Have you ever considered working could be costing you money. Even if you have a very small commute or better still walk to work, there are still many associated costs. In certain scenarios your job might cost you more in financial terms than it’s actually worth. That healthy salary can soon get whittled away in hidden bills. Sit down and do the maths yourself. Here are 5 things you might like to consider:
Commuting: The cost of commuting by train has grown year on year and now constitutes a major sacrifice from any salary, frequently running in to several thousand pounds. The alternative, which is usually driving, even if over a short distance has a cost. Cars need fuel, they need regular servicing, taxing and MOTs. For the average motorist before they take the car off the driveway it will still cost them around £30 per week to leave it sitting there, and that’s before depreciation. Even worse in two car families only one of the cars really has a use outside of commuting.
If you are driving then fuel will be a big consideration and I want to spend a minute or two going through the costs of fuel and what it means for you in financial terms because I think you’re going to be astonished by the costs of this. Firstly, it is important to remember that before you even get your salary in your hand you will already have paid National Insurance at 12% and income tax at 20% and that’s before you pay VAT at 20% and 53p per litre on fuel duty. I guarantee you will be amazed at how this works. Let’s say I have already earned up to my tax threshold, and let’s face it most employees do. I then earn £100 each week above the threshold. By the time the Government has taken National Insurance at 12% and Income tax at 20% out, I’m now left with £68. Yes you read that correctly. £68.
Let’s say I need to get to work this week and I live locally so I buy £30 of fuel at £1.50 per litre. That works out at 20 litres. The Government not only takes 53p out of each of those 20 litres of fuel that I buy, it also charges VAT on the fuel and on the fuel duty at 20%. That is a tax on a tax. So out of my £30 of fuel I pay £6 in VAT and also £10.60 in fuel duty.
Let’s add it all up again then. Out of my £100 I earned, the Government took £32 before I got the money and then a further £16.60 after I got it. That’s a total of £48.60 in taxes. Not forgetting the actual cost of the fuel which was £13.40 after tax was removed. So from my £100 I am left with £38 and 20 litres of fuel. If I don’t go to work I don’t need the fuel. The Government hasn’t done anything at all and ends up with £48.60 in taxes in one form or another. This is of course a fixed cost; therefore, the more you earn the less impact the fixed cost has on your overall income, but in this example that is still a whopping 62% cost of actually going to work.
Childcare: Like commuting this cost won’t apply to everyone, but to those it does they will not be shy about letting you know what a burden it is. Not just in terms of the actual cost of the childcare but in getting children to the childcare facility or carer’s house, picking them up on time or facing over run costs and making emergency provision for when they are ill. Even taking grants and allowances into consideration childcare costs for those who need them are likely to run in to several thousand pounds a year. Even as children get older, days taken off to care for sick children or to cover for inset days or strikes frequently either come out of the parent’s salary or from their leave entitlement. Lots of working adults dread the 6-week summer break for these very reasons.
Clothing: Does your company supply workwear, uniform, or clothing? If not then dressing appropriately can run in to several hundred pounds per year too, and let’s face it who wants to wear work clothes to go out in, so the clothes you buy for work are rarely used for anything else. This is especially so where company policy dictates the wearing of certain colours and styles even though the employer won’t pay for the uniform. People working in sectors such as hospitality can often end up with a wardrobe half full of black clothes and flat comfortable shoes. Although there is a move to make employers contribute towards the costs many small employers say they simply can’t afford to.
Food: If you’re not disciplined enough to make a packed meal each day, buying food out on a daily basis can become expensive. I know everyone has to buy food anyway; however, a sandwich made at home will always represent only fraction of the cost of the one you buy in a sandwich shop or supermarket, even if it is part of a meal deal. A sit-down meal at lunch time could leave you counting more than just the calories and cost you half the food budget for the entire week. If you have a long commute or work long or unsociable hours the cost of feeding yourself can follow you home too. Who really wants to make a meal from scratch at 7.00pm after a long day. Not me that’s for sure. Without discipline you could easily find yourself eating mid-week takeaways and shop bought ready meals.
Paying Others: Having more time is probably something you have considered but not really as a financial cost. Think about it this way. How many hours do you have to work to earn enough money to pay a handyman to fix a dripping tap, or carry out simple repairs to your car such a changing the wiper blades or replacing a blown bulb? After a hard day’s work can you even be bothered to wash and hoover out your own car. You could spend the entire day working to pay somebody else to do jobs you could do yourself in an hour or two if you weren’t tied down to working. Effectively you could be working 5 or 6 hours some days to pay other people to do work you could be doing at home. If you get paid £15 an hour and have to work 5 hours to pay the plumber to fit a £2 washer on a tap you could either have done it yourself and paid yourself £75 for doing it or you have just paid a random plumber £75 an hour to do it for you. No wonder they have nice vans.
Finally, you have to consider your own time. Your own time doesn’t really cost anything if you have plenty of it at your disposal; however, as we have already seen if you’re working it does. Everyone should take a few minutes out periodically to review their work arrangements. If you don’t have the time for leisure and the pursuit of your own happiness then perhaps it’s time to reflect on all the things you’re missing out on. If later you don’t have enough money you can always cut your costs or get some more, but you can’t get some more time if you run out of that……!
Let me know in the comments how much it costs you to work each year.