Rounding it up
In light of COVID-19, many of us are working from home and hoping this shift will save us some money.
But it’s too early to celebrate; as a result of our new WFH norm, it’s become easier to spend more money on utility bills, online shopping, food, and childcare.
Luckily, you can stay on top of any increased expenses by creating a plan, like capping your delivery dinners to once per week, and sticking to it.
At first glance, working from home might sound like a great opportunity to save money. For example, no more shopping for expensive work clothes to impress clients, since you can hide the fact that you’re wearing sweatpants on zoom. Plus, your gas bill will be lighter, since you won’t be commuting to the office anymore. But don’t celebrate just yet. While we’ll be taking a look at how some factors associated with working from home can help your budget, there are also factors that can be detrimental to your budget.
How does working from home help my budget?
In 2017, the average Canadian household spent $2,142 a year on costs associated with gasoline and other fuels. Spending on public transportation, on the other hand, averaged around $1,274 per year. Guess how much your commuting costs will be if you’re working from home? Zero. This excludes venturing out to get groceries or visiting a family member, of course, but your overall commuting costs go down significantly if you’re not having to travel to and from an office every day.
2. Clothing and makeup
If you work in an office, you likely dress up in a business-casual outfit, at the minimum. Wearing these clothes every day results in wear and tear, requiring you to shop for more outfits every couple of months or so.
Luckily, when working from home, although you still might need to look presentable for any video conferences, the frequency will be much less allowing you to dress more casual more often. Same thing applies for makeup and fragrances - with the average household spending an average of $264 on makeup annually, it’s more than likely that the bulk of that cost reduces while working from home.
At about $2 per cup of coffee, you might not realize that coffee is a $6.2 billion dollar industry. With the average Canadian consuming almost 3 cups of coffee per day, it’s no surprise that buying a latte a day will impact your budget. Even if you buy just one coffee every morning at the average price of $2 a cup, you’re looking at $480 a year (assuming 240 working days annually), which isn’t even close to the national average.
At home, however, you can save a lot of money by brewing your own coffee, and Canadians have been! Throughout the COVID-19 pandemic, only 46% of Canadians reported that they were drinking coffee outside of their homes, which is a dramatic decrease compared to the reported 91% in pre-Covid 2019. Of course, it’s still possible to spend money on coffee since coffee shops are considered “essential”, but try to take advantage of the savings you can accumulate by brewing your cup of joe at home.
How does working from home hurt my budget?
Although you can find savings in commuting, clothing, and coffee, there are some expenses that you will notice increasing or appearing for the first time. Don’t be alarmed by all of these new expenses - you can stay on top of them by creating a strong budget. And, to manage all of these budget changes, be sure to check out KOHO’s in-app insights, to help you stay on top of your spending.
1. Online shopping
While some stores have been closed throughout the lockdowns, many remained open for curbside pickup and online delivery. With the stress of the pandemic, emotional spending has been made very easy by online shopping, since your next pair of designer jeans are a mere click away. In addition, with mental health stress increasing through the pandemic, more people are susceptible to emotional spending through online shopping. To avoid falling into this spending trap, try your best to stick to your budget, and find low-cost alternatives to get the kick you usually would from shopping.
All that to say, if there is a local business you want to support, go for it! Remember that a healthy budget is one that still allows you to have a little fun, while being conscious of your bottom line.
2. Utility bills
Between cooking, watching television, and using your laptop and lights throughout the day, your utility bill is likely to increase as you work from home. For most of your utilities, this might not be totally in your control. You need light to do your work, and you need to charge your laptop.
You can try to mitigate this increase in cost, however, by unplugging unused electronics, using natural light instead of lightbulbs when possible, cooking with a toaster oven instead of a conventional oven, and lowering your thermostat in favour of warm sweaters and textiles.
Food has been a tricky area with respect to personal budgets throughout COVID-19. Although restaurants have experienced shutdowns for indoor dining, sales on delivery services like Uber and Skip the Dishes have been through the roof. So, while there is definitely opportunity to save costs on food by relying on groceries and cooking at home, the temptation to order delivery is definitely greater. Especially, during a time where you can’t visit your favourite restaurant.
A good way to manage your delivery spending habits could be to agree upon a once-a-week delivery dinner, and to stick with that limit. But, if you really need that party pizza or gourmet pasta, at least you can earn 2% cash back on it with a KOHO Extra account.
So what’s the deal with my work-from-home budget? Am I saving money or spending more?
The answer depends on you. While working from home can help you save on some costs, you need to be hyper-aware of any increased or novel expenses, and be diligent about maintaining your budget to manage them.
Remember, maintaining your budget isn’t something you can do in one night, even when you’re working from home. It’s about the small choices that seemingly don’t matter much in the moment, but add up to either a hurting budget or a financially healthy one. Regardless of how your budget currently looks, you have the power and resources to make the most of a work-from-home environment when it comes to your budget. You’ve got this!
Chrissy is a freelance writer and editor who is passionate about making financial education accessible. She is also a communications advisor for the Ontario Ministry of Energy, Northern Development and Mines. When she isn't writing, you can find her practicing yoga or watching horror movies.