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What is your real hourly wage?

Calculating your true hourly wage, from Financial Integrity.Did you know that your job may be costing you money?  Step 2 of Your Money or Your Life involves calculating your real hourly wage, which is a very powerful exercise for folks who thought the $50 per hour they're supposedly making really ends up in their pockets.

To follow along at home, first make some notes on how long you really spend working.  Start with those 40 hours in your cubicle, of course, but then add in the hour you spend grooming, your daily commute, and the extra hour you vegetate in front of the tube to wind down after work.  Do you have to study or take classes to stay up to date in your field?  Do you end up spending a week in bed because you're so run down from work that you catch the flu?  Add it all up!

Next, add up all of your work-related expenses.  These include the gas and upkeep on your car, those fancy duds you wear to the office, every meal or $5 cup of coffee you consume away from home because you're too busy to pack a lunch, the six pack of beer you drink while winding down in front of the tube, the massages you pay for to wipe out the work stress, and the money you give other people to do your household chores since you don't have time (daycare, house cleaning, lawn upkeep, etc.)  Don't forget to include your taxes. 

Finally, use the formula below to figure our your real hourly wage.

Weekly income - Work-related expenses = Real hourly wage
  Total hours you really work in a week


The example at the top of the post from the Financial Integrity website shows how someone who thought she was making $48 per hour was really making $25.57.  The book includes someone who thought he was making $11 per hour who was actually making $4.  Without too much of a stretch of the imagination, I can see how working could send some job slaves into debt!

Luckily, I've very rarely had a real job, but when I did I could clearly see that the extra job-related time and money was a trap.  If you're working a real job, I encourage you to add it all up and figure out your true hourly wage.  Would you have accepted that job if you'd realized you were only making $7 per hour?



This post is part of our Your Money or Your Life lunchtime series.  Read all of the entries:





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Very eye-opening... and sad. As soon as I can get enough land I'm homesteading, too! Right now I'm doing the best I can in an urban situation.
Comment by Eliza Tue Feb 16 16:11:33 2010
Don't feel bad --- most other people are in the same boat! Although I adore homesteading, I don't think it's the only way to break free of the rat race. I think you can do it right there in the city too!
Comment by anna Tue Feb 16 17:08:25 2010
I moved pretty close to where I work, so my commuting (around 2200 km/year) is done by bicycle. This is a double whammy, because I don't have to pay for gas, and the time spent cycling is not an expense in my eyes. Riding a bike is far more enjoyable than driving a car.
Comment by Roland_Smith Wed Feb 17 12:56:04 2010
Your commute sounds perfect! I always wish that there was a way to get somewhere without a car from our farm, but that's the one downside of living out in the country --- absolutely no possibility of public transportation, and the roads between us and the town are very unfriendly to bicycles. Maybe someday we'll lobby to get bike paths put in.
Comment by anna Wed Feb 17 15:28:30 2010

Don't sound like a good combination to me. Investing is an unsure business and brings its own worries. For me I'm pretty sure that the gains from investing money would not weigh up to the worries over my investments.

Besides, if we all become investors, who are we going to invest in?

Part of the program is just common sense; do not buy what you cannot pay for. Part of it sounds vaguely new-ageish like 'life energy', and it seems to gloss over the fact that some of us actually like a large part of our work, so that it gives us 'energy'.

Comment by Roland_Smith Wed Feb 17 17:27:20 2010

Roland --- I assume you went to the website or book and saw that one of their final steps is saving up enough that you can invest it and live off the investment income, right? I'm with you --- that part doesn't seem quite as safe long-term as it could be (even though they recommend investing in bonds.)

I think that for people like you and me, "don't buy what you can't pay for" seems like common sense. On the other hand, it clearly isn't or Americans wouldn't be sinking further and further into debt. As a nation, we've had a negative percent savings over the last few years.

In reply to "some of us actually like a large part of our work", I'm of two minds. My last job was the best job I'd ever imagined. I was working for a non-profit, trying to help save the world, with people who were fascinating and like-minded. But after working there for two years, I wished I'd never taken the job and had just remained a volunteer! I ended up having to devote so much of my time to fundraising (which I came to hate) and other administrative tasks that I wasn't doing the parts of the job I loved any more, and my relationships with the board changed as I became staff instead of a volunteer. By the time I quit, I was thrilled to be out of the group. Granted, my experience can't be extrapolated out to everyone's work experience, but I think that most people wouldn't go in to work every day if it wasn't for the money. For those people, it makes lots of sense to shift gears so that you can volunteer doing the parts of your work you love and not get it all mixed up in making money.

Comment by anna Thu Feb 18 16:38:14 2010

Maybe as staff you were getting the shitty tasks because nobody was volunteering for them? :-)

At the danger of using a terrible cliché, everything has its ups and its downs. As long as the ups outweigh the downs, you're good.

For myself, I tend to keep in mind the old saying "that which cannot be changed must be endured". So I just do the things that I consider chores but I try to avoid spending time grumbling about them. Makes life a lot easier.

Comment by Roland_Smith Fri Feb 19 01:55:14 2010
That's definitely the way being staff at a non-profit goes --- doing all the jobs no one would volunteer for. But if you could delete the shitty parts of your job and just to the parts you enjoy, wouldn't you?
Comment by anna Fri Feb 19 08:15:54 2010
Within the group of people that I work with, everybody has his strengths and weaknesses, things that they do and don't like to do. We try to divide the work so that people can do that which they like and are good at (those two are usually strongly corrolated).
Comment by Roland_Smith Fri Feb 19 12:19:49 2010

Isn't debt to a large degree a question of how people raise their children? My father grew up during the depression and the Nazi occupation of WWII. As a result, he was very frugal. He never threw away anything that he thought he could use. Clothes were only disposed of if they were really worn, and then usually cut up into cloths for cleaning duty. Never borrowed money, because you'd be paying back the original amount several times over.

We grew up with that attitude, and a good thing too, IMO.

Of course it's partly a cultural thing as well. If loans are easy to come by, it's easy to slip into debt. Especially of there is no shame associated with being in debt. In the Netherlands the term 'in debt' (with the exception of a mortgage on a house, because house ownership is stimulated) carries a very strong negative association. And lenders have to check with a neutral credit registration agency before lending people money. They will usually not lend you money if you already have a large outstanding debt relative to your income.

Comment by Roland_Smith Fri Feb 19 13:07:43 2010
I like your points about being raised in a family that frowns on debt, or having a society that frowns on debt. American society seems to worship debt. Everyone wants a good credit rating because that means they can go into more debt! I feel extremely lucky that I somehow picked up a major aversion to debt.
Comment by anna Fri Feb 19 16:26:28 2010

One very unique homestead, $1,500 per acre, the opportunity of a lifetime