How Much Money Can You Save When Working from Home?

If you’ve ever found yourself daydreaming during your daily commute, wondering whether working from home could save you money, you’re not alone. Freelancing or working remotely doesn’t just offer freedom from the nine-to-five grind – it can also lead to significant savings.

From commuting and coffee runs to childcare and dry cleaning, office life comes with hidden expenses that add up fast. In this post, we’ll break down the everyday costs you can cut by working from home, as well as a few upfront investments you’ll need to consider to make remote work a smart financial move.

Working from Home: Savings

While the daily costs of office life might seem small, they can add up fast over the course of a year. In this section, we’ll explore some of the most common expenses you can cut by working from home. Just keep in mind that actual savings will vary depending on your location, lifestyle, profession, and personal spending habits.

Commuting

Whether you drive or take public transport, working from home will save you commuting costs. According to statistics published by Clever Real Estate, the average American spends $8,466 per year on commuting costs. It isn’t just about the money either; an average of 239 hours is lost each year in the commuting process.

For drivers, these stats don’t take into consideration vehicle maintenance, parking fees, and vehicle depreciation due to mileage. They also don’t address the added safety risk of being on the road more frequently. Regardless of how you get to work, commuting involves spending a lot of time and money that could be better spent elsewhere.

Food and Beverages

Takeout lunches and fancy lattes add up in the long run! 

Global statistics on coffee consumption indicate that over half of Americans purchase coffee from a shop at least once a week, with the average cost ranging from $31 to $40 per month – or $372–$480 per year. By contrast, brewing coffee at home typically costs just $11–$20 per month, or $132–$240 per year. Even if you’re a heavy coffee drinker, switching to home-brewed coffee can cut your costs by around 50%. While coffee alone may not seem like a major expense, it’s a perfect example of how small daily habits can lead to meaningful savings over time.

Calculating food expenses can be tricky because everyone’s eating habits are different. Someone dining on steak and lobster at a restaurant will naturally spend far more than someone reheating leftovers. That said, the difference between eating out and cooking at home is clear.

We can get an idea of averages by looking at Journey Foods’ article on Cooking at Home vs. Eating Out. They calculated the average prices per serving based on 86 meals: $20.37 for a restaurant meal, $12.53 for a delivered meal, and $4.31 for a home-cooked meal. Multiply those numbers by the 260–262 average workdays in a year, and the potential savings are substantial.

Of course, working from home doesn’t guarantee you’ll cook every meal, and plenty of office workers bring food from home. But it’s undeniable that being surrounded by cafés, takeout spots, and vending machines at the office makes eating out more tempting (and more frequent).

Wardrobe and Appearance

Traditional office jobs often come with hidden appearance-related costs. Uniforms, safety gear, business attire, dry cleaning, and daily grooming products can all add up over time.

According to a survey on workplace appearance by Nvision, men spend about $307 per year on work clothes, and women spend about $328. These figures can increase dramatically based on industry, location, and work environment or dress code. Add in dry cleaning – which averages $12–$15 per garment – and the total climbs even higher.

When heading to work, you might also be inclined to do more than just throw on a nice shirt. Advanced Dermatology’s data study says that the average American spends $897 per year on appearance-related expenses like makeup, haircuts, and skincare.

Not all of these expenses are strictly work-related, but many become less essential when you work from home. Remote workers can typically dress more casually, reuse items already in their wardrobe, and skip the daily styling routine. You can even work in your pajamas if you want to (although depending on your job, it might not always be advisable).

Childcare

If you have children, working from home is likely to reduce your childcare expenses since you can have a more flexible schedule. You might be able to handle school drop-offs and pickups during breaks, and catch up on work while your kids nap, play, or attend school.

Childcare can be one of the biggest expenses for working parents, especially if both are away from home full-time. Costs often include before- and after-school care, daycare, and summer activities. The average annual cost of childcare in the U.S., for two children in daycare, is about $28,168. This accounts for roughly 35% of the median household income.

And what about those furry friends? If you have a pet and are away from the house all day, you might need to pay for someone to help take care of it. The average cost of pet sitting is $36–$60 per visit. On the high end, if you’re away on a business trip and need someone to watch your animal overnight, that could cost around $305 a night.

Working from home won’t eliminate these costs entirely – you may still opt for occasional help to reduce distractions or carve out focused time – but it can give you more control over how and when you spend.

Taxes

While working from home might incur some additional costs, you’ll be able to claim portions of home-related expenses as business deductions, reducing your taxable income. The IRS guide to business expenses states that an expense can be tax-deductible if it is both “ordinary” and “necessary” for the business you operate.

That definition may sound vague, but here are some common examples of tax-deductible expenses for freelancers and remote workers:

• Business-related food (e.g., lunch with a client)
• Travel and lodging costs for business-related trips
• Home office setup and maintenance
• Continuing education and certifications
• Equipment, regular supplies, and tools
• Phone bill, internet service, and software subscriptions
• A portion of utility bills

The amount you can deduct depends on several factors: your income, your business expenses, and the nature of your work. Tax laws also vary by state and country, so be sure to research local regulations or consult a professional to make the most of your eligible deductions.

Location Flexibility

One of the biggest advantages of working remotely is the freedom to live wherever you want. If your work isn’t tied to a specific location, you can relocate to areas with a lower cost of living and potentially save thousands each year.

Housing costs vary dramatically by region. In the U.S. for example, the median home sales price is $416,900 – but average house prices vary significantly by state. Hawaii is the most expensive state to buy a house, with a median home value of $843,723. West Virginia is the least expensive state for purchasing a house, with an average home value of $167,168. 

In every state, renting is more affordable than buying. The average rent in the U.S. is $1,736. The most expensive state to live in is Massachusetts, costing around $2,875. The cheapest state is Oklahoma, with an average rent of $1,049.

Looking internationally? Your money could stretch even further. For example, Campbeltown, Scotland – recognized as the UK’s cheapest seaside town – has average property prices around £103,078 (approximately $130,000). Prefer to rent? A one-bedroom apartment in a Philippine city can cost as little as $325 per month.

For freelancers and remote workers, it is quite clear that relocating to more affordable areas can lead to substantial savings. Although the financial incentives are plentiful, working from home also saves you time, which is priceless. That means more freedom to spend time with your friends and family, and less time stuck in traffic or on public transport. And you’re likely to have a much better work-life balance as a result!

Working from Home: Costs

Even though working from home can save you money in the long run, you’ll still need to make a few investments while you transition. Next, we’ll address a few of the costs that you might need to consider.

Home Office Setup

To work from home effectively, you’ll need a comfortable, functional workspace. For some, that might mean setting up a desk and chair in a spare room; for others, it could involve designing a fully customized home office.

The good news? You can build a home office on virtually any budget. If you have an existing space that you want to convert to a home office, the cost can range from $700 to over $5,000. If you want to add an addition to your home that will serve as your home office, the cost can be anywhere from $15,000 to over $50,000 (especially if you hire professionals to design and construct it). 

Of course, many remote workers keep things simple. If you’re starting from scratch, here are some average costs for essential home office equipment:

• Sit-stand desk: $500
• Ergonomic chair: $350
• Computer: $1000
• Large monitor: $150
• Wireless mouse: $30
• Ergonomic keyboard: $50

That total’s around $2,080, though your actual cost may be much lower if you already own some of this equipment. And remember: You don’t need to buy everything at once. You can start with just a reliable computer and upgrade your workspace over time as your needs, and budget, allow.

Software

When you work remotely, you won’t have access to company-provided computers loaded with all the software you need. That means investing in the right tools to stay productive, organized, and connected.

The software you’ll require depends on your industry and the type of work you do. Common categories include word processors, video conferencing tools, project management platforms, cloud storage, design suites, and invoicing software. Below is a snapshot of typical options and their estimated costs:

These tools help streamline your workflow and maintain professional standards, even from a home office. Many offer free trials or tiered pricing, so you can scale up as your business grows.

Pension, Health Insurance, and Taxes

Unfortunately, when working from home, you don’t have a friendly accounting department to take care of all your deductions (though you can hire an accountant). That means it’s up to you to purchase health and dental insurance, set up retirement savings, and manage your own taxes. This is why we recommend five types of savings every freelancer should have.

In the U.S., freelancers are required to pay 15.3% of their income to cover Social Security and Medicare. In addition, you’ll need to plan for income taxes; most experts recommend setting aside 20% to 35% of your earnings to cover your annual tax bill. While that might sound steep, keep in mind that you can reduce your taxable income by claiming eligible business expenses, as covered earlier in this post.

If you need additional medical coverage, there are lots of different types of health plans available. They are often divided into price tiers: bronze, silver, gold, and platinum. Each tier offers a different balance of coverage and cost, allowing you to find a plan that fits your needs and budget. The average cost of health insurance in the U.S. per year is $8,951 for an individual or $25,572 for a family, so it’s important to budget accordingly.

And don’t forget about retirement planning. Without an employer-sponsored pension or 401(k), it’s up to you to set money aside for the future. Options like a traditional or Roth IRA, a solo 401(k), or even a high-yield savings account can help you build a solid retirement fund over time.

Utility Bills

One of the perks of working from home is making the most of a space you already rent or own. However, it can also lead to slightly higher monthly bills. Electricity usage often goes up due to longer hours of lighting, heating or cooling, and running computers. You may also need to upgrade to a faster internet plan to support video calls, large file transfers, or other work-related tasks.

Exactly how much your utility costs will rise depends on your location, the season, and the kind of work you do. That said, many of these expenses are tax-deductible if they’re part of your home office setup.

To offset the added cost, look for easy ways to reduce energy usage – like switching to LED bulbs, using smart thermostats, or powering down devices when not in use. You’ll lower your bills and reduce your environmental impact at the same time.

Professional Development and Marketing

One thing you’ll likely lose when transitioning to remote or freelance work is the luxury of employer-funded professional development. No more all-expenses-paid conferences, workshops, or training sessions. Instead, the costs of upskilling, maintaining certifications, marketing yourself, hosting a website, and attending networking events all fall on you.

As with many expenses in freelance life, the cost will vary depending on your industry, goals, and preferences. The good news? Most of these investments are tax-deductible. And beyond the financial write-off, investing in continuing professional development shows clients you’re serious about your craft – helping you boost your credibility, increase your rates, and move forward in your career.

Working from Home: Costs Vs. Savings

Choosing to work from home is a personal decision, and there’s no one-size-fits-all answer. Everyone’s situation is different, and one kind of work environment will not work for everybody. When weighing the costs versus savings of working from home as a freelancer, the key is to evaluate your specific situation rather than relying on averages. The statistics we have provided are merely meant to help you see the bigger picture.

Start by tracking your current expenses: commuting, work attire, dining out, childcare, housing and more. This will help you estimate your potential savings. Then, price out the essentials you’ll need to work from home, like office equipment, faster internet, health insurance, and software subscriptions. Keep in mind that many of these expenses are tax-deductible, which can significantly offset your total out-of-pocket costs.

Also consider the less tangible benefits: time saved from commuting, greater flexibility, increased focus, and a better work-life balance. These perks often outweigh the financial pros and cons on paper, especially over the long term.

And finally, remember that many of the costs listed here are one-time only costs, but the savings will be recurring every year. While the transition may not be cheap at first, for many, the freedom and lifestyle benefits of freelance life are well worth it.

Ready to Work from Home?

Curious about how to turn remote work into real savings, but not sure where to begin? Our courses can help you launch a lucrative side hustle or build a rewarding freelance career, all from the comfort of home.

If it’s time to turn your kitchen table into the most profitable desk in town, explore our free lessons to get started.

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