The Economics of Everyday Work: Where Your Earnings Actually Go

Before you sit down at your desk to start work, you could have already spent the money you're paid for your labor. That includes the fuel for your journey to work, the cost of parking, and the breakfast you stopped to buy on the way because you ran late. Each of these purchases seems small on its own, but together they can erode a significant portion of your earnings.

By managing these workday spending points, you can distinguish between necessary and avoidable expenses. With a little planning ahead, you can cut avoidable spending while still saving money.

Start With What You Actually Have to Spend

Your budget has to work off what is left in your account after you have paid all your invoiced bills. This is your annual salary minus all the payroll deductions you pay each year. So if you make, say, $50,000 per year, then your monthly take-home pay would be $3,846. Create a budget based on your lowest-paid month to account for years when you work many overtime hours and make more money.

Consider where your money has been spent in the previous month. Review your last payroll advice, then check your bank and credit card statements online. Identify essential household bills, then the costs of transportation, food, and other discretionary spending. Plot each category of expenditure against your last payroll advice to see where there is room for reduction.

Beyond a rough summary of spending, a good budget also provides insight into areas of household spending that need to be addressed. If total grocery spending is high, break it down to include household supplies. Convenience store trips during the workday may be part of the daily commute to and from work.

Reduce the Cost of Eating Through the Workweek

Food when you’re out at work during the day is one of the most variable costs. As with the rest of your spending money, tackle the biggest and most frequent items first, i.e., your lunch purchases from shops near your place of work.

Cooking an extra portion at dinner, for example, can provide several lunches over the week. Bringing a sandwich to work doesn't have to mean slaving away over a hot stove in the evenings. Most foods travel well these days and can be reheated at work if necessary.

It also helps to be prepared for those unexpected occasions when you can’t get home in time for dinner. Whether it is a late night at the office or an early start the next day, keep some emergency supplies at work, like snacks, and also have a meal you can heat up in your office. That way, you can have the occasional lunch out instead of buying lunch every day.

Make Your Commute More Affordable

You don’t have to go out of your way to save fuel; you can check gas stations along your usual routes. Even saving a few cents per liter can add up over time. In addition, planning and combining errands around work can reduce time spent on the road, saving fuel on journeys to and from home.

If you regularly fill up your car for work, consider a credit card for gas rewards, such as the BP Rewards Visa credit card. Weigh any discount against interest and charges in the terms and conditions, as well as where you normally buy fuel and how you can collect the rewards. It may offer limited value if you have to travel out of your way to fill up or spend more than you otherwise would.

Savings will also depend on your working hours and location. For example, you could share a trip with a work colleague, travel during off-peak hours, use public transport on occasion, take a slightly longer route to avoid a toll, and more. Your employer may also offer commuter benefits or allow flexible work, so it is worth discussing these with your HR department to see how they can help.

Give Convenience Spending a Clear Limit

You may need to spend at convenience stores or shop online for convenience after work. Even though these may seem like sensible purchases, they can easily add up if they become habitual.

If you work irregular hours, consider using grocery delivery and cutting back on daily takeaway drinks. On the other hand, you may like the occasional meal out and prefer shopping for groceries in person. Set a spending limit for all your convenience spending, and make sure you are getting value from each.

 Another important check is to regularly review all your subscription-based services to see whether you are getting enough value from them. It is surprising how many people keep paying for services long after they have fallen into disuse.

Bring Household Bills Into the Same Review

The expenses you have left at home will exert the greatest pressure on your earnings. The fixed costs of your rent or mortgage will remain largely unchanged, but you can offset them against other household bills, such as phone and internet contracts and insurance, which you can change to reduce spending.