How much is your time worth? Have you ever actually calculated what you make per hour? I don’t just mean what’s your hourly rate or yearly income. I mean how much do you make when all work related costs and times are factored in?
I’ve made a list of costs that I think should be factored in:
1. How many hours do you commute each day?
2. How much gas do you use going back and forth from work?
3. Does your job require you to buy expensive clothes?
4. How much do you spend in dry cleaning?
5. How much is your child care?
6. How many extra unpaid hours do you work (both at work and take home)?
7. Do you own an extra vehicle because of work?
8. How much do you spend paying people to do things you would do if you didn’t work so much (ie – mowing the lawn, shoveling the driveway, etc…)
Just a hypothetical example but let’s say an average couple with 2 kids both making $40,000. This would give them an $80,000 pretax household income.
$80,000 / 52weeks / 40hrs = $38.46 hour
Now let’s look at the actual hourly cost based on these assumptions.
1. They each commute for 1 hour a day = 2 hours a day
2. Each do 2.5 extra hours of work each week (ie- checking email from home) = 1 hour a day
3. Have daycare costs of $70 a day:$70 X 49 weeks = $3430/year
4. Have someone mow their lawn in the summer = $500/year
5. Have a 2nd vehicle payment and insurance: $350month X 12 = $4200/year
6. Gas for the cars: $10 day X 49weeks X 5days = $2450/year
7. Parking for work = $1000/year
8. Each spend $600 a year on “work clothes” = $1200/year
9. Conservatively assuming a 20% tax bracket = $16,000/year
New hourly wage (before taxes):
$80,000 / 52 / 43 = $35.77/hr
New hourly wage (after taxes):
$64,000 / 52 / 43 = $28.62/hr
New hourly wage (after taxes and work related expenses):
$64,000 – $12,780 = $51,220
$51,220 / 52 / 43 = $22.9/hr
This means that the real wage of the couple is $22.9/hr or $11.45/hr individually. A far cry from what it initially appears to be. This is just an example, so work it out on your own and see what your real wage is (might make you think twice about frivolous or impulse purchases).