Financial Benefits of Working From Home

Savings by Working from Home

For those that are familiar with living below their means and being frugal, one of the areas that people often recommend as an opportunity to save money is to live in close proximity to your employer.

By living close to work, you will spend less on gas and maintenance of your vehicle–and possibly even reduce the need for an extra vehicle completely. There are additional benefits as well and one of the most important may be more time to spend with family and friends, or pursuing hobbies (like starting a blog).

Until earlier this year, I was the antithesis of this frugality as I had a 100+ mile round-trip commute to work.

On average I spent a minimum of 2-3 hours just commuting every day.

Every. Day.

Fortunately I have a fairly fuel-efficient vehicle and honestly found the drive time to be mostly enjoyable, as it allowed me to either be lost in my thoughts or listen to podcasts. However, it still took a toll both personally and financially.

Now that I have changed employers and am fortunate to work from home on a full-time basis, I thought it would be interesting to take a look and see just how much that change has meant to our family finances.

Fueling the FIRE, or Maybe Not

With a commute in excess of 100 miles per day, even with a fuel-efficient vehicle, it should come as no surprise that fuel costs were the most expensive part of commuting.

Looking back at my spreadsheets (most of which go back 15+ years) I can see that I was averaging approximately $3,200 annually in fuel costs.

To be fair, I know that not all of that was fuel nor was all of the fuel consumed only in commuting to work.

It was rather common that I would run into the gas station to grab a Diet Coke as well, and an occasional doughnut was not out of the question if I ran out of the house without having breakfast.

Now that I work from home, I have spent $27.50 for gas…in 4.5 months!

On an annual basis, this equates to about $75 for fuel. Let’s round up to $100.

I am now saving approximately $3,100 annually in fuel costs alone.

To put that into terms that we can all relate to as dividend growth investors, if I invest that savings (which I am) into dividend stocks at the average yield of my current portfolio, I would add $85.56 in forward dividend income.

It is much nicer to have that money fueling our pursuit of FIRE, as opposed to just being burned up commuting.

Pay the Toll

Driving 100+ miles to and from work resulted in a lot of interstate driving. For me, that also meant paying tolls for that privilege of using said interstate.

Three separate tolls each way.

Again, referencing my historical expense tracking, these tolls cost me an average of $65.00 per month or $780 annually.

Given that my commute is now 0.0 miles, and as demonstrated above my car barely leaves the driveway, this cost has been entirely eliminated.

Investing this money into my DGI portfolio would equate to an additional $21.53 in forward dividend income.

Maintaining the Machine

The last category that I will evaluate here is auto maintenance–and that primarily means oil changes. While there are certainly costs such as new tires, brakes, etc. I have not accounted for that here so this is quite conservative.

The typical week would log approximately 600 miles on the odometer.

If we estimate 50 working weeks, as even though I had four weeks of vacation I typically would take two and carry-over two, that comes out to 30,000 miles annually.

Assuming we are diligent and get our oil changed every 5,000 miles, there would be 6 oil changes per year. In our area, the average cost of an oil change with synthetic oil is about $50 give or take a few.

The $300 for oil changes can now produce $8.28 in forward dividend income.

As mentioned, I believe this is a conservative number for auto maintenance because I have not included additional “wear and tear” costs such as tires, brakes, and fluids. However, to offset that conservative approach, I also typically did maintenance myself so my total costs were lower than if I took my car to a mechanic.

Hidden Costs

The costs above are all directly related to the cost of commuting to work, but there are quite a few additional costs that could easily be included here that have been reduced or eliminated now that I work from home.

Work clothes.

Lunch out with colleagues.

Drinks after work.

Speeding tickets.

Having the flexibility to work from home means that I can wear whatever I want. And despite what some might think, I do still actually get dressed every day (eventually).

My wife and I will occasionally meet for lunch, but otherwise lunch is now made in my kitchen. There is no excuse not to have breakfast now, so those doughnuts at the gas station are a thing of the past as well. The lack of driving has significantly reduced the odds of getting a speeding ticket as well.


This has not been an exhaustive look at the financial benefits of working from home, but clearly the lack of a commute has reduced or eliminated multiple key expenses.

Based on my habits from these first few months of working from home, we could consider eliminating one of our vehicles. However, I don’t think we will pursue that any time soon as our cars are all paid for and I like the flexibility that having two cars provides. I am comfortable with the trade-off to have that luxury.

Even if the salary between my old employer and new employer were equivalent, working from home would be saving me a minimum of $4,180 each and every year. As noted above, it is not unrealistic to see that number be closer to $5,000-6,000 when you account for expenses such as clothes and eating out.

Looking at this with my DGI lens, working from home is adding at least $115 in forward dividend income by investing that money instead of spending it on commuting to work.

Have you ever worked from home? What type of benefits did you see?

25 thoughts on “Financial Benefits of Working From Home”

  1. Those are some awesome numbers DivvyDad! Amazing to see the impact such a change has on your life / money and physical health!

    With my job its not possible to work from home, I have done it in the past with my own company but I never really felt good doing it. I like / need (?) the interaction with other people.

    1. Yeah, I was a little surprised when I actually sat down and calculated just how much was being saved. It is essentially like an additional raise just by eliminating the commute.

      I am very fortunate to have a job where I can be remote, which in part has been necessitated by the fact that I work for global companies and a lot of the teams I work with are in Europe or Asia. It can be tough not to have the daily interaction with colleagues, however my dog keeps me company until my wife and kids get home haha. =)

  2. I don’t miss my commuting days DD. Like you, for so many years I would spend an hour and a half to 2 and half hours commuting per day in metropolitan traffic. Not only is it a waste of money, but a waste of time and personal energy. Tom

    1. Absolutely Tom, it is amazing how much the commute wears you down. It feels so liberating to know I can sleep longer now and still be working earlier than when I was commuting–plus at the end of the day, there is no long drive to get home.

      During the winter months, I had some nightmare commutes during snow storms. The worst time it took me longer to get home than I spent working the entire day!

  3. The advantages are well detailed here, but are there also disadvantages? Usually management jobs, particularly senior ones, pay more than individual contributor jobs but they also might not fit a remote work situation. Does working from home impose a glass ceiling of sorts? I’m early retired and side gig mostly from home as a consultant, but do have to travel frequently. I never really worked remotely. I’m just curious about the model since my career was a typical old fashioned 9 to 5.

    1. Hi Steveark, thanks for stopping by and for your question.

      I think there are disadvantages, but in part it depends on the company that you work for and your own personality as well (e.g. the lack of constant interaction with colleagues in a face-to-face manner). I work in IT management, and fortunately working from home has not caused any issues. While I was with my prior employer, and expected to be in the office most days, I had direct reports that worked in different states and different countries–so remote management was natural. At that job my boss was also in a different location.

      To manage that disadvantage does require some effort, however with Skype calls or WebEx with the camera you can minimize the impact of not being physically together. Also, I think properly setting expectations with your team (as well as upwards) goes a long way with a disperse environment.

      In terms of the glass ceiling, I think there is definitely potential for that to occur and again it depends on the company. At my prior employer, I was actually laid off because they wanted to consolidate the IT management into one geographic location (despite having just gone through a globalization restructuring the year prior). At my current employer, they have a long history of being heavily remote-based and it is an entirely different culture.

      Congrats on your early retirement, I am planning to join you in the next ~10 years!

  4. Damn Millennial

    I was just discussing with a coworker the cost of commuting today! It is so brutal financially. However, it is even more brutal mentally.

    The stress of sitting in traffic an hour each way is just NOT WORTH IT! I am thankful to be close to work it really makes a big difference.

    1. You’re right, the mental / stress component is very real although much more difficult to measure. I’ve definitely noticed an improvement on that front as well, and I would say that’s even more valuable than the financial aspect.

  5. Wow, that is an insane savings! I’ve been fortunate to have a round trip commute of 14 miles/20 minutes. Between fuel, maintenance, insurance, and depreciation, I’m spending $170 a month on transportation.

    1. Thanks Kody, appreciate you stopping by and sharing. That’s not a bad commute at all, and I like to see that you’re accounting for depreciation as part of your cost.

  6. DivvyD –

    HECK YAH! That’s some serious savings, as long as your income doesn’t change/gets better – then it’s the right fricken move. You are saving not only money but… TIME.


    1. Lanny, I really could not have been more fortunate as the new job came with a salary increase and lowered expenses—so a double whammy on the positive side!

      The time aspect is huge. I never have to worry about being home for family dinner in time, I can exercise in the morning as I no longer have to leave the house by 5am, my wife and I can have lunch together every day as she works about a mile from home. I am very grateful for what this change has provided.

  7. I never worked from home, DivvyDad. I’d probably find it a bit strange, but perhaps I’d get used to it. I’d probably miss the interaction with co-workers the most.
    When you mentioned that you drove that many fewer miles, the thought of lower insurance costs came to mind. I think Kody touched on it in the comments. You could call up the insurance company and have them take that into account as well.
    It does sound like you got quite the life upgrade with the new position – no commuting time, fewer expenses, more time with the family, more pay!

    1. Hey ED, I will say that working remotely is not for everyone but fortunately I have taken to it quite well. It really has been a great situation, and one that I am grateful for every morning as I wake up.

      I have been on the phone with our insurance a few times recently but that is one thing I haven’t asked them about–adding it to the to-do list for Monday. Thank you and Kody for bringing up the topic of insurance!

  8. DivvyDad,

    Love this article a lot. Sure, there are a lot of hidden costs in commuting and you highlighted them. Sure, a fuel efficient car is great. But what’s the easiest way to save on gas? Not to drive the car at all! And you highlighted the largest savings….no maintenance or wear and tear on your car and body. Sitting in cars for long periods of time, even if you are cruising on a highway, can be just brutal on your body. Last comment on the savings too. You also highlighted an important point that you no longer are picking up snacks or eating out with co-workers, another way to save money

    Sure there are some downsides. There is a chance you may miss the social aspect of it all. But it seems like you are still having that based on other responses to comments. This sounds like a win-win situation, so congrats my friend!


    1. Thanks Bert, and you bring up a topic that I didn’t touch on and that is related to health. I’ve had a lot of issues with my neck and back, which I won’t say were caused by the long commute but I know that it certainly didn’t help. Those issues brought about increased medical costs. Now that I am working from home with 2-3+ hours back into my time bank, I am exercising more regularly and reducing the neck/back pain.

      It truly has been a win-win situation for me, and it is something I hope more people have an opportunity to try at some point in their life.

      One thing that I didn’t highlight but will mention here, working from home often results in working longer hours. People have a perception that it is all fun and games, goofing off, etc. but there is also a perception that since I work from home, I should always be available. It is a definite challenge and one that I have approached as if I was working in the office and set consistent start / end times of my day to do my best to maintain that balance.

  9. I work from home and own a car. And while I’ve noticed my expenses have gone up since I bought a car, they seem to be way lower than what everyone else pays. Such a huge advantage when it comes to saving

  10. Hey, great article!

    This is one of my biggest personal peeves at the moment. I commute 2-3 hours a day. I save costs by using public transport as much as possible. But to get from my home to the train station I have to commute an extra 8km (about 5 miles) – this I do very cost-and-time-effeciently by riding a motorcycle.

    But the 2-3 hours a day of TIME wasted just drains my spirits. Let alone the money wasted on train tickets, fuel, work clothes, etc.

    The (not so) funny thing is, I CAN work from home 90% of the time, but my employer is still very old-school and wants bums on seats! I do work remotely about one day a week, which helps tremendously (both for my finances and my sanity), but it’s still not ideal.

    I’m working on a plan though. This will only be a medium-term issue, I’m NOT going to settle for this long-term… 😉

    Cheers mate!

    1. Thanks for stopping by Hamster, and becoming the first visitor from South Africa!

      It really can be a drain, although one silver lining with taking the train is that you can be productive in using the time to read, write blog posts, or even sleep. But the cost and time drains can take a toll on you, so I hope you’re able to shift that soon.

      Some employers definitely take that more old-school approach and expect to see people in the office for 8 hours a day. The unfortunate thing is that they often view productivity simply by someone being present, and not the quality of work they are actually producing.

      What kind of motorcycle do you have? I’ve got an ’02 Harley Softail myself, and my wife recently purchased a little 50cc scooter that gets about 100MPG!

  11. Working from home isn’t an option for me, but it’s absolutely my goal once I finally retire from the military! And even before then, Mrs. CD and I have already discussed living as close to work as humanly possible for the rest of my career to avoid the costs (and time lost) to another long commute.

    I’m often amazed at just how much stuff like commuting to work actually costs once we really dig in and look at the numbers, especially since getting to and from work was something I had never put much thought into beyond how much gas I had to buy. Thanks for sharing!

    1. First and foremost, thank you for your service CD!

      Working from home is something that many don’t have the luxury of doing, and for that I am extremely grateful with this new opportunity. There are ways to mitigate that to some degree and living close to work is ideal as it opens up even more possibilities (walking to work, riding a bicycle, etc.).

      You’re right that many of us don’t sit down and calculate how much that commute really costs, and admittedly I never really did for the many years that I had the long commute. I knew it was costing me a pretty penny, but due to other choices that took precedence it was something I just lived with.

      Appreciate you stopping by and sharing your feedback!

      1. Thanks, it’s my pleasure! I’ve definitely got my fingers crossed that we end up somewhere that’s much more bike-friendly than where we live now, according to Redfin our neighborhood scored 7 out of 100(!) for biking. Someday!

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