Are you really making money at your job? Most people would answer, “Of course, I’m earning money. I bring home a paycheck and deposit that money into the bank every week.” What many people don’t realize is that IT COSTS MONEY TO WORK. After your work expenses are deducted, how much is left? What is your true income?
Many years ago, I was working and making a decent income. When I got pregnant with our first child, I knew that I really wanted to stay home with our baby. We knew our finances would be extremely tight without my income, but my husband and I were willing to do whatever we needed to do to make it work. When I quit my full-time job, it was tight but not nearly as much as I expected. Why? A lot of my income was spent on job-related expenses. When I was no longer working, my list of expenditures shrunk greatly. I was able to teach private music lessons to make just enough extra money for us to get by comfortably.
This is not a stay-at-home mom versus working mom debate! I simply want to help you realize how much you are actually making at your job. Is the cost of working eating up the majority of your income? I want you to work smarter, not harder!!
Around the time that I decided to quit my job, I just happened to see a TV show on one of the major networks about how much it really costs to work. (I don’t remember which show it was, but it was one of the news magazine shows like Dateline or 60 Minutes.) The show found a lady who thought it would be impossible to make ends meet without her income. They (the show) figured out how much she was spending just to be able to work and helped her crunch the numbers. They discovered that, in the end, she wasn’t making anything. She was actually losing $5,000 per year!
The show helped her realize that it took all of her income (and $5,000 of her husband’s income) just for her to hold a job. The lady sat down and cried when she realized that. They helped her develop a plan to quit her job and do in-home childcare to make enough money to meet their needs.
Do the math! What does it cost you to work?
The expenses everyone knows about
OK, so let’s get to the heart of the matter. How much is it costing you to work? What is your TRUE net income?
Your gross income is the amount paid to you by your employer before any deductions are taken out. Your employer deducts federal, state, and local taxes, retirement, union dues, etc. before paying you. The amount of your paycheck is your net income.
Start with your net income. First, we’ll concentrate on the work-related expenses that everyone is familiar with. Subtract these expenses from your paycheck amount:
- Childcare costs
- Professional fees (professional certificate, professional training, professional organization membership fees)
- Lunch costs (eating out, the daily coffee)
- Parking fees, tolls
- Commute costs (riding the subway, Uber, taxi, bus)
- If you use a personal car: Gasoline costs
- If you must have a car to be able to work: Read and consider the next few paragraphs.
Let’s stop for a minute and consider the cost of owning a car. If you must have a car to commute to work, then you should consider at least a portion of your car payment and insurance premiums as a work-related expense.
If your commute is long, you’ll likely need a dependable, newer car with full coverage insurance. That means paying a car payment, insurance premiums, and more upkeep costs. (Think about it…you’ll need oil changes more often with a long commute versus a short one).
If you work a mile or two from home or AT home, you could probably get by with an older, already-paid-for car (and possibly only liability coverage). I’ve seen people commute an hour just to make $2.00 more per hour. Sadly, the cost of the commute likely eats up the extra money they’ve made (and then some).
Think about this for a minute: Is your current car more than you really need? Could you get by with a less expensive car?
The expenses no one thinks about
Now, I want you to think about some of the costs of working that we don’t often consider. Try to determine how much you spend on these categories:
- Professional clothes/uniform/scrubs I bought professional-looking, dressy clothing when I was a schoolteacher. When I stopped teaching and worked only part-time, I didn’t need to buy as many dressy clothes. I wore casual around-the-house clothes most of the time. My clothing expenses plummeted.
- Dry-Cleaning/Laundry expenses
- Shoes This is another category where I spent much less after I stopped teaching. I didn’t need as many shoes and the ones I had lasted longer. Instead of buying new shoes 2-3 times a year, I could wear one pair for 2 years!
- Makeup Yes, really! When I quit teaching, I was at home during the day and didn’t need to wear makeup every day.
- Workplace expenses Co-worker gifts. Some people are what I like to call work friends. You’re not close to them personally, but you see them at work daily and you feel obligated to buy them a gift for their baby shower, wedding, or retirement. At my workplace, each co-worker put $10-20 per month in a fund for buying gifts for co-workers. If your workplace doesn’t do something like this, you are probably buying all such gifts yourself.
- Food expenses Think hard about this because this category can be a biggie! Do you eat out after work because you’re too tired to cook? Do you buy pricey, convenience foods to save time after a busy workday? When I went from full-time to part-time work, I had more time to shop frugally and more time to cook. I spent less eating out and less at the grocery because I didn’t need to buy convenience foods. (Example: Instead of buying a 1.5/lb bag of frozen chicken strips for $6.19, I bought fresh chicken for $1.99/lb. and breaded it myself. Cheaper and better!)
- Service expenses Working moms often pay for services that they are too busy to do themselves. Do you hire someone to clean your home? Iron your clothes? Mow your yard? Clean/detail your vehicle?
- Guilt purchases This expense was talked about on the TV show that I mentioned above. They said that some parents spend extra money out of guilt. One lady said that she frequently bought her kids toys because she felt guilty that she worked so much.
- Miscellaneous Everyone’s situation is different, so you may have other expenses that aren’t listed above.
How much are you actually earning?
After you subtract all the expenses listed above, you’ll know how much you are actually earning. Are you making enough to justify keeping the job? Is it time to look for a job with better pay? Could you make enough money to meet your family’s need by working somewhere else? Could you earn enough money by babysitting, teaching music lessons, tutoring, working an online job, or a work-from-home job?
I’m not advocating that the whole world stops working because it costs so much! But I do want you to have a job that you are actually making money from instead of a job that costs YOU money to work. I’ve talked to moms who’ve said they wished they could stay at home like I did. The sad part is that they didn’t realize that they probably could. As I said above, I want you to work smarter, not harder! Take the time to evaluate your own situation and do what is best for you and your family.
I feel like I need to give a little disclaimer here: This is not professional advice. I’m not a financial planner. I’m simply writing based on my own experiences to give you something to consider. There are other benefits from working (such as retirement and insurance benefits). Those benefits alone may warrant keeping a job even if your weekly income (after all the expenses listed above) is low. Do not make a quick decision. Take the time to research your situation thoroughly.
I wrote this post because I want other moms to realize what I realized many years ago. It does cost money to work. We moms need to be smart about our job choices. Work smarter, not harder!
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