Sometimes exchanging less pay for more freedom doesn’t mean less money and vice versa.
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It’s a tough question with a potentially tricky answer.
Why? Because many remote work jobs offer less money than office jobs. There are several reasons why.
- The work could be freelance or contract work, which may pay less in certain industries.
- Skill sourcing world-wide to the lowest bidder can favor low-cost countries.
- Less money offered because of the additional freedom allowed.
Inevitably if you are facing a choice between an office job and a remote job, it is likely the remote job pays less gross income.
The good news is that this may be completely irrelevant. Most of us make the mistake of comparing gross income to gross income instead of net income to net income.
Let me explain further. The only income that counts is the actual dollars available to spend each month. This is net income after your deductions, taxes and expenses.
Remote income may provide the same or more net income in your pocket than an office job with a greater gross income.
Here are some of the costs and savings often missed in the comparison.
- Potential tax advantages for freelance or contract work.
- Transportation costs.
- Day care costs.
- Home cleaning costs
- Other office related costs (buying lunch, formal clothing)
- Opportunity costs (your hourly pay times hours in commute per week)
The goal isn’t to point out every possible cost, but to get you thinking correctly about the cost of an office job.
On the flip side, make sure you add the cost of employer paid benefits to the remote work income if you will be a contractor or freelancer without paid vacation or insurance.
In summary, before making a decision based on money, make sure you count and compare the costs and expenses correctly. Contact your lawyer or accountant for specific tax or legal advise first.