How Much Is Work Costing You?

How Much Is Work Costing You?

How Much Is Work Costing You?

Working is an expensive habit!

Now that I am a full time loafer (uh, I mean self-employed & working part time), I am coming to realize just how expensive working is. 

When I was the typical manager working long hours, time was at a premium. The job left me only part of the evening and weekends to address the other aspects of life that needed tending to, including trying to fit in leisure when possible (if I had enough energy not to be a TV zombie). 

It's no surprise that when time is at a premium, expenses go up. And, along with the costs of convenience, the material costs of maintaining a professional look also cannot be ignored. 

The magnitude of this convenience cost and the material cost of "looking the part" only really sunk in once I had a chance to step back and take a good look at the financial impact of "being a professional." 

Here are the expenses I have avoided since leaving my corporate life (annualized):

  • Second car (lease, insurance, gas): $8,000
  • Parking and transit: $200 - lucky for me I often walked/biked
  • Daily fancy coffee/latte habit: 12 per week X $3.70 = $2,131
  • Breakfast on the go: 2 per week X $4.00 = $384
  • Lunches out: 2 per week X $20.00 = $1,152
  • Groceries (20% premium for convenience): $1,920
  • Dry cleaning: $20 per week = $960
  • Office attire (suits & accessories $900/yr, shoes $300/yr, hosiery $864/yr) = $2,064
  • Beauty salon (hair and nails): $154 every 6 weeks and $40 every 3 weeks = $2,028
  • Second gym membership in order to fit exercise it into my day: $390

Total $19,229!

If I convert the above to pre-tax dollars at 35%, the total is nearly $26,000!

I assure you the above are conservative estimates and, before anyone starts poking holes in the numbers, saying I have replaced these expenses with substitutes or that I still incur some of these costs, I am showing you the difference between what I used to spend when working in a corporate setting and what I do now in each of these categories.

Despite knowing there were expenses I would no longer incur, I had no idea it would be that much! This discovery came as a relief on two fronts: it validated my FI assumptions making it possible for me not to work if I don't want to and it quelled my concerns about the potential for higher spending as a replacement for working.Yes, I was afraid that not working would actually cost me more money. 

The costs of professional employment are not something I learned in business school. If anything, the expenses associated with the professional lifestyle seemed to be considered an expense that was just a given: you make good money, so you can afford these extra expenses. How else would you be able to show off your status and prove your competence?

Well, to me, the math just doesn't add up anymore. 

 

What do you have to shell out for the privilege of working in your chosen profession?

OR

What are you saving now that you are your own boss or FI?