Knowing your real hourly wage

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You have a finite number of hours on this earth. Every moment is unique and you can’t turn back the clock. Yet, seldom have we stopped to think about how much time we are spending in exchange for our salary.

Some of might say, “We earn $1000 a week, working 40 hours and so I trade one hour of my life for $25.

Oh yes, that’s probably the incoming amount. What about the outgoing amount? Unfortunately,this is not so straightforward. Just like most corporate financial statements, aside from the revenue, expenses also place an important role. Things like operating expenses, salaries,  taxes, etc, could take up a big chunk before we can manage to figure out the profit. Similarly, for the layman, expenses include travelling expenses, meals, taxes, insurance. The list goes on.

Vicki Robin, the author of the book, “Your money or your life” (a highly recommended read by the way), reiterates that one needs to establish the actual costs in time and money required to maintain your job in order to find a good equilibrium. This also provides things in perspective.

Here, we are going to explore some hidden “time costs” associated with our jobs. Note that some of the below figures could be high or low depending on your spending habits. But for the purpose of the exercise, we tend to put these on the high end. We highly encourage you to calculate yours based on your personal spending habits. We are also assuming a 5 day work week here.

Commuting

Even with an increasing number of companies providing flexi working hours or work-from-home arrangements, the vast majority will still need to commute to work (unless you could literally walk or cycle there). For the purpose of this exercise, let’s just say that you pay around $10 for a return trip via the public transportation system and let’s put the total commuting hours at around (1.5 hours a day). Based on the above assumption , we spend about an average of 7.5 hours commuting to and fro work a week, and an additional $50 for the transportation cost.

(1 week – 7.5 hours / $50)

Meals

There are more people who dine out during lunch rather than packing food from home. Well, that’s also to reward us for having working so hard anyway, since we are so busy and stressful at work, nothing beats a good meal break right? And as we all know, depending on the location of your workplace, you either have affordable options, or not so affordable ones. Well that’s just the main course isn’t it? What about desserts or probably a cup of takeaway coffee from starbucks to bring back to the office? After all, we still have half a day to go right? Nothing beats the zzz monster compared to a good cup of coffee to allow us to concentrate after lunch break.  My oh my, seems like we are spending a lot here on food. Let’s assign some figures to it. Let’s say we spend around $10 for lunch and maybe another $5 for coffee and perhaps another $5 bucks for snacks. The total time for these activities (assuming a lunch break of 1 hour) woud be about 5 hours in total and that would be around $100 a week.

(1 week – 5 hours / $100)

Appearance  

Getting dressed for work is perhaps a time consuming task that goes beyond far what we think of. Think about the time and money were also spent on personal grooming like shaving products, shopping for clothes, cosmetics for make up and skincare, laundry. Unless you have a designated uniform for your workplace, most of us wear different attires for work and on off days. Well it does sounds like we need quite a bit of clothes in that sense. White-collar workers are expected to dress in nice tailored shirts/suits/pants, high heels, pantyhose, ties etc. Well, let’s say we take about 30 mins each day to prep up daily and spend about $1000 annually for all the above items.

(1 week – 2.5 hrs / $20)

Decompression

Sometime after a long day of work, we might need to drink some beer or catch some shows on netflix to unwind. The activity differs for most and you might have your own option. If they don’t cost anything, good. But if so, factor them in. Based on the earlier example, this might take around an hour and cost around $10 daily.

(1 week – 5 hours / $50)

Other worklife-related expenses

There might also be other health related cost due to work stress or even health maintenance ones like gym membership, that yoga package you signed up for, massage/spa package etc. You might also be paying for house cleaning service because you got no time for your household chores (or too lazy to do them) and also daycare expenses for your children. Hypothetically, we could hypothetically estimate about $200 per week for about 10 hours.

1 week – 10 hours / $200

Summary

So we shall add the above 5 items up to find out your “real hourly wage”

Commuting – 7.5 hrs / $50

Meals – 5 hrs / $100

Appearance – 2.5 hrs / $20

Decompression – 5 hrs / $50

Others – 10 hrs / $200

Total hours per week = 40 hrs (hours at work) + 7.5 hrs (commuting) + 5 hrs (meals) + 2.5 hrs (Apperance) + 5 hrs (decompression) + 10 hrs (others) = 70 hrs

Total expenses per week = $50 + $100 + $20 + $50 + $200 = $420

Real hourly wage = ($1000 – $420) / 70 hrs = $8 per hour

Now you have your real hourly wage and a good sense of how much of your life are being traded for money though the above exercise.

Some might argue that the above is not an accurate depiction. For instance, regardless of whether we are working, we will still need to have our lunch right? Or even if we are not working, we won’t be wearing the same clothes daily anyway.

Yes, you are correct. However, as mentioned earlier, the purpose of this exercise is to put things in perspective. We do not often associate time spent or work related expenditure as a trade off. Well if you are not working, you might probably cook for your lunch instead and the money might have gone to your groceries and the equation changes. Similarly, you probably won’t need to buy “work clothes” unless you are working in a corporate environment. Of course, how much is enough is something else left to be debated.

Well, now you have your equation sorted out.  When you want to buy something at $25, you might think you are trading one hour of your life to buy it. But in actual fact, you are trading slightly more than 3 hours of your life to buy that item using your real hourly wage. That’s quite a difference, and it puts a whole different light in your spending patterns. This will also make you consider about the real costs of taking up an extremely stressful job or a job which requires extensive commuting.

Some of us pay quite a price for being “normal”. An interesting quote from Journalist and author Ellen Goodman put it: “Normal is getting dressed in clothes that you buy for work, driving through traffic in a car that you are still paying for, in order to get to the job that you need so that you can pay for the clothes, car, and the house that you leave empty all day in order to afford to live in it”.

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