for all the young adults who are just starting their lives and careers, full of hopes and dreams. College degree in hand they wade into the job market to find many of the shelves are empty, or that the jobs left behind are the same low paying jobs they could have landed without the degree... and without the debt. More unsettling are those with degrees who do get jobs in their field, but the jobs pay barely enough to keep them afloat. My daughter's friend (4 year degree, dean's list all the way) pays nearly $600 every month for her student loans. She has a job that pays $9 per hour... and sadly, it's a job in her field. My daughter, on the other hand, decided after graduating from high school that she wanted to "experience life" before settling on a career path and the college education that would take her there. I was not happy with her decision, but what can you do? She moved out of state, worked (retail, waitressing), came back after 3 years and still said she wasn't sure about college. Mind you, she was high honors in high school and took honors and AP courses, so I felt she was wasting her talents. Finally she said she didn't want what her friends had-- all the debt and stress. She applied for and got a job and is currently making $15+ per hour M-F, 9-5... more than any of her friends with degrees. And she has no debt. She has her own apartment. Her friends are still living with their parents. One is considering going back to school for her Masters because then she would be eligible to apply for a job in her company making $12 per hour. Her Masters will cost in the neighborhood of $32,000.
It used to be a given that a college degree meant you would earn more money over your lifetime. I don't know about anyone else, but I think that's becoming less and less true. Should we really be pushing our kids to get that degree? Maybe not. At the very least we need to be delivering tough love and telling them what degrees are an economic waste of time that will only land them in a hole of debt and stress.
When I was 24, my husband and I (both college educated and he had finished an MA) were making less combined as educators than the electrician next door. Granted the neighbor worked overtime to boost his income. His wife worked part-time in the evening at a bank. I felt really depressed about not having money for vacations, clothes, furniture, appliances, a home of our own, etc. That was 1972. There have always been disparities between jobs that require degrees and those that are skilled trades. You have to do your research if you don't want to get the fuzzy end of the lollipop! I did my MS in Special Education, and have never had trouble finding a job, since. I have worked two jobs more than once in order to keep the bills paid. I am retired now, and I don't have it all, but my husband and I have a nice home (paid for), three cars (more than we need), and
we can afford the things I was so depressed about not being able to afford at 24. I always say that all my struggles (financial, marital, etc.) have me dripping with character! Complaining gets you nowhere, and gets you no sympathy.
Buy your clothes at Walmart, Target, Kohls.
I used to read how buying better clothes saved you money because they would last longer and stay nicer looking.
Now they are sending us to the disposable clothing line at Walmart.
How is spendning money on clothing that will unravel or have holes in it after the first wash, or shrivel up after the second wash, or no longer fit after the third wash (if they ever did fit since China and Indonesian women are much smaller than American women).
Yea I can see how much I'll be saving...
$800 for a good suit?! over $100 for a decent pair of dress shoes?? bogus... ever heard of buying anything on SALE?
a very, very good suit shouldn't cost over $500 (likely less) if you know how to shop. a quality pair of men's shoes that should last you several years can be had for $85 or less. I got a good pair of brand name work shoes for $50 at Macy's by shopping carefully (on sale). I have a dressy pair I wore at my wedding, bought at the same place for $80 (NOT on sale). sure neither will match the CEO's, but hey he makes well over $300K in salary alone where I work (not counting bonuses or stock options which add up to a lot) - so he can afford it. mine will hold a nice shine and last nearly as long while looking good.
I work an average of 4 days a week. So $80 of gas a week. And there's maybe 5 weeks in a month. So that's $400 in gas a month. Multiply that by 12 and add it with my insurance and that's $9,600 a year just so I can drive my car at work. Not counting oil changes and other general maintenance ((I do most of it myself but it still costs money.))
I'm not trying to be a ****, but let me say this. If you can't come get your pizza yourself, please give your pizza guy a decent tip. Most of us use our own personal vehicles.
I notice that in your article you write the phrase:
drive to the office. What makes you think that everyone works in an office. Some people just go to work every day.
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