How working from home can help save you money

Major economic shocks are typically negative.

Think the popping of the internet bubble in 2000, the 2008 global financial crisis and, most recently, the global pandemic. The nerve-wracking volatility in global markets early last week is raising worries that the U.S. is suddenly on the cusp of a recession.

(Call me skeptical. Market volatility largely reflects concerns that tech stock valuations were too high, and the financial reverberations following the Japanese central bank tightening monetary policy for the first time in 17 years.)

Big shifts in the economy can also be positive, though. Hoover Institution economist Steven Davis argues that the COVID-19 pandemic instigated a fundamental shift in how many of us work and live and, he persuasively argues, the transformation is mostly for the good. In “The Big Shift in Working Arrangements: Eight Ways Unusual,” he focuses on the economic implications from the rapid rise in work-from-home options for analytical and computer-intensive jobs.

Here’s the thing: The economic transformation also offers the telecommuting workforce a chance to improve their household finances. Seize the opportunity.

Office-based workers are now putting in full paid workdays from home (or other remote locations) at least one day every week. Davis weighs the evidence and finds that the new arrangement benefits workers, on average.

“In this regard, it’s important to recognize that time savings, greater flexibility in time use over the day, and greater personal autonomy are untaxed benefits of working from home,” he writes.

Hybrid and remote work also frees household cash flow. The career website Flexjobs estimates that people who work from home half the time can save up to $6,000 annually while those who work remotely full-time can save up to $12,000 per year on commuting costs, lunch, professional attire and other daily expenses.

They can also live far from their employer in cheaper locations. These are estimates, of course, and individual circumstances vary. Still, the personal finance message is that working from home opens another avenue for savings.

Of course, workers and their employers are still trying to figure out how to make this work better. The answers will take years to unfold, especially considering the huge scale and rapid scope of change. Meanwhile, remote workers should revisit their household budget for the better.

Chris Farrell is senior economics contributor, “Marketplace”; and a commentator for Minnesota Public Radio.