How Much Are You Paying to Work?

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Asa Wilson @ Flickr

“Can you write about how much you’re paying to work?’”

We got this e-mail from a reader recently. Apparently, once-upon-a-time I’d mentioned in a post how we don’t realize how much we PAY to work. I said I’d be writing about this in a future post, but then forgot to, you know, write it.


In my defense, there are a lot of saunas and spas in Europe and they’re not going to visit themselves.

Anyway…without any more excuses, here’s my better-late-than-never post on how much you’re paying to work:

When we’re working, we love focusing on the fatness of our paycheck. But we never stop to consider how much of that paycheck gets eaten up by the costs of working. We also never stop to consider that without those “working costs,” our expenses in retirement would be much lower, and thus, we could be closer to FI than we think.

Let’s break down all the costs we pay to work:



As I mentioned before, investment income is taxed more favourably than earned income. So, the employee goes and busts their ass getting their salary, but immediately a big chunk of it goes to taxes. But in retirement, if you structure your portfolio properly, you may never need to pay taxes again.

Taxes mean you are paying the government to work.


B137 [CC BY-SA 4.0 (], from Wikimedia Commons

Hands up if you love being stuck in traffic every day, breathing in the exhaust fumes, and wasting hours of your life.

Or if you live in a big city like I did, being squeezed into the subway and being covered in the sweat of a hundred strangers, swearing and jostling around you.

Anyone? Anyone?

I thought so.

Well, guess what? You’re paying for this privilege. When you’re working you have no choice but to drive or take the subway everyday. You’re paying gas, maintenance, insurance, monthly transit passes, etc. all for the privilege of getting your ass to work.

Subway passes in Toronto cost us $130/month each back when we were working, so that adds up to $3120/year.

Mr. Money Mustache calculated that driving to work costs you $795 per year per mile driven.

Since the distance from our rental to work was 6 miles that means it would’ve cost us $795 x 6 x 2 = $9540/year for the round trip. Yeesh!

Eating Out

Ever been so tired from a long day, you say “screw it, let’s just grab a pizza or go to the nearby restaurant and grab dinner?”

I’ve been there.

Because you’re so drained from a long day at work, you have no time or energy to make dinner, so you drop 2-3x how much you would’ve spent cooking a healthy meal on eating out instead.

If we had time to cook, we could’ve lived on $600/month to $800/month on groceries, but because we were regularly eating out when we were working, we’d easily spend $1000-$1200/month on food.

This adds up to an extra $400/month or $4,800/year. That’s how much we were paying for rent in college!

Professional Wardrobe

It’s been more than 3 years since I’ve worn a suit. I honestly can’t even remember what material suits are made of.

When you’re working, you have to pay to look “professional.” That means buying all sorts of clothing that you’d never spend money if you weren’t working.

Luckily, I was in engineering, so I only needed suits, blouses, and dress shoes for interviews and the occasional client meeting. But if you’re in sales or finance, you’ll likely spend a whole lot more.

A professional wardrobe is estimated to set you back around $1000/year per person on average but could cost considerably more for other professions.

Professional Services 

Remember the professional clothes I mentioned above? Well, not only do you have buy those things, you have to spend more money dry cleaning them.

I had to look up how much dry-cleaning costs to write this section because I honestly can’t remember.

Right now our our clothes fit neatly into 2 backpacks and we would never be dumb enough to bring or buy anything that needs dry cleaning. It makes no sense for travellers.

But while you’re working, you have repeated costs for dry cleaning (estimated to be around $30/week on average), which amounts to $30 x 52 = $1560/year per person.

That’s not all though. When you’re too busy working, you’re also too busy to clean, maintaining your lawn, fix stuff around the house , etc. So, what do you do? Outsource that shit of course!

Luckily, we rented a 1 bedroom flat, so we didn’t have to worry about the lawn (that was the landlord’s problem) and I didn’t have much space to clean, but my co-workers estimated they spend $400/month to hire a cleaner and $150/month to hire a professional mowing service. And if you live in a cold place (like we did), some people also outsource snow removal.

This all adds up to $1560 x 2 (dry cleaning) + $400 x 12 (cleaning) + $150 x 12 (lawn mowing)= $9,720 per year for a couple!

High Cost City

Terabass [CC BY-SA 3.0 ( or GFDL (], from Wikimedia Commons

One of the biggest costs of living most people struggle with is having to live in a big city to find work. But when you no longer need a job, you are location independent. You could easily move to a low-cost area and save tons of money on rent.

If you live in a big city, you could be forced to pay double or triple the housing costs than if you were location independent and could move to medium-sized to small-sized town.

This would save you tens and thousands of dollars per year.

Child Care

This is huge for people with kids. Since you’re usually stuck in a high cost of living city, the demand for child care also drives up costs. So now you’re paying $1500-$1800/month per child on child care for the first 3-4 years of their lives. If you’re retired, child care is either completely free or can be drastically reduced since you don’t need it every day.

So child care will set you back $18,000 – $21,600/year per kid—another expense you’re paying to work.

Decompression Costs


Here’s a cost most people don’t think about—costs you paid to de-stress. When we were working we blew money on vacations. They were a necessity to decompress from our jobs. But now, the travel costs are part of our day-to-day living expenses. I no longer shell out thousands of dollars a year for vacations and my life is way better. It’s a never-ending vacation!

And in addition to vacation, you also spend more money on massages, gadgets, etc. to de-stress your life. Guess what happens when you remove that stress? You no longer spend money on de-stressing.

De-stressing costs amounted to $5000-$6000/year when we were working.

Stress-related Healthcare

The last time Wanderer got a full health exam at the doctor’s office, his doctor diagnosed him as “obnoxiously healthy.” I never heard that when I was working. I frequently struggled with wrist pain, back pain, depression, anxiety etc. All of which cost money to fix (medications, ergonomic chairs, acupuncture, wrist braces, etc.)

I’ve now lost my wrist brace, I don’t buy ergonomic chairs because I don’t have any back pain, and haven’t taken any work-stress related meds in 4 years.

We don’t realize how much stress harms our health, and how much we’re paying to fix it afterwards.

Putting It All Together

When we add it all up, let’s see how much you’re paying to work:

A couple:

$3120 (commuting) + $4800 (eating out) + $1000 x 2 (professional wardrobe) + $1560 x 2 (dry cleaning) + $5000 (decompression) = $18,040/year

A family of 3 with a house/car

$9540 (commuting) + $4800 (eating out) + $1000 x 2 (professional wardrobe) + $18,000 (child care) + $1560 x 2 (dry cleaning) + $9720 (services) + $5000 (decompression) = $52,180

Wow! And I haven’teven included the extra cost of being in a big city, taxes, and stress-related costs in this scenario!

This is obviously a hypothetical example using our own experiences, co-worker’s costs, and average estimates. Your cost could be higher or lower depending on your situation.

So think about how much you’re actually paying to work. Your salary is not free. Just like running a business and only looking at revenue but ignoring costs doesn’t make sense, you need to figure out how much you’re paying to work, so you can you figure out your REAL salary.

Let’s hear it in the comments below. Calculate how much you’re spending to work and how much you’d be able to live on without those costs. Then figure out whether this changes your time to FI.

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80 thoughts on “How Much Are You Paying to Work?”

  1. My situation was relatively sweet. The dress code was super chill, so about $900/year in bus fare and maybe $650 annually in lunches that I forgot to pack (or the occasional coworker happy hour).

    Then they closed my office and said “you can take a severance package, or move 140 miles away from your house and your wife’s better-paying job, or work from home,” so I’m in my third year of telecommuting full-time. Our dog never microwaves fish in the break room and my coworkers can’t randomly drop in to chew my ear while I’m focusing on a task. It’s kind of marvelous.

    1. LOL. That does sound marvellous. My co-workers never microwaved fish but someone did bring in Durian, which is 1000 times worse. My director walked into the lunch and room, sniffed the air, and said “smells like something DIED in here.” Fun times.

      Did anyone at your work actually take the severance package over working from home? Can’t image why they would–unless they planned to quit anyway.

      1. Durian?! That sounds like a public nuisance misdemeanor. I can’t imagine!

        Some did take severance — mostly coders who could easily jump ship and decided they wouldn’t mind a surprise five-figure bonus. I briefly considered it, but didn’t have anything lined up. Working from home was a nebulous concept, up to that point reserved for snow days and occasional evening releases… but I’ve taken to it like a fish to water.

  2. I don’t think it’s fair to count taxes. That’s not the paying to work. That’s paying for having income. If you have enough passive income, you’ll have to pay taxes too.
    The commuting cost seems high to me. When I worked, it wasn’t that high. My company reimbursed some of the public transportation cost.

    The whole thing looks high to me. I’m pretty sure I didn’t pay this much to work for corporate America. It was more of a health cost.

    1. If you compare work with unemployment, then yes, taxes are paying for having income. However, if you compare being an employee with a retiree living off investments, than the retiree doesn’t pay taxes while the employee does.

      That’s very lucky that your employer reimbursed some of your public transportation costs, Joe. I didn’t have that and neither did most of my friends. I think yours is the exception rather than the norm though.

      As for it being high, yes, you could be right that compared to your job (since you get reimbursements), it’s probably high. That’s why it’s a different number for everyone, depending on the company and line of work. But definitely working is not free. You will incur costs–like you said, even if it’s more in terms of your health rather than spending. I would argue that’s even worse–because once you destroy your health, even money may not be able to fix it.

  3. That’s what I like about doing freelance work. Many of the above expenses I can write off my taxes. Commuting/vehicle wear costs, education, and computer hardware and software are all tax deductible expenses for me. Try and do that as an employee! For US employees, W-2 income tax reduction is largely limited to tax deferred retirement savings (IRA, 401(k)) and home mortgage interest. But as a small business freelancer, you have far more tax reduction options available to you.

    1. Definitely works out better from a taxation perspective to be self-employed/contractor. However, from what I heard, the trade off is consistent income and security. That being said–from my last job, I quickly found that that full-time job security is a myth. So kudos for making freelance work out for you!

  4. There are indeed costs to working for most people and this is where good career planning/job contract negotiation can be a real plus. For instance, I am paid $800 a month car allowance plus gas thus negating that cost for me. We also live in a MCOL city yet are high earners. As to eating out I happen to love cooking so we have a chest freezer in the garage full of home cooked meals to heat up on work nights and can save our entertainment dollars for well chosen happy hour specials on the weekends.

    What can’t be avoided though are the things like the cleaners (although I can remember discovering my dress shirts could be washed and ironed for me was a game changer in quality of life!) and work clothes. Still, one can buy quality and things last a long time.

    As far as health and decompression we have a home gym (just like Mustache does) and it functions for both making it a very good investment. Add in our travels and we are totally decompressed.

    While not all expenses with a standard, modern working life can be avoided many can be mitigated and/or deferred to the job. I think a lot of folks just never consider they can do this and bear the full brunt of these costs when they do not necessarily have to.

    Good article.

    1. Career planning and contract negotiation is definitely helpful in alleviate some of these costs. It also helps if you’re in a lucrative field with high demand and low supply. All good factors to consider before accepting a job.

  5. It’s very true that working isn’t free. The best job I ever had was when I telecommuted every day. I spent a lot of time on the phone, but it was way less expensive.

    I think your estimates for the costs might be a little on the high side. For example, I worked but still cooked most of my own meals. I also never hired anyone to mow the law or other “services” either.

    These differences might have a lot to do with why I was able to save a lot more too. 😉

    1. They are definitely more on the high side because they reflect my spendy co-workers rather than FIRE-ninjas like you 🙂

  6. We used similar logic in deciding (several times) to be a one income household. Infants raised by mom and no latchkey kids later on (today, the most risky time for teens and pre-teens is 3-6PM) was worth a lot more to us than the added income.

    The incremental net income never made sense to us. And, we didn’t even realize we were Mathing Shit Up! 🙂

  7. Also, there’s the time it takes to spend all this money on working. Commute time, errand running, time away from kids (when want to see them!).

  8. Commuting by car is for chumps 🙂

    Part of the reason I accepted my current gig is because it’s about 15k from home, forcing me to bike >30k a day, every day I go into the office.

    1. Yeah i do the same thing. Bike to work everyday. I only bus when the weather’s too poor for biking, and in vancouver thats maybe 20 days a year.

      1. Mostly I just work from home when the weather is bad. It’s a nice excuse to stay out of the office. 🙂

        On the other hand, I do try to go to the office at least a few days a week (2 is my typical minimum), so if (1) the weather is super bad, (2) it’s been way too long since I’ve been in the office, then I’ll stoop to driving in

    2. That’s why you’re a badass 🙂 It helps save money on gym membership too.

      Do you have a shower somewhere in the office? That was my problem with running to work–couldn’t find a place to shower, so had to do it at the YMCA nearby, but it was a hassle.

      1. Yes. Most tech companies around here have some sort of shower facilities – often times gyms as well. That said, I’m not sure I’d let that stop me anyway :). I’ve grown to despise using the car as the stress of dealing with traffic is enormous.

  9. Great article for those who didn’t realize how much this type of stuff added up to. Now that my spouse is retired and I only work 20 hours a week from home most of these expenses are cut for me. I pretty much just pay taxes and whatever extra it costs to power my computer for work. No commuting costs and if I do need to go anywhere for work I get reimbursed. I usually just work in my pajamas so no wardrobe costs. Spousey does most of the cooking and cleaning. Life is good!

      1. yeah it’s part of our arrangement, I pay the bills with my part time job, he gets to focus on his art but he also needs to do most of the house work. Before when we both worked full time the deal was I did the grocery shopping and the dishes and he did the cooking because he hated doing dishes, he was a horrible cook when we first started dating 12 years ago but has gotten a lot better over the years.

  10. I think there are some nuances to your article based on the type of work you are doing and where the office you are going to is located. Let’s take me as an example as I think I can illustrate some of these differences.

    Before my wife and I took on our nomadic travels around the world (best decision ever!) and started our blog to share our journey, I was working in Engineering for one of the Big Four Tech company and I was based in San Francisco. My review of my estimated “cost of work” expenses as per your categories looks like this:

    *Professional Wardrobe & Services*: $0 / month
    Because my worked was based in California, I did not have to follow any dress code. You might probably know that engineers here are pretty lay back when it come to dressing up! I did have to dress up for the end of year party though but this was a one time purchases that I made even before starting working! (Yep, I’m still using the same suit I had when I was in my early 20s)

    *Eating out*: $300 / month
    We were fed breakfast, lunch and dinner for FREE. I realized ppl would consider this a perk that not everyone has access to. However if you work in tech, this is the norm and people are expecting that type of benefit. I know, this feel a lot like #firstworldproblem. 🙂 While I was used to cook my meal at home before, this benefit did not give me this incentive anymore, especially as we had access to healthy and nutritious options with locally sourced and organics produces that were prepared daily. We did however splurge on some eating out during the weekend with friends, probably more (thank you San Francisco) that we would have done if our situation was different. I also probably put more time at the office during the week because of this, but it’s hard to quantify the impact on my “cost of work” expense.

    *Commute to work*: $200 / year
    Because commute in San Francisco sucks and I prioritized my health over my work, I decided to make the rather unusual decision to walk to the office from my apartment. This represented a daily commute of 2 hours for a total distance of 7 miles (roundtrip). The only “commute” expense I can think of is to get a new good pair of sneakers every 6 month (at about $100 a piece). Not only I was totally killing my 10,000 daily steps, I was pretty energized by the time I got to the office to enjoy my FREE breakfast.

    *Decompression*: $0 / month
    Because I was pretty active daily, I did not felt the need to decompress. Also my company was offering each employee with a free 90 minutes massage once a month by professional therapists that came on-site. It was hard to say no to that and oh boy, this was great.

    *High Cost City*: $2,000 / month
    This was probably the most expensive category for me since I lived in San Francisco. This is something we’ve drastically lowered not that we are traveling the world and became fully location independent! [And big kudos to you and Bryce for playing a big role into our decision to start our nomadic long-term travel journey]

    So while my former 9-5 self might not have been your average reader by current lifestyle and/or demographic, my “cost of work” expenses ended up at: $0 (professional wardrobe) + $0 (dry cleaning) + $3,600 (eating out, mostly on weekends) + $200 (commuting) + $0 (decompression) + $2,000 (rent) for a grand total of $5,800 / year.

    While everyone’s situation is likely to be different, at the end of the day people should be aware of “How much they are paying to work” and make sure they are find with it. So thanks for writing this article as it is a great way to help educating people about the choice between their life and their money they are making my taking on a 9-5 job.

    1. Thanks for sharing your numbers and experience, MrNN! I especially love this part “we’ve drastically lowered now that we are traveling the world and became fully location independent!”

      So glad we’ve been helpful in inspiring your life of travel and super cool that you’ve started a new blog! Proud of you guys and can’t wait until we meet up again somewhere in the world!

  11. Another great article. I did a similar calculation with someone making $85k year in Canada. He was married with kids and drove to work.

    We were conservative and estimated that he lost almost $40k a year to taxes and work related costs. We did not include his alcohol expenses but he was a drinker.

    Anyone making over $60k year (salary) doesn’t work 40 hours a week. They usually work at least 50. You need to factor that in. Also travel time to corporate office or offsite training is not covered. If you have to travel from Vancouver to Toronto head office a few times a year plus attend a couple of conferences in different cities, it really adds up. Your annual salary is supposed to cover this time. Other costs such as daycare really shoot up during this time.

    1. I supported viticulture rather generously while working, and continue to do so in retirement. Mrs Badger would scoff if I put adult beverages as a work related expense. 🙂

    2. Yup, I can believe that. People don’t think about work-related costs until they’re no longer paying those cost. It only became obvious to me after we retired.

      Some may say $40K/year for work-related expenses seems high, but that’s the reality for most people. It’s so easy to spend money on convenience costs when you’re strapped for time–and driving to work daily and child care ain’t cheap.

    3. I actually make $70,000 and work 40 hours a week in non-profit. However, these jobs are very hard to get because there is less turnover and these organizations do not really grow. I have been trying for years to get one of these sweet gigs. But as I posted below, I didn’t realize how much my old job which paid $95,000.00 was costing me until I no longer had to pay those costs.

  12. Totally agree! That’s why I now work from home 4 days a week until we reach FI and my partner quit her stressful job to be a stay at home mom when we saw what childcare costs would be!

  13. I own my own business so I work from home. I’m terrified to add up what I spend on coffee in a year, but I figure at least a portion of that spend is for my sanity – I start to lose my mind after being home for a week or so, only leaving to check the mail. Sometimes I just need to sit in a coffee shop, even if it’s only for a little while. I’m new to FI and will be working doubly hard next year to get myself in a better financial spot.

    Thanks for this eye-opening read.

    1. Now that we’re in Europe, I’m also blowing money on coffee and desserts. I’d say it’s money well spent 🙂

      Best of luck on your FI journey and kudos for your hard work getting that FU money!

  14. We have been car free for twelve years and love our walking commutes to work. Even changes to our places of employment this year resulted in the same commute as the commute was a decision criteria after salary & benefits. I have worked in offices where 60 to 70% of the staff had cleaning help at home. These same people were saving zero for retirement and despite annual salary increases, they still could not afford one dollar to the pension plan. Oh well…

    1. “We have been car free for twelve years.”

      Woohoo! *car-free five*

      Many of my co-workers were also paying for cleaning, eating out, and saving nothing for retirement. Shockingly some of them have discovered this blog (despite me not telling them) and the FIRE movement, so hopefully they’re now making positive changes!

  15. Don’t forget about the hours you spend getting ready, commuting, and post work decompress/prepping. All of those count against your hourly wage. I.e. work 40 hr work week but you spend an hour in the morning and in the evening prepping and commuting. That is an extra ten hours a week that you don’t get paid for

    1. Great point. There’s also a time-related cost. So really people aren’t working the 40 hours a week they think they are.

  16. Hey Bella; when I last saw you at the ROM in Toronto you were dressed in a beautiful evening gown which you looked amazing in! You are obviously spending money on some perks! Love your articles!

    1. Was I? I haven’t been to the ROM in over a year. Maybe I have a twin I don’t know about who likes fancy dresses? 😀

  17. Those costs are not high estimates! In downtown Toronto for any child under 18 months in daycare it is 2-2.2k per month-if you can get a spot. Our miracle was 19 months old when I returned to work, and it is $1900/month including just one hour outside of core hours of aftercare as I run to get her by 5 pm. Metropass is still $134/month, and food is expensive even if making coffee and cooking at home. There are some sweet health food places that make great stuff that are $$$ but definitely add to health and well-being. 4-5 more years until retirement makes sense, and by then child care will be much less. Dry cleaning is a bit less for us, I spot clean and send stuff out once a month in cold weather-marshmallow dad and I wear dress clothes but hang them up nicely and take care of them. Living in a condo so services are included except some help with cleaning ?

    1. “1900/month”

      GAH! And I thought my coworkers were paying a ridiculous amount at $1800/month! Yikes! Well, such is the price for working the big city. I never realized how much things are SUPPOSED to cost in the rest of the world until AFTER we left Toronto.

      Well, good thing you are only 4-5 years from FI!

  18. I was just lamenting about this very same thing this weekend. I really don’t like wearing ‘professional clothes’. In fact the only reason i own more than 2 collared shirts is for work. Hopefully i’ll be out of the race soon and can work in jammies for the rest of my life. But luckily enough I don’t have to drive to work everyday. Bike or bust.

    1. I’m with you on that. I loath professional clothes. I just feel awkward and uncomfortable the whole time and they are so annoying to wash and iron. Only bought them because I had to for interviews and client meetings.

      Glad you don’t have to drive to work! Bike or bust all the way!

      1. I buy dress shirts from Costco, like $14 each? And slacks don’t really wear out, I think I paid mabe 30 bucks each, and I have never ever dry cleaned anything.

        My son, the Engineering Student is asking for designer jeans from the Nike outlet, $100 each. That shit is expensive, and shoes? $125 for a pair of running shoes?

        Its not just office wear, ALL clothing is expensive, thank god for the sales at Old Navy.

  19. Interesting article!
    I actually find for myself that this works mostly the other way around – when I have too much free time (ie, take a week vacation in town without going somewhere), I find I get bored pretty quick, and end up spending money on things that I wouldn’t be if I’m working (getting coffee out, socializing, buying random stuff for my place). My company is pretty low-stress and I bike, so decompressing/commute aren’t particularly issues.

    I’d be curious to get your opinion on some of the social aspects of RE (which I plan to do sometime down the road). I find the socializing I get at work is something I never would have imagined I’d enjoy (I’m an introvert), but actually gives me a real sense of community, which (feels like) I would have to try much harder to maintain out of work. This podcast got me thinking about it

    1. “I find I get bored pretty quick, and end up spending money on things that I wouldn’t be if I’m working (getting coffee out, socializing, buying random stuff for my place).”

      Well, see, the thing is if you equate fun with spending money, then you’ll spend money regardless of whether you’re working or not. Maybe instead of “buying random stuff” which will eventually just end up in the landfill anyway, try going for a hike, renting movies from the library, going for a picnic with friends, etc.

      We’ve found that a there are TON of free things you can take advantage of when you’re not working (ie museums that are free during that day that working people can’t take advantage of), meet up groups for game night, hiking, swimming at the beach, writing a novel, etc, etc. The list goes on. That’s why our entertainment costs are quite low, even in retirement.

      To answer your question, work is one way to get community, but it’s not the only way. In fact, we actually have a lot more friends now and a bigger community (while we were working we hang out with co-workers but had little time to meet any new people). Via Skype, we regularly schedule game nights and regular chats with friends and visit friends all over the world.

      So yes it might take more effort, but it’s worth it. You can join FIRE-related facebook groups (chooseFI, MrMoneyMustache forums) to find people near you.

  20. Girlfriend and I are lucky to have a lot of this not apply to us.

    She works from home as a translator. No work clothes, no work lunches, no commuting costs. She did finally buy a car when we moved to the country so she’s not stranded at home when I go to work, but she borderline stresses about her battery dying from sitting – that’s how little she uses her car. She can write off a small portion of our regular home expenses.

    I’m a flight attendant – service director if we want to get really specific. I work on call, so some days I sit at home waiting for a call while guaranteed a certain amount of hours. On those days I have time, energy, and motivation to cook, so girlfriend gets a nice dinner once she’s done translating for the day. Sometimes I putter around our 25,000 sq ft property and fix or clean something. On the days I do work, the company either provides food on board, or doles out tax-free expense money for food. This comes out to about $10,000/yr. Work uniform means that my clothing expense is very low. I’m given a stipend every month for dry cleaning but pocket it. Steaming and ironing my clothes works just fine until they wear out – maybe a set of clothes or two per year at maybe $100 per out of my pocket.

    My commute involves a 45 km each way drive. It’s rarely during traffic, and I do it about 5 times per month. I work 15-18 days, sometimes less, and some of those on layovers – typically in Geneva or Frankfurt, but also other places in Europe and Canada, occasionally China. 30 days of paid vacation per year, but I do have to expect to work holidays.

    Other negative expenses: I, my parents, and my girlfriend travel for very cheap. Business class to San Francisco or Barbados for maybe $70 round-trip, sometimes in business class. I sent my sister to Hong Kong for $28, I think. Round trip to Australia was $110. Business class to Switzerland for about twice that. Discounts on hotels and things, too, so taking off for a quick weekend or week away a few times a year is a palatable option. Health, dental, chiro, glasses 90% paid by the company for girlfriend and me. Defined benefit pension.

    Not all of us are so stressed at work that we need to get out of the rat race ASAP. That doesn’t mean I don’t see the value of putting money aside and creating options for myself, but I can keep happily going the way I am for some time yet.

    1. Awesome! I’m glad it’s working out for you. And you’re right, the value of having money aside to give you options is the exactly the point of FI. The quitting part is optional.

  21. I had two choices after moving away from my work site: one was to work from home with my original company, 8% pay cut but never go on site.

    The other choice was a 12% pay raise at a new job but I would have to drive 30 minutes -1.5 hours each way (traffic depending) no working from home allowed.

    By my math just counting the time to drive I wouldn’t be getting a raise, they would just be paying me to drive to work and back every day.

    I took the paycut and started working from home. Last year I spent 3 wks in Greece working half days which was a nice perk.

    I also found that I’m much more efficient when I can get work done on my own terms. The pay cut ended up being the biggest hourly raise of my career.

    1. “The pay cut ended up being the biggest hourly raise of my career.”

      Very cool! Looks like you Mathed Shit Up and it worked out great for you!

  22. I don’t disagree with anything listed here but not all jobs have those costs. I for one work in a remote mining camp. When I’m at site food is paid for and there is no commute other than the company paid flights, which we collect Aeroplan points on. The wardrobe consists of all the worn clothes I was planning on donating. And since we can live anywhere with this job, I live in small, cheap community in the mountains, mortgage free. Now if only the stock market would go up I could retire! I was soooo close until ‘Shocktober’ hit! lol.

    1. Awesome. Happy for you!

      And yeah, ‘Shocktober’ wasn’t fun BUT it’s temporary and healthy. I’m still going to give the market a pat on the back for the crazy bull run we’ve had for so long. *pat pat pat* Plus, remember when you’re still working you have the advantage of buying during dips.

  23. In the UK we have suffered numerous train strikes and the trains never run well in bad weather either. So for long periods people had to work from home. As far as I could see, in my industry at least, productivity did not suffer one bit. With the modern technology available this is not really very surprising. But when the strikes ended pretty much everyone simply got back on the train and started commuting again.

    So commuting is not just expensive it is also a total waste of time for most employees who could do just as good a job from their own homes. I can only conclude that despite the bitching people are happy to put up with the crap commute to say they work “in the city”

    1. Yeah, I don’t get the obsession with working “in the city”. I used to like “the city” (aka Toronto) before I started working. Then having to deal with crowded subways for almost 10 years made me hate it. Now I like “the city” again when I go back to visit and ride the subway at 2pm on a Monday. It’s awesome.

      1. Umm, where the heck in T.O. are you travelling at 2pm on a Monday where the TTC isn’t still moderately busy?? Heck, my local Y is considered to be “somewhat busy” at that time of day. Just my two cents, but you may want to try out a bikeshare membership next time. Waaaay faster, cheaper & more reliable than driving, uber or overcrowded transit. But still comes with the perks of outsourcing all bike maintenance, having to double lock against bike theft & the horrid inconveniences of occasionally forgetting to bring bike lights or getting caught by an afternoon snow/rain storm.

  24. To be fair, a lot of those I was able to eliminate by working from home. I don’t commute, save 2h a day and a bunch of money.

    I no longer outsource home cleaning as I do that while I am stuck on boring TCs, hubby does the lawn during his work breaks.

    Same for cooking at home or eating out (work lunches!). I have a capsule wardrobe for my company meetings that I can machine wash, and on a daily basis wear jeans and T-shirts, as nobody sees what I am wearing anyway.

    So I suppose this is partially also a way to accelerate your path to early retirement! Start working from home, save faster and quit it altogether:)

    1. Working from home makes so much sense to me. I think most people simply do not want to as they enjoy the social side of work. Also, deeming being present in the office as having a high value may be another reason for people putting up with the commute.

      The social side of work is actually another cost of working. One thing I certainly do not miss post FI is the office party, the lunches out and drinks out with work colleagues, When I go to the pub I want to go with my mates not some people I happen to share an office with.

      Love the house work during boring TCs comment. I once managed a whole pilates class with my headphones in listening to the Group CFO waffling on about something!

    2. “Start working from home, save faster and quit it altogether:)”

      You said it, Agata! Other readers seem to have figure out this trick too.

  25. This post was like a car crash for me. I didn’t really want to know the truth behind the numbers, but I just couldn’t find ability to stop reading and look away. I grabble with this all the time, but fortunately being self-employed, my expenses are a write-off. I mean, we’re still paying for it, but at least we get some benefit out of it. Plus we get to write off many other things like most of our travel, conferences, etc since they are all business expenses. If you’re spending the money anyway, might as well be a tax write-off.

    1. Right on, Mrs. Wow! Another reader also mentioned it’s more lucrative to be self-employed or a contractor for this exact reason–you can write off the expenses. But yeah, adding it together is scary. And in my case I didn’t even understand work-related costs until AFTER we retired. Ditto with the expensive cost of living in a big city–you don’t realize how little things cost in the rest of the world until you get out. I just thought everything was supposed to be expensive.

  26. Hmmm… depends a lot on your job. Both of you were in tech, as was I:

    Taxes: For generating active income, you have to pay taxes, but active income also allows you to contribute to 401ks and IRAs, get heavily subsidized health insurance, etc. You only never need to pay taxes on portfolio income if your income is low. If you have low active income, you pay very little tax also. Yes, dividend income is treated favorably, but for dividend and cap gains income equivalent to income when working, I still pay 23.8% federal and 13% CA state.

    Commuting: If you’re in tech, telecommute or avoid rush hours.

    Food: Many offices provide free food in Silicon Valley, so you can save a lot on food expenses.

    Professional wardrobe: N/A. Wear t-shirts and jeans to work

    Professional services: When you’re early retired the last thing you want to do is mow the lawn or fix stuff around the house unless you love those chores… you could be consulting and making a lot more for that time.

    Child care: Can contribute pre-tax to childcare expenses. Many employers offer subsidized child care on-site.

    High-cost city: Beyond your job, family ties, relationships, schools, and cultural diversity may be tying you to the high cost city.

    Decompression costs: While working, there is a pool of readily available co-workers for group sports. Many employers pay for gym memberships or have gyms on-site. Early retirees can endure stress too, in other forms: more dependent on market returns that you can’t control, more uncertainty about health care if you or your family gets major illness, uncertainties over child development or costs (public vs private vs homeschool, treatment for developmentally challenged children, sports participation, dance classes, music classes, foreign language study, college expenses, etc etc), marital stress over expenses for leanFIRE.

    Health-related costs: Employer subsidized health insurance. Don’t put all your time and health into your job. Tens (hundreds?) of thousands of Silicon Valley workers sandbag.

    Takeaway: Consider changing jobs to something more aligned with your interests and with better benefits.

    1. If you work for specific companies in Silicon Valley , then sure you could get those things comp’d. However, that’s the exception rather than the rule. But yes, I do agree how much you pay to work depends on your individual situation.

      1. In my particular situation, expenses went up a lot after leaving work. $20k extra per year for crappy health insurance that requires considerable out of pocket payments for any visits or treatment. $20k for daycare expenses that would have been subsidized by my employer and remaining payments made from pre-tax income. An extra $5k in annual food expenses due to not having free company meals. An extra $1k in annual gym membership. I used to play basketball at the company basketball court 5 days a week, and the company also paid for outside gym memberships.

        I had minimal commute costs (home was near work, only local traffic) and wear the same clothes now as I did while working. During my final year, the company allowed me to work from anywhere, so I did the digital nomad thing before the term was coined.

        I’d consider my last company’s benefits to be actually light. Other companies that shall remain unnamed have a bowling alley, gym, gourmet food joints, ice cream shops, dry cleaner, health clinic, game room, daycare, movie theater, etc on campus.

        I’ve also had opportunities at multiple companies to work in Europe and Asia while having all housing, travel, and daily expenses comp’ed and collecting US salary. At my first job out of school, I spent my first year overseas at 5 star resorts with daily limousine service and returned home to a deskful of uncashed paychecks which supercharged savings. I was just fresh out of school and that company is a dinosaur in Silicon Valley, so it wasn’t like these types of benefits are special… pretty standard around here and I would have thought pretty standard anywhere. My last job offered me a similar deal, but I turned it down.

        I’m just saying everyone’s situation is going to be different, so people have to evaluate their own situation. I’m sure there are plenty of people whose expenses will go way up after early retirement. Especially in the health expenses category which could easily blow away all other potential savings!!!!!!

        1. “after leaving work…$20k for daycare expenses”

          Wait. You left work and you still pay for daycare expenses? That’s a choice, not a necessity. What’s the point of paying for daycare when you don’t have to work and can stay at home to take care of the kids?

          1. More to life than money and I have more than enough several times over.

            By the way, you are free to apply to my old job. The company is still hiring for dozens of positions like mine…

  27. Great post. I am going to have to run some calculations of my own to see how much we are currently paying to work. With the discussion of whether or not we want to start a family soon, I think it’d be important to weigh the cost of continuing to be a 2-person working household in a HCOL city or moving to a less expensive city and adjusting our work situation but saving on housing and child-care.

    Thanks for putting this together. Definitely food for thought!

  28. Socialization for the kid. I think they should play and interact with other kids their age, who are mostly in preschool. My kid went to a bilingual pre-school so now she’s fluent in two languages.

    Also, kids like to push their borders. Some things they know they can get away with at home but can’t get away with at school, so the school rounds out their early childhood experience.

    School also has a lot more learning aids, projects, and curriculum than we’d be able to provide at home.

    You are right, if my passive income dropped precipitously while my kid was in preschool, I could have just pulled them out. More likely that I’d just go out and earn some income though.

  29. Hi Firecracker,

    I have written you with this request before although it was a long time ago. This was also something I didn’t realize until I made a career transition from a Bay street career where I had to wear a suit everyday to working at a non-profit. At my peak salary I made $95,000.00. Now I make $70,000. Since starting this job, I have had 3 months where I have saved over 50% of my income, $2000.00. I didn’t realize how much it was costing me to work until I started this new job. I also didn’t realize how much I use to spend:

    Commuting: I have always lived and worked downtown. But when at my old job at I had travel on a monthly basis with a car and was only reimbursed for mileage. I had to use autoshare. It cost me $2000 a year that I no longer have to spend.

    Eating Out: This was the biggest spend. I used to work 70-90 hours a week. Evenings and weekend and ALMOST never cooked my own meals. Now I almost never eat out. I only do it maybe once a month. The biggest impact on my savings due to my new job where I work only 40hours a week is food. I have calculated that my food costs are now around 10$ a day (yes I eat meat, mostly chicken and salmon). Whereas I used to consider a 10$ lunch to be cheap. Before it was not unusual for me to spend maybe 5$ on breakfast (coffeee+breakfast sandwich), lunch (10-15$), dinner (15-30$). That is minimum 25$ a day. Another bonus of making all my own food is that I have lost weight and now fit into many clothes I have been too fat to wear for 5 years.

    Professional wardrobe: While I still have to look professional for my current job, I do not have to wear formal suits. Suits are ridiculously expensive. I have a weird body and have gotten 3 sets of suits (skirt, pants, blazer) tailor made for around $1000 per set. Now I try to buy things I can both wear to work and outside of work. I also use to have to dry clean most of my work clothes at a cost about $100 a month. Now, I don’t need to dryclean anything.

    Professional services: never needed them because I live in a small condo

    High Cost City: yup, live in Toronto. My new career still requires me to be here. So no change.

    Decompression Costs: I use to go for massages at least once a month and I use to take sleeping pills. Don’t need either. I still spend money on vacation because because I have more time to research and plan ahead, I am able to go on longer vacations for the same amount of money I use to spend on my shorter vacations. I also now take more vacations.

    Other things I no longer spend money on:

    Work socializing: There used to be immense pressure to attend after work drinks in the financial districts or expensives lunches downtown. All of my work socials are now durign work hours and everyone at my job brings their own lunches

    Invitations to expensive fundraising breakfasts or galas: I rarely get invited now. But when I do I tell people I am too poor because I work in non-profit.

    Pressured to donate to fundraisers: I use to spend $3000-4000 on that. My old work had competitions where you sponspored leaders in the company. It was hard to say now. My current work still has charity events but they are for raffle tickets or clothing drives.

    So me:

    2000 (commuting) + $5000 (eating out + work socialization) + $3000 (professional wardrobe) + $1560 (dry cleaning) + $5000 (decompression) + $4000 (fundraisers)= $20,560…God I am so mad about the money I threw away on things I did not want to spend money on but now I feel even more grateful for my career transition.

    The most important thing is time. This itself is priceless. But in terms of cost. I now have time to read blogs like this. Learn money saving tips and track my expenses like a hawk.

  30. I understand the larger point you are making here but the costs listed are way too high. And even as an executive, I cooked at least 4-5 meals a week and while I used dry cleaning for my dress shirts, I found a cheap place run by a Vietnamese couple that charged half of what the bigger names did, for the same quality. Also, my decompression was Jazz and classical music on the drive home and weekends, so it cost nothing. While I agree with you that people *can* spend as much as what you’ve shown, I wouldn’t have my kind of net worth if I had. It all boils down to sensible choices and stressful work shouldn’t drive higher expenses unless you let it. Finding the root causes of stress at work and addressing them while having a poised demeanour goes a long way in making the most of a high earned income. I always say FI is mandatory, RE is optional. When you get to FI, that alone removes a major stress factor even when you work in a demanding job.

    1. Yup, it’s definitely on the high side for FIRE people. But normal for regular people, as they are numbers taken from my co-workers. If most people could optimize it like you did, we wouldn’t need personal finance.

  31. My biggest cost is Life/living; all the hours preparing for work, driving to work, working, and thinking and dreaming about how to solve the problem of the day. Still, I’m very fortunate that I feel my job helps people and their family’s.

  32. Hi,

    Just to share my story. I reached FI but still have the full-time employment. I work about 70 hours a week as things stand. It’s damn tiring. I maintain the comfort that I can serve my notice at any point of time. I will be out of it in a month’s time. Such circumstance is looming closer..


  33. Wow, this was eye-opening. I’ve seen the cost of commuting article from MMM some time ago, but had never bothered to calculate my own personal numbers…

    As it stands, my numbers are at around $60k a year if I were to stay where I’m living now and $48k a year after my anticipated move closer to work. Most of that is in taxes which blows my mind.

    I’m quite surprised by the numbers because as an engineer, I’m already saving by not needing any fancy professional clothes or the associated upkeep. I always brown-bag my lunches, so there’s no cost there either.

    Most of my costs are from the taxes and the commute. I’m pretty glad to be moving closer to work soon as it cuts my commute costs in half due to time-savings. Despite these numbers though, I wouldn’t consider moving any closer. In this area near work, long-term health risks due to contaminated water and air over time is a definite risk — I’ll take the commute and cost to spare myself from cancer. (It’s statistically more likely to get cancer on that side of town. Also, this city is very anti-bike; I’d end up injured, probably)

    I’ll take the hit and eagerly anticipate when I can put that Freedom money to good use! Like some others were saying, the employer benefits that come with work really help balance out the cost. For example, I took a look at the amount of money the company is putting into subsidize my health insurance; it’s 3x the amount I’m paying.

    Thanks for a wonderful article.

    1. Nice work on reducing the cost by moving closer to work! It’s also helpful in terms of saving time and better for the environment too.

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