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How Much Is Your Job Costing You?

{ 21 comments }

The following article is from Melanie, our staff writer. Melanie is in the beginning phase of her journey to Financial Freedom and she’ll bring a refreshing point of view for us. 

Earlier this week, I read an article that really gave me a lot to think about. The piece, Your Lifestyle Has Already Been Designed  hit on so many points that I’ve been feeling, but could never quite put my finger on. The post discusses a long-term traveler’s return to the working world, in the typical 40-hour workweek. He starts to notice that his spending increases, quite significantly, and that he was actually happier and had more money while traveling the world. The general thesis of the post is that the 40-hour workweek is designed with the economy in mind. The author states:

“We’ve been led into a culture that has been engineered to leave us tired, hungry for indulgence, willing to pay a lot for convenience and entertainment, and most importantly, vaguely dissatisfied with our lives so that we continue wanting things we don’t have. We buy so much because it always seems like something is still missing.”

I read this quote again and again. I didn’t want to admit that it has become true in my own life. Having a job is certainly something to be grateful for, but even so, the article got me thinking: How much is your job costing you?

job costing you

Your Actual Wage

It’s not enough to look at your gross wage, or at your salary package that your employer offers you. It’s important to look at your net income and see what you are really bringing home after all taxes and deductions are taken out.

The first time I did this, I got really depressed. I already work in the nonprofit sector, so I am not well endowed with a high salary. My income seemed fairly good, given the low cost of living. However, when I found out my actual wage after all deductions my hourly wage was several dollars less!

For budgeting purposes, you need to base numbers on what is actually coming in, so knowing your actual salary is helpful.

Physical Costs

What are the physical costs of working at your job? Do you sit at a desk all day, which has been proven to be unhealthy and unnatural? Do you do physical labor everyday and come home exhausted? Is your safety at risk when performing your job?

I bike to work as my mode of transportation. Although I love biking, and it saves me some money, I find myself exhausted when I get to work and when I come home. The hour a day of biking, and 8-hours of sitting can really get to me. Although I intended to save money on transportation by biking, I’ve seen a spike in my food spending because I’m hungrier after my bike commute. Think about the physical costs of working at your job. How much is your job taking a toll on your physical health?

Mental Costs

Each job has a mental cost as well. As an employee, you are trading time for money. This means if you work hard or slack off, you will still get paid the same. If you run out of work to do, you must complete the full 8-hour day. As noted in the article, the average worker completes only 3 hours of real work per day. While it might seem cool at first to get paid to “look busy” or “do nothing but sit at a desk,” it can take a mental toll on you too.

Perhaps you have a hostile workplace, catty co-workers, or a micromanaging boss. There are a number of ways that your job can have a cost on your mental health, from increasing your anxiety, to lowering your self-esteem, or making you utterly bored and stifled.

Financial Costs

There are many additional financial costs to working 40 hours a week; factors we often overlook and deem completely normal. The cost of gas, your vehicle, bus pass, etc, should all be considered if you need to rely on them to get to work.

Are you required to have a special wardrobe for work? That is extra money too. You essentially have your “day clothes” and “work clothes.”

Are you so busy working that you are constantly going out to eat? Attending happy hours or expensive vacations simply to avoid the fact that you have no life outside of work? Are you paying an exorbitant amount for childcare because you have to work? Think about all the ways that your job is directly and indirectly costing you money.

What Are the Alternatives?

I am not trying to paint a terrible picture of all work places and I understand that some people can handle the 40-hour workweek (and dare I say like it) better than others. However, the article really got me thinking. Traditional jobs cost you money — a lot more money than you’d think if you don’t consider the factors above.

I think this is the reason I find self-employment and passive income attractive. If you are going to spend 8 hours a day doing something, don’t you want to have some ownership of what that is? Doesn’t making money in your sleep sound lovely? I am new to the freelance game, and I know it is harder than being an employee. It takes more time and effort — but I like the fact that you can see the results of those efforts, good or bad, right in front of you. I am not savvy on how to make passive income, but I know I could learn a lot from Joe.

As we spend each day living our lives, it’s important to think of the big picture and how each aspect affects the other. If one aspect is affecting another negatively, it might be time to try something new.

Tell me — how much is your job costing you? Do you like it, or are you interested in self-employment and passive income? 

Photo Credit: Flickr Kugel

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{ 21 comments… add one }
  • kammi July 9, 2014, 7:32 am

    My “job” actually saves me money because it’s about 20 minutes from where I live and the area itself doesn’t have many food places (or a cafeteria), so I’m forced to prepare a meal. I take public transportation so I save a tonne of money. I don’t eat out (Mint guilts me too much!). I don’t do the “Happy Hour meet-up” after work that a lot of people want to do with typical jobs…no way; that stuff drains your budget. I think if you have a long term goal and the self discipline, it’s a lot easier. I work a LOT…at least 60 hours a week, but I’m very efficient (and I also get up at 5 to go to the gym every morning). Plus, I look forward to Jeopardy and cooking in the evening, and I also am taking online classes at home (which means I have to be home ideally by a certain time to put in the time into the course and get enough rest). It’s up to the person; we don’t have to give into consumer culture or follow everyone ‘in the office’ who is going out for lunch/ splurging/ in debt/ on payments. I find it liberating to be myself and have goals.

    • Melanie July 9, 2014, 7:42 am

      That’s awesome! You are strong and persistent to be able to do the 9-5 and not give in to some things that seem commonplace like going out, happy hours, etc. It’s a total culture, and you are going against the grain. Nice. 🙂

  • Kat July 9, 2014, 8:00 am

    Even though I am probably much older than you, I think about these things, too, Melanie. Part of why I think that way probably comes from having read “Your Money or Your Life,” by Joe Dominguez and Vicki Robin, when I was in my late twenties. I wish I had read that sooner in life. I kick myself sometimes for not having done the wise thing and go straight to college and get a good money-making degree and put it to work early. If I had done that, I quite possibly could be drawing a pension already in my mid-forties and doing something I really love now to supplement that income. But, if I had done that, I wouldn’t have had so many rich experiences. I was recently reminded, as I lamented my current state of affairs, of the fact that I’ve traveled through eight countries, most of the United States, spent weeks backpacking in wilderness areas and canoeing down beautiful rivers, lived among the redwoods and gorgeous north coast beaches, dated people from six different nations – thus learning so much more about their cultures than I would have been able to by picking up a book, and in general did whatever I felt like doing for the first fifteen years of my adult life. That is what people work all their lives to retire to do, right?

    I, like you, now work at a non-profit organization, and while I love the mission and feel good about contributing to improving people’s lives, I miss making enough to improve my own. Even though I had begun earning enough to improve my life in my low to mid-thirties, with three layoffs during that decade – (dot.com bubble popped, automotive industry tanked – ah, the oughts decade!) – I have had a hard time picking up the pieces and beginning again. At this salary level, I will never achieve financial independence, or even financial ease of mind until I find ways to earn money on the side and start to draw some passive income.

    Anyway, I highly recommend that book. It encourages the reader to calculate all his or her expenses AND time in preparing for work, getting to work, getting home, de-stressing, etc., and to subtract all that from the salary earned on the job before getting into their suggestions for building up a passive income stream. You may prefer Joe’s way, or any number of other ways to generate that cash flow, but the book is sure to get you charged up to start making positive changes in your life and thinking.

    • Melanie July 9, 2014, 7:28 pm

      I’ve read that book! It was so insightful and really made me think of things in different ways. I definitely think it is a PF must. Sounds like you have been on quite the ride. It’s interesting that people that work in nonprofits are often helping others to get by and achieve a better life, but we can barely take care of ourselves!

      I know things must seem frustrating now, but have hope! And continue to work hard and things will happen. My partner and I have 100k in student loans between us — oftentimes it feels like it’s all hopeless, but every single day I work harder to make it better, and realize that hope is what keeps us going. And seeing the debt balance go down 🙂 Thanks for your thoughtful comment.

  • Michelle July 9, 2014, 8:19 am

    I used to have a day job, and it was costing me a lot of money. I found myself spending a lot more because I using material items as my way of coping with how much I disliked my job.

    Now, we are both self-employed and we love it. Our spending is down and we couldn’t be happier.

    • Melanie July 9, 2014, 7:29 pm

      It’s so interesting how that happens! Glad you got out and are spending less and having fun.

  • Kenny July 9, 2014, 8:24 am

    Another thing that I have been evaluating since 1992 has been working in office vs working at home. I had the luxury to do that working for a Fortune 100 company, and I still have it with my Fortune 15 company.

    Personal Costs that stem in the $200 to $1000 a month are saved depending on the day/month/year. I have computed almost EVERYTHING down to $1 that I have been able make the company pay or save. My cars as a result have VERY low mileage on it, and I compute those elements also.

    In sum total, the Job Costs are huge, which is why a person making $50K per year does not end up with $500K in 10 years or 20 years, and sometimes even 30 years. Melanie brings up lots of other things that are extremely valid also.

    Kenny

    • Melanie July 9, 2014, 7:34 pm

      Wow, you have it down to a science. Nice! The job costs and other costs are very real.

  • retirebyforty July 9, 2014, 9:24 am

    I used to spend much more freely when I had a job. I’m pretty thrifty, but I still find myself spending on convenient items and just stuff that I don’t need. That’s the problem when you have too much money and too little time.
    The physical and mental cost are the big ones for me. The work was taking a bigger toll on me than I’d like. It’s not worth it to be ill over a job especially if you don’t need to. Self employment is much better for me.

    • Melanie July 9, 2014, 7:36 pm

      So happy for you, Joe! Sounds like your last job was literally killing you.

  • Laura July 9, 2014, 9:59 am

    Interesting topic. Maybe this depends a lot on personality and your stage of life. I actually spend more when I’m not working and I accomplish less (like exercise) without a schedule that includes work. Also, I found that traveling/living in other countries got old and I craved some stability.

    Now that I have two small kids, I enjoy working part-time (mingling with adults, being valued for my skill set, having some peace and quiet at my desk, etc.). Definitely you need balance. I traded in my full time gig for part time no bennies and short commute after I calculated that after costs (daycare, commute etc) my FT job was only netting 10K a year. So I started looking for ways to bring home more than that with less output on my part and more time to devote to my family.

    • Melanie July 9, 2014, 7:43 pm

      Definitely depends on the person. That is great you were able to calculate your net salary, realize it wasn’t worth it, and then downgrade to something that works for you.

  • EL July 9, 2014, 10:57 am

    Great topic to write about Melanie. When one is unhappy they use spending as a coping mechanism. I’ve been through it and I’ve seen it happen to others. Some people are stuck in a job due to circumstances like high debt and or high cost of living. It takes great effort with a bit of luck to break free to leave a job and become self-employed. The number one reason people do not quit more often is doubt within them to be able to make enough in self-employment compared to the job.

    • Melanie July 9, 2014, 7:47 pm

      I sometimes think the risk is lower for me, because my income is already low as a nonprofit worker. 🙂 I was able to pass the 1k mark a few months ago in side hustling, which was so very rewarding.

  • Dave July 9, 2014, 4:36 pm

    Melanie, the article looks like a cost-benefit analysis, with only one side of the ledger completed! I realize the article is about “costs.” Your last section (Alternatives), however, mentions that some people are able to “handle” a workweek, and you want to have “ownership” of what you do. This seems like a grim outlook towards work. If you’re employed by a non-profit, then hopefully they are engaging in some civic or societal good works that you feel positively about. I work for my state welfare agency, and my wife is a teacher. My work is hard, and the uncompensated extra time is a drag, but I think what I do is very important. I feel like I’m making a big contribution by getting in there and doing my best to advocate for kids and families every day.

    I do ask my wife sometimes if there’s something else we need to be doing, before age or wear-and-tear puts some activity or travel destination out of our reach. We really don’t have any burning desires that go unfulfilled. Our salaries meet our needs, and we’ve been able to set money aside, too. DRIPs are a fantastic way to begin creating that passive-income portfolio with very little commitment of time and effort on your part. For instance, we purchased $100/month of McDonald’s stock by automatic deduction for just three years (1996-99) and just reinvested the dividends since. That $3600 investment is now worth almost $17,000! (Imagine what we could have had if we had kept going!) My point is, setting it up as, “A job OR passive income,” is a false choice. We have jobs and are growing passive income, too.

    • Melanie July 9, 2014, 7:56 pm

      Hey Dave! Yeah, I wasn’t trying to make it either/or, just posing a question about the costs of your job. I think it’s something people don’t consider.

      As someone who has committed the past 8 years of my life to nonprofit work, I am well aware that the rewards are vast and go far beyond the monetary compensation. I have letters and cards from families and kids in my office to remind me of the work I have done, and will continue to do. I guess for me, with my high debt load, I am ready to try something different for a while. I wonder if I could make a better difference making more money and being a donor/volunteer instead of a worker. Does that make sense? So glad that you have found rewarding work, with a salary that meets your needs. Also, thanks for the tip on passive income!

  • Dave July 9, 2014, 10:12 pm

    Melanie, if you see an attractive, “doable” way to make more money, then go for it! Successive generations are expected to have more jobs; I’ve only worked for four employers since graduation in 1992. It’s kind of ironic, but the reason my wife and I stopped contributing to our DRIPs (we had several, while we were DINKs; that is, Dual Income No Kids) in 1999 was that I switched jobs. The new job offered (I thought) more money, but less of it was guaranteed. Ultimately, my overall pay stayed about the same, but we never regained the habit of contributing to the DRIPs. We did contribute to Roth IRAs, but that money feels less accessible to me.

    Finally, this month, I went on Computershare and opened up a DRIP account for Verizon. Verizon is very light on fees: no setup fee, no cash investment fee, no automatic investment fee. Cool! (No automatic investment fee means you can auto-contribute the minimum $50/month without losing a hefty percentage of your investment off the top.) You could even open a Walmart DRIP for as little as $25/month, with a $1 automatic investment fee. Seriously, just $25 to become a part-owner of a $250B behemoth with a 2.5% dividend yield and PE below 16! Their trucking initiatives give them a competitive advantage, and their sheer scale is making “green” more mainstream, with their efforts to reduce packaging waste and use more solar.

    One other benefit to DRIPs is ZERO CAPITAL GAINS TAX on sale, provided you meet taxable income limits. That was made permanent in the 2013 tax code.

  • Kate July 9, 2014, 10:45 pm

    I’m very thankful that I’ve been working online for almost 4 years now, where I don’t need to travel to go to work. 🙂 Before, when I worked in a company, my main problem are my work attire and my commute expenses.

  • Blair July 10, 2014, 6:24 am

    I get paid $8 an hour for a part-time job. I get a lot of customer interaction, and it’s not that hard. The organization gives us shirts to wear, and I already had the pants. I bring my lunch, and the commute is 1 mile each way. There’s always some cost to working but mine are minimal.

  • Zee @ Work To Not Work July 10, 2014, 11:45 pm

    My job has some costs to it such as my bus pass, but some days I walk to work and I can save that money. I also look at my walks as being good for my health. When you were talking about biking to work I was thinking, but this is good for your health so I think of that as a positive. Yes you spend more on food but you don’t get so out of shape that your health suffers, also you don’t have to spend money on a gym.

    The one good thing about my job is that the lunch options nearby are SO expensive. I’m talking about $9 crappy sandwiches or $14 lunches that are actually decent. Because the price of lunch nearby was so expensive I started bringing my own lunch to work so it’s been saving me money. Also my work provides snacks so I only have to bring the main part and I can get the chips and soda free.

    I realize I’m pretty lucky where I am at the moment but I’ve also spent time at jobs where I had huge expenses (think 80 mile round trip commute everyday) I’m glad I have a job that’s close to where I live. I think that was the biggest thing for me.

  • Shane July 15, 2014, 8:27 am

    Nice post Melanie. I enjoyed how factored in all the things that plays into our working lives. This clearly shows how much of ourselves and time revolves around our careers. Hopefully this post will encourage more people to pursue a career that is filled with passion and that one has more sense of control over.

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