How much do you actually make?
We all know how much money we make. We know this by our hourly rate, or maybe by our yearly salary. But today I’m going to introduce another idea to you. An idea that should underpin all of your employment choices for the rest of your life.
The Real Time
Let’s imagine you work 8 hours each day of the week. 5 days per week, 8 hours, that’s 40 hours per week, right?
Unless you seamlessly transition from doing your leisure activities to working, with no time in between and no preparation, you are spending more than those 40 hours per week working.
I’m going to try to enumerate some of the things that increase your weekly “work clock”.
Most of us have a travel time to work. This may be by car, ferry, train, bus, bike, or some other type of transportation, but for the majority of us, a daily commute is a part of our work.
I have to dress for the occasion every day I go into work. I have to keep meticulously groomed and well-dressed. This is time that I add to my weekly “work clock”. I also have to organize presentation materials and stop at various places on the way to work in order to secure supplies I may need for the day. This is more time.
The Real Cost
There are many activities that add to the cost of having a job. These may include such things as your work attire, gas or transportation costs, and even the price of the activities you engage in to decompress from work. Some of these things have a time component as well.
Getting out of work doesn’t always mean you are done mentally. Many people “take their work home with them” in the form of thinking about work, stressing about the next day or their boss or coworker, or planning ways to find better work. And to deal with this, some people find ways to decompress. Whether this is a game of golf, an hour on the tv, a soak in the tub, or a glass or three of wine, these things factor into the cost of having a job.
What do you do with this?
There are an enormous amount of factors that increase our time or money cost for our jobs, but here I’m going to tally some of those factors from a client, as an example:
45 minutes commuting to and from work each day
- 40 minutes getting ready for his day
- 8 hours working
- 30 minutes eating lunch in the office
- 30 minute bike ride each day to clear his head
= 10 hours, 15 minutes each day working
He also spends
$100 per month on work clothes
- $400 per month on gas to commute and maintenance on his vehicle
- $50 per month on drinks to relax after work
- $1,200 per month on child care for his daughter for when he’s working
- $250 per month on fast food/takeout for work lunch
= $2,000 each month on his job
New Hourly Rate?
In a 5-day workweek, my client thus spends 51 hours and 15 minutes working or completing tasks that he may otherwise not have needed to without a job. And spends a little under $500 each week on work-related expenses.
My client makes $27 per hour. In a 40 hour work week, that comes out to $1080 pre-tax.
But let’s remember, my client works 51.25 hours each week! And spends $500 on his job in that week.
So let’s calculate his actual hourly rate!
= $580 per week
$580 / 51.25 hours = $11.32 per hour!
ELEVEN DOLLARS AND THIRTY TWO CENTS.
There’s a lot of thinking to do when it comes to this. Is that an hourly rate you’re comfortable with? Are you feeling particularly fulfilled with your job? Can you manage to stay happy in your current position long-term? This hourly rate reflects the total time it takes you to get ready for, go to, and relieve yourself of your work. I urge you to spend some time evaluating what you do for these three phases of work, and tally your own life.
In my next article, I’m going to borrow some wisdom from a guru of personal finance, Vicki Robin, and I will explain how you can take this number and apply it to your life and evaluate how much it costs to do and buy the things that you (maybe) love!