The Future of Remote Work & Its Impact on Personal Finances
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When the COVID-19 pandemic first hit, my job switched all of its employees to work full-time from home. They weren’t the only business that did this, either. As a result of the coronavirus, companies of all sizes were forced to find ways for their office workers to cobble together work arrangements that avoided the need for in-person meetings as a protective measure.
Now, thanks to vaccines and other medical advancements, many companies and employees are evaluating whether or not it makes sense to consider operating with such flexible work arrangements. For some businesses, eliminating the cost of real estate by doing away with leasing office space is a major perk of the remote work revolution. While some remote workers (like myself) are happy to work from a home office and the occasional coffee shop, others prefer an in-office experience in real-time—without tedious video calls.
Beyond personal preference, remote work also has an impact on personal finances. Keep reading to discover the financial pros and cons of remote jobs and learn a few ways that they can improve your cost of living.
In this article
Remote work: An overview
Remote work has grown in popularity in recent years, particularly with the introduction of technology that makes it easier for employees to stay connected and collaborate remotely. With remote working, employees can work from anywhere—their homes, coffee shops, shared workspaces, and more—allowing them more control over their schedules, access to better job opportunities, and even lower operating costs. However, there are potential risks associated with remote working that must be considered before committing to such an arrangement.
The benefits of remote work include flexibility and autonomy. Remote work gives employees greater control over where and when, meaning they can adjust their hours or take on additional responsibilities without worrying about traditional office structures or employee expectations. This opens up more lucrative opportunities, such as freelancing or working remotely while traveling. Remote workers also avoid long commutes, which can reduce stress, improve morale and lead to increased productivity.
On the other hand, there are potential drawbacks to remote working, as well. Employee engagement may suffer from a lack of face-to-face interaction with colleagues and supervisors. Working from home can be isolating, and distractions such as television, family members, or pets may make it difficult for employees to focus on their work tasks. There is also a risk that progress may be slower when communication is limited to email or messaging apps instead of being able to consult face-to-face in person.
Though there are pros and cons of remote work, it is clear that this type of arrangement is here to stay. To take advantage of its potential benefits while mitigating its risks, workers must be aware of the flexibility, benefits, and costs associated with remote working, which will be discussed more fully in the next section.
Flexibility, benefits, and costs of remote work
Remote work offers employees flexibility that is often hard to come by in traditional workplaces. Employees primarily enjoy the freedom of working from home or any other remote location and making their own schedules. They can avoid the many trials and tribulations of commuting, such as traffic and long work days that may require missed family obligations. In addition, remote workers may also benefit from reduced stress levels due to better workplace environment control and fewer distractions than in an office setting.
Unfortunately, this option has some drawbacks; not least is the potential of feeling like you're in a vacuum without easy access to on-the-job guidance or support systems. There is also a chance that team members might feel less connected with each other without physical presence, which could decrease morale. Additionally, it may be more expensive for employers since they have to provide hardware and software to employees, connecting them virtually to the workplace.
On the other hand, if implemented properly, the cost savings associated with remote work can be significant. Employers can save money on rent, utilities, materials, and other staffing needs with no need for physical office space and less overhead associated with day-to-day operations. Plus, providing telecommuting options often helps attract high-quality candidates motivated for long-term employment due to increased job satisfaction.
Flexibility and benefits aside, remote work does come with its costs. Ultimately it is up to each employer to decide if a “workspace from anywhere” culture will benefit their business model—and how much they are willing to invest in making it a success.
What does the future of remote work look like?
The future of remote work is bright, with many organizations adapting to the sudden need to provide effective virtual platforms for their employees and customers. As the world progresses and technology advances, remote work will become even more prevalent. Such trends are already beginning to emerge; the increased adoption of “smart working” technologies and services is making remote collaboration easier than ever before.
Companies increasingly invest in digital tools that facilitate remote operations, such as video conferencing systems, cloud storage solutions, and virtual private networks (VPNs). Additionally, employers have a unique opportunity to leverage existing internal resources, such as employee networks and project management software to optimize further and streamline remote work. At the same time, greater recognition of the importance of data privacy and security means that organizations must stay current on regulations related to these issues.
Despite its potential benefits, not all will agree on the future of remote work. Some are concerned that distance working can decrease productivity and potentially even burnout if not managed properly. There’s a risk that companies may struggle to maintain their corporate cultures with teams scattered virtually throughout the world. Additionally, there is no denying that technology may not be readily available or accessible to everyone; hence remote working can prove difficult in developing countries where infrastructure may be limited.
Overall, it remains to be seen how beneficial or detrimental distance working can be over the long term. However, given today's landscape and technological advancements, it is certain that more businesses will continue embracing this trend as an essential part of their business models moving forward.
Ultimately, no matter what side of the fence you’re on regarding remote work—there’s no denying that this shift presents new challenges and opportunities for businesses in 2023 and beyond. To properly navigate this brave new virtual world, employers must leverage specific tools designed to enhance productivity while working remotely.
Shift in employer expectations
For some employers, a remote workforce may represent an opportunity to acquire more talented employees from a wider range of areas. However, for employers already accustomed to having employees in a traditional office environment, there can be resistance to managing remote teams. Ultimately, employers will likely expect more from their employees—even those working remotely.
Employers must now recognize that employees operating in remote settings require different management approaches than those in a centralized office. Consequently, employers should know the additional resources and guidance needed for managing distributed teams. They must also provide adequate compensation and benefits packages so that employees remain loyal. In this way, employers can expect better performance and productivity from their remote workforce by offering above-standard incentives.
However, some companies may abandon the advantages of employing a remote workforce completely and revert to traditional arrangements due to higher costs or perceived downsides associated with managing a distributed team of workers. In such cases, employers may require increased attendance at the office location with less flexibility for employees; additionally, since mistakes or poor performance could be harder to monitor among teleworking staff, higher vigilance may become mandatory for all tasks and activities under company supervision.
In any case, there is no doubt that a successful organization depends on careful consideration of employee management strategies as well as providing necessary incentives—from better job security and career progression opportunities to quality benefits—to guarantee employees’ loyalty and engagement while they are working remotely. This will ensure that employers’ expectations are met while giving their workers the support they need and adequate recognition for their efforts.
Rapid growth in market opportunities
The emergence of remote work provides advantages for both businesses and employees. In the global economy, competing companies are no longer limited to those within the same city or country. Even small companies can now access workers worldwide by leveraging digital tools. Therefore, it's no surprise that we have seen rapid growth in market opportunities in recent years.
Types of remote work
Unlike during the height of the coronavirus pandemic, the labor market has carved out a few different iterations for the way remote work looks. These have their own ins and outs and offer different opportunities for remote employees.
Full-time remote work
Many companies still operate in a decentralized manner, with workers in various locations connected only by the internet. Without the need for on-site meetings, this is one of the most flexible work options for remote work and personal finances.
For example, if you work full-time remotely, you may no longer be required to live in the same city as your company’s headquarters. This can significantly reduce your cost of living since the difference between working in a market like San Francisco or New York City and a place like Louisville, Kentucky, can save you tens of thousands of dollars. At the same time, some companies may have limits on where you can live due to tax laws, so it’s a good idea to talk to human resources before you make a major move as a remote employee.
Hybrid work
Hybrid work is a blended approach to remote work where employees spend time in the office and some time working from home or another location. This remote work arrangement may make more sense if you deal with clients or need to be on-site for certain meetings or inspections.
One benefit of hybrid work is that it can reduce some of your commuting costs. Whether that means you’re filling up your gas tank less or can save money on public transportation, lowering these sorts of monthly costs can greatly impact your finances. When I was no longer driving an hour to and from work in city traffic, I felt like I got a $200 monthly raise!
Freelance
While freelancing has always been around, it’s worth noting that remote work can give you more time to pursue a side hustle as a freelancer. For example, with the hours you save not having to commute to work every day, you can spend the time you would have been working earning some extra money with any number of side gigs.
Freelancing can maximize your earning potential without requiring you to leave your house or even work that many extra hours since you’re likely already on a schedule of eating dinner based on when you’d normally get home from the office. Even having some extra time to earn money playing games could be a relaxing and rewarding way to spend some extra free time.
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Challenges of working remotely
Remote working has become increasingly popular in recent years, but like all new trends and strategies, it has unique challenges. Employees who work remotely often face difficulty with communication, productivity, collaboration, and maintaining a sense of community within a team.
Communication challenges
When people work remotely, they lose the ability to communicate informally with their colleagues. This type of communication often leads to more ideas and creativity amongst teams and a greater sense of connection. Additionally, distractions such as household tasks and outside family or friends can create difficulties when focusing on the job.
Productivity challenges
Another challenge for remote workers is staying motivated and productive without the structure of physically being in the office. Without regularized check-ins from supervisors and colleagues, it’s possible that employees could become “out of sight, out of mind” and less likely to receive rewards or recognition for their hard work.
Collaboration challenges
Also, many tools used for collaborative work are still not well-suited for remote teams due to difficulty coordinating tasks from different time zones or platforms. Even with video conferencing technology available to connect people remotely, there is a lack of face-to-face contact, which can affect how teams interact and their level of trust. Lastly, digital fatigue can be an issue when having too many video calls in a day instead of relying on other forms of communication like email or text messages.
Community challenges
The last major challenge associated with remote working is creating a sense of community within a team. Building relationships between colleagues is essential to foster deeper understanding and collaboration within any workplace. But without meeting up after work or sharing lunches in person, this kind of camaraderie can be harder to achieve with remote teams.
Tools for enhancing remote working
Implementing powerful technologies to facilitate remote work will be critical in the years ahead. Teams with access to effective communication, collaboration, storage, and task management systems can maximize their effectiveness while working apart. In addition to these specialized tools, employers may consider providing employees with additional resources such as ergonomic equipment, separate workspaces designed for productivity, and technical support for remote applications.
On the one hand, using software and hardware specifically created for efficient remote working will likely lead to higher productivity and more positive professional experiences among team members. Additionally, virtual collaboration tools are becoming increasingly more user-friendly and intuitive; many organizations have successfully developed custom solutions tailored to their particular needs and objectives.
On the other hand, having too many applications or complex systems can create added overhead and confusion, draining time and resources. Also, with no unified workplace or communal setting like office space, it can be difficult to ensure that everyone is properly engaged and connected with one another.
Ultimately, the most successful teams will likely choose solutions that provide the most streamlined yet comprehensive experience possible. With the right combination of reliable tools and attentive management from their employers, remote workers should reach greater results than ever before.
How does remote work impact personal finances?
Remote work has a significant impact on personal finances. It can provide several advantages, such as saving money and improving living costs by cutting transportation costs and eliminating the need to commute. In addition, it can offer the freedom to choose where and when to work, potentially leading to increases in productivity. A recent survey suggests that remote workers have seen an average of $4,000 in annual savings—a figure that will likely increase with more businesses transitioning to remote work setups.
At the same time, there are downsides to remote work that must be considered. For example, people may face significant upfront costs for setting up their home office properly. In addition, there may be issues with staying motivated, greater potential for stress and burnout, increased distractions from family members or roommates, and social isolation from colleagues. Moreover, because of their distancing from traditional workplace dynamics, remote employees may find it more difficult to network for additional job opportunities or access professional development courses compared to those working in physical offices.
Costs and fees
While you may already pay rent or a mortgage, there are additional costs and fees to be mindful of if you work from home.
Home office setup
The initial startup costs of creating a home office can vary from person to person, but if you plan on working full-time from home, it’s a good idea to do it from somewhere other than the couch or dining room table. From personal experience, having a designated home office space helps me manage my work-life balance, which can be challenging when working from home.
Some of the different items you may need to invest in for your home office setup include:
- Office desk ($100-$400+)
- Office chair ($50-$250+)
- Better internet router/modem ($100)
- Home printer and ink ($50-$250)
- External computer monitor ($100-$200)
If you want to cut down on some of these costs, consider browsing places like Facebook Marketplace or even websites like Freecycle.org. Chances are high that you may not need to spend full price on some of your home office gear if you’re willing to buy used instead of new.
Keep in mind that if you’re working from home, you may be able to take a home office deduction on your taxes. However, it’s important to talk to a tax professional about what is needed to qualify for that deduction, as there is a lot of red tape associated with it — especially now that more people are working from home.
Higher utility costs
Working remotely means you will be in your home more often, so it’s logical that some of your utilities will be higher. The two main utilities to be aware of in managing your costs are your electric and internet bills.
If your home office has windows, so you can work without all your lights on during the day, that can be an easy solution for lowering your electric bill. You can also be mindful of your AC or furnace usage if you’re trying to find other ways to save on your electric bill while working at home.
Internet may be trickier since it’s necessary for online work and you need a reliable connection. If you can keep other costs for your home office low, it may be worth paying a bit more for stronger, faster internet. Switching internet providers or finding promotions can help lower these costs, too.
Potential for longer hours
While not a hard cost per se, it’s worth noting that if you don’t have a commute or coworkers leave the office, you may be tempted to work longer hours when working from home. When you don’t have to beat traffic and your office is steps from your dining room, it’s much easier to knock a few more tasks off your to-do list even after the work day ends.
Keep in mind that if you’re paid a salary, that number is calculated based on a traditional 40-hour work week. While there are certainly times that you may need to spend longer than a normal work day to get something pressing completed, you don’t want to make it a habit.
For example, if your salary is $60,000 annually, you make roughly $28.85 an hour before taxes. Working an average of two extra hours a week reduces your hourly rate to $27.47 an hour before taxes — a loss of close to $3,000 annually.
While companies sometimes worry about time theft when employees work remotely, in some cases, employees may commit wage theft without even realizing it. This is because most employees don’t think about the cost of long hours financially. Instead, they only consider how longer work days become mentally taxing or create more stress. However, if you aren’t careful about establishing boundaries with your work and coworkers, you can lose a fair amount of money.
Other miscellaneous conveniences
When you regularly commute for work, it is much easier to tack errands onto a trip home from the office. Economists have already tracked how online shopping habits and e-commerce metrics increased due to the pandemic and stay-at-home orders. Many people are still paying for that convenience. It’s important to assess whether or not those costs of convenience are worth budgeting for.
Online delivery is one major miscellaneous expense you may spend extra money on while working remotely. For example, if you order groceries rather than grocery shopping, that is an added cost you might not incur if you take trips to the store after work. Or, if you work through lunch and are counting on food delivery instead of meal prep, you can eat into your paycheck that way, too.
Delivery fees can nickel and dime you if you aren’t conscious of them, so it’s important to recognize that some of the remote work’s cost savings can quickly be eaten up by other habits while working from home. Even with Amazon Prime, which offers free 2-day delivery, you still pay an annual fee for that convenience.
Working remotely outside the home can also add up if you’re not careful. For example, if you work from coffee shops daily, you’re more likely to spend more money. While you may already budget for a morning latte from your local coffee shop or Starbucks, sitting in a coffee shop for hours on end, you may feel more obligated to buy a pastry or get a second drink.
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Pros and cons
Pros
- Lower commuting costs. The savings on gas, car maintenance, or public transportation can all add up quickly when you’re not commuting to and from work five days a week. This offers bigger savings if you’re fully remote, but even hybrid workers can reap this financial benefit.
- Flexibility. If you have a 30-minute commute to and from work daily, working from home nets you five additional hours to do as you wish each workweek. In addition to offering more time to use flexibly, remote work allows you to work from wherever you’d like to live.
- Save money on work expenses. Working from home, you may be able to save on work expenses like business clothes or even eating lunch out with colleagues. These cost savings can also add up quickly.
- More productive. You may find that you get more work done without extra distractions and interruptions from coworkers. This could make it easier to use all of those vacation days, making the most of your benefits since you don’t feel guilty taking time off from work to do.
Cons
- Higher home office costs. If you plan on working from home full-time, you’re bound to incur more utilities and other equipment expenses to outfit your home in a way that lets you be productive.
- Work/life balance. Work/life balance is about more than your happiness and the ability to separate two aspects of your daily life. If you wind up working longer hours from home, that could cost you money in unpaid labor.
- Potential for increased food delivery or online shopping. When you work from home, becoming more of a homebody is only natural. This could manifest financially in you ordering lunch for delivery or doing more shopping online rather than running errands outside the home. Those delivery fees can add up if you’re not on top of your budget.
FAQs
What are the potential advantages and disadvantages of remote work?
The potential advantages of remote work include increased flexibility, improved employee retention and engagement, and cost savings. Flexibility is especially important for those who don't want to adhere to the traditional 9-5 work day or commute to a physical workplace. Employers can offer more flexible scheduling and work-life balance options to employees, which can result in greater job satisfaction and lowering employee turnover. Remote work can also provide cost savings on overhead expenses such as renting office space and equipment, as well as reducing travel costs associated with commuting or business trips. On the other hand, there are some potential disadvantages of remote work. These include lack of face-to-face collaboration, communication difficulties due to distance, and absence of team building activities. Additionally, it can be difficult to manage accountability when working remotely since it can be challenging to check in with employees regularly. It may also be harder for employers to create company culture when employees are not physically together.
How will remote work affect business operations in the long term?
Remote work is likely to have a significant effect on business operations in the long term, both positive and negative. Over time, remote work will save businesses money due to decreased overhead costs when workers are based at home instead of in an office. It may also reduce employee turnover as employees don’t have to worry about relocating for work. Additionally, removing geographic boundaries can open organizations up to a much larger talent pool, as people from all over the world can apply for jobs - allowing businesses access to people with a wider range of expertise and skills. On the other hand, remote work has its drawbacks as well; it can be difficult for employers to monitor the progress of remote employees or ensure that they are following the company’s rules and regulations. Furthermore, communication is often more challenging without face-to-face interaction, leading to misunderstandings and disconnects between team members. In order to successfully transition into a remote model, companies must invest in developing better technologies and practices to manage and communicate with remote workers effectively.
How can I maximize my personal finances while working remotely?
Creating a budget can be extremely helpful in managing personal finances when working remotely. It allows individuals to set aside the amount of money they will need each month for bills, expenses and other necessary spending in order to prevent overspending or running out of funds for unforeseen costs. Automating one's personal finances can also be beneficial when working remotely as it can help to ensure bills are paid on time and remind individuals of important due dates, so no late fees or interest penalties occur. In addition, it is important to reduce unnecessary spending while working remotely, such as eating out frequently or buying more expensive items than what is needed. Finding cheaper ways of meeting everyday needs, like using alternate forms of transportation instead of an Uber or Lyft, could result in considerable savings over time. Overall, focusing on saving money by creating budgets, automating personal finance tasks and finding low-cost options for basic needs are all effective strategies that individuals should pursue when maximizing their financial health while working remotely.
The bottom line
As with any work arrangement, any job has pros and cons. While some people might be thrilled to have no distractions or interruptions at work, others may miss the camaraderie from in-person meetings conducted around a table instead of on a Zoom call. It’s important to weigh the personal benefits and the financial pros and cons when considering remote work.
For example, if you’re trying to pay down credit card debt by picking up an extra job, remote work can help free up extra time to work without having your secondary side hustle weigh on you as much. On the other hand, if you aren’t careful about added costs, you can lose money working from home, too.
Lifestyle creep can happen if you’re not conscious of it. Thus, knowing how to maximize your earning potential while minimizing the likelihood, you mindlessly spend money you don’t need to is a great way to make the most of working remotely.
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Writer
Brent Ervin-Eickhoff is a Chicago-based writer, stage director, and filmmaker with a background in digital marketing and content creation. In addition to Joy Wallet, Brent has written for Complex, Volkswagen, HowlRound, Picture this Post, and Third Coast Review, among others. He currently serves as the Associate Director of Marketing for Content Creation at Court Theatre at the University of Chicago. Brent graduated from Ball State University with Academic Honors in Writing.
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