söndag 14 februari 2016

The cost of work




How much does it cost you to work?

Perhaps a somewhat strange question, but please allow me a few lines to explain. If the aim is to become financially "free", i.e. being able to live out of a passive income and retire* before the official retirement age, we have to factor in the cost of actually working. Sure, net effect is positive, but in my case there are a few cost items I have due to working which I would otherwise not have of would be significantly different; a few examples:

  • Car - we would will not need two cars if when I retire*
  • Work day lunch
  • Work clothes
  • Etc.
In addition to the above we have some softer and harder to quantify financially factors to consider as a consequence of having a "normal" job:
  • Time away from family
  • Stress level affecting health
  • Less time/energy to exercise, causing a medium/long term health risk
  • Etc.
When retiring* there would of course be other activities also generating costs, but I would be in much better position to control these and ensure that e.g. food is healthy, that I get enough exercise etc.

*) I keep adding a start after each time I mention the word "retire". This should probably be described in a separate post in some length, but what I mean is that 

  • I have enough financial assets so that I with a 4% withdrawal can finance our cost of living
  • I quit my full time job
  • I might do some part time work on a contract basis every now and then (because I want to, not because I have to)
So, with this said: One action coming out of this is for me to calculate the cost of work (at least the parts which I can determine financially) and see what that does to my financial freedom calculation.

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