Should you track work expenses?

Should you track work expenses?

First, what are work expenses? Simply put, they are expenses that would disappear if your job, well, disappeared. Some examples of work-related expenses would be commuting costs, work clothes, and taxes on your income. Note that some work-related expenses may not be immediately obvious, such as costs of dining out because you are too tired after work to make a meal at home.

One reason to track work expenses is to know how much you are really netting from your job. After all, it is not as important what your gross salary is as it is what you net after you subtract all your job-related expenses.

Another reason is that if you were to stop working, what are the costs that would continue vs. those that would go away once you stopped working? This is useful to know if, for example, you are thinking of retiring one day. If retirement is in your planning, you will likely want to estimate what your expenses would be in retirement. You can do this by subtracting your work expenses from your total current expenses. All the remaining expenses will likely be there after you leave your job. Of course, don’t forget to add in any new expenses that you might have in retirement, such as additional travel.

Speaking of stopping work, sometimes there are periods of time when we are between paying jobs. So, it’s good to know how long your savings would last until you found a new job. Not a happy thought, but this is a case where planning ahead of time is key.

For a more in-depth treatment of tracking your work-related expenses, see the book Your Money or Your Life: Transforming Your Relationship With Money and Achieving Financial Independence (1992).