This is quite a depressing and scary article but at the same time it can be really inspiring, particularly for anyone who is thinking about quitting their job.

The depressing side is that the amount of our salary we take home from working in a normal job is a lot less than most people realise. Normally when we think about our salaries we either focus on the headline earnings – deceptive as you never see some of this money – or our post-tax earnings, which is also deceptive because hardly anyone accounts for are all the little costs that are involved in working. These expenses may be budgeted for, but often aren’t seen as costs associated with working: costs such as commuting, the daily Starbucks and all those clothes you only ever wear for work impact to name but a few.

Below I have created a calculator and chucked a load of ‘averages’ in there: an average salary, average coffee consumption, average lunch budget, average commuting costs. What comes out is really quite scary. On a salary of £25,000 the amount you actually take home is only about £14,400! Taking this into account and with commuting time included, it changes the hourly salary from an attractive £11 an hour into £5.56 an hour. The person in this example is getting paid half what they think they are. Once you add in the heightened cost of living in London it is starting to look very bleak.

An average Londoner on £25,000 a year only gets to keep £14,400 of it after taxes and work related expenses!

But on the flip side of that, it means to replicate a £25,000 salary as a stay at home, self-employed entrepreneur is actually a lot easier than we might think. For starters we can immediately chuck away all of the costs associated with work. No more commuting, no more £5 Pret-a-Manger lunches, no more uncomfortable shirts and ties. Added to that if you own your own business and pay yourself through it, you get taxed a lot less than you would be as an employee. It is so much better in fact, you only need to earn £15,503 to replicate the take home salary of a £25,000 city employee. Have a play around with the calculator to work out how much you would need to earn to replicate your current salary.

If those savings aren’t enough, think about how cheap living costs are and how nice the weather is in Thailand. If you’re self employed and working from ‘home’ you can live anywhere in the world…

Take Home Salary Calculator


How do you earn money from home? Well there are many ways and exploring them is what this blog is all about. Anything from an online-store owner to a freelancer on odesk, from a professional gambler to a blogger. Stay tuned as I delve into each option.