How much does it cost to work?

By Slow Dad - March 18, 2017

When you calculate what it truly costs you to attend work, does your current employment choice actually make financial sense?
Recently my ten year old son wanted to know why we didn’t go holidaying for the 6-8 weeks of the school summer holidays, the way some of his friends from his previous (private) school did.

It was a fair question, and a potentially appealing prospect. The idea of spending an extended period near a beach someplace sunny and warm sounded wonderful after yet another cold drizzly London working week.

I (overly?) fondly remember long ago those seemingly endless summers, back when kids were free range and left largely to their own (unsupervised) devices. It was not unheard of to be pushed out the door shortly after breakfast, in search of friends and mischief, reminded that “if we couldn’t be good, be careful” and that we should be home for dinner. This was strongly incentivised by the prospect of being loaded up with chores were we subsequently found to be within earshot when something needed doing.

On reflection I told my son that holidays cost a lot more money that you’d at first realise. There was the obvious costs like airfares, accommodation, eating out, and so on. Then there was the hidden costs, for example as a hands on business owner if I didn’t work I didn’t get paid (which is at least partially true).

Beach holiday, or peak hour commute. Where would you rather be?
Beach holiday, or peak hour commute. Where would you rather be?

Trust, but verify

He thought about that for a couple of minutes, then asked if he could use his iPad to look some things up on the internet. I said fine, expecting him to vanish into the mysterious world of Minecraft and YouTube videos (that at the moment seem to be of other people playing video games, is that a thing now?).

A bit later on he came back and asked what brand of suit I wore to work.

Then where we found our after school nanny.

Then how much I spent on my lunch each day when I was at client sites.

I wasn’t sure what he was up to, but there was a lot of scribbling in a notebook and an intense look of concentration.

As is his want, at precisely bed time my son suddenly decided he wanted to talk.

Normally this consists of him unloading about his day, occasionally asking questions about mine, and if he really doesn’t want to go to sleep he’ll ask some deep and meaningful question about life, the universe, money or some other topic that delays going to bed.

This time however he started by rubbishing my excuse about it costing too much to go on long holidays. Once again I wonder if it was a parenting fail to teaching my kids to call bullshit when they hear it.

He opened his note book and showed me that he had calculated it costs me around £30,000 each year just to go to work. Therefore if I didn’t go to work I could be saving £30,000 and that would be more than enough to pay for a long beach holiday each year.

Initially I disputed his number, the figure couldn’t possibly be that high! However he stuck to his guns and took me through his workings, challenging me to find where he was wrong. I’ve reproduced his workings below.

The numbers he had looked up on the internet didn’t exactly match my outgoings, but they were certainly in the ball park.

I was impressed with his analysis and research skills, and couldn’t dispute his findings.

In fact he had actually understated things, having forgotten that during his (many) school holidays his (public) school wouldn’t be looking after him for free. If I don’t do it then I have to pay someone else to.

My son’s logic was fine as far as it went. It was even valid conclusion in our house given we have reached Financial Independence, which by my definition is when sustainably recurring passive income streams cover your living costs entirely. For those folks who haven’t however, he had overlooked the minor fact that not working meant not earning any income to pay the bills.

How much does it cost you to attend work?

That got me to thinking. How much does it cost you to actually attend work in order to earn your income? Once you’ve computed that figure, does your current job in its current location actually make as much financial sense as you thought it did?

For example at my local supermarket the staff regularly complain about their ~1 hour long commute to work. The same is true of the staff at my younger son’s nursery.

They earn £7.20 an hour before tax, so much of the first hour they work each shift just covers their commuting costs. Based on my son’s estimates getting to work is costing them over £1,300 per year.

According to the Mayor of London’s rent map the average cost of a renting a room in much of London is over £130 per week. That is at least £6,700 per year.

Therefore the supermarket employee needs to work over 1,100 hours each year (that is more than 20 hours per week, every single week of the year) just to cover the cost of them living within commuting distance of their work.

It is only after they have already worked 21 hours in a week that they can start thinking about paying for groceries, let alone going on a holiday somewhere sunny and warm!

Commuting sucks.

So what?

Carefully run the numbers when considering employment options. For many people, particularly closer to the bottom of the corporate ladder, taking on an epic commute in search of a higher salary in the big city can be a false economy... even without placing a premium upon the time lost commuting.

My son’s argument was good enough to convince me it was nearly time for our next holiday, this time to Australia.

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