# Caution: You Earn Less Than You Think

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Quick quiz: How much do you make per hour?

If you're an hourly employee, that was easy to answer. If you're salaried, you had to do a little math: \$X annual salary divided by 52 weeks, then divided by X hours per week equals your hourly wage. For example, \$50,000 a year divided 52 weeks equals \$961.53 per week, and \$961.53 divided by 40 hours per week equals \$24.03 per hour.

Got your number? Good. Now hold that number in your mind for a moment, then let it go. Because what you're actually making per hour is likely much less.

Say What?

However you calculated that number, chances are you were missing out on one big piece of the equation: We all have to pay something in order to have the ability to make money. Let's say you work a traditional 9-to-5 office job. You'll have certain expenses because of that job that you wouldn't have without it.

You have to pay for the gas (or public transit) to get to commute. If you drive, you may also have to pay for parking. Maybe if you didn't have a job you needed to commute to, or you had one closer to home, you could get rid of your car.

If you're like most people, you probably grab some food or beverages during the workday. Maybe it's a daily stop for your morning coffee, lunch out or a snack from the vending machines.

Unless your office is super-casual, you've had to invest in a work wardrobe. If you have kids, you may have to pay for child care. And, if you're like most people, you probably treat yourself with something (whether it's a nice dinner or drinks with friends) when the weekend comes to reward (or forget about) all the hard work you put in.

All of these expenses count against your take-home income. You know the saying "you need to spend money to make money"? Well, it's true, and not just if you're an entrepreneur. Every dollar you spend in order to maintain your employment is a dollar you're not able to spend on the rest of your life. But, you need to spend it so that you can stay employed. Sound like a catch-22? It is, but here's how you can make it work for you rather than against you.

The True Value of a Dollar

There isn't much you can do when it comes to work-related expenses. Sure, you can cut back on those daily coffees and brown-bag your lunch more often, but things like commuting costs and child care are still going to be there. What you can do is shift your money mindset so you make the most out of every dollar you do get to take home.

Let's do a little more math. (It will be worth it, I promise.) Rough out your monthly work-related expenses. Multiply by 12 to find you annual work-related expenses. Now, plug that number into the equation you did earlier: \$X annual salary minus annual work-related expenses, then divided by 52 weeks, then divided by X hours per week equals your true hourly wage.

Got your number now? Good. Now consider this: that amount is how much money you make for every hour you spend at work. If your true hourly wage worked out to be \$10, that means you have to spend one hour working for every \$10 you spend. There's a good chance you feel slightly (or more than slightly) uncomfortable with this number. But there's a reason I'm putting you through all of this.

Unless you know how to value your time, you'll have a hard time valuing your money. Throwing away \$10 here or there may not feel like much, but when you consider that you're actually throwing away an hour of your time, suddenly that impulse purchase you're considering takes on new weight.

So, if you're brave, take a long, hard look at that final number you came up with, and every time you're faced with a spending decision, remember how much your money is really worth. You can make the most of your money and your time by realizing what goes into each dollar you spend. Would you rather get that shiny new doodad that's trending today or have a few extra hours to spend with your family? Is owning the latest technology worth several more weeks in the office?

It's your choice. Just be aware of what you're spending.

Paula Pant ditched her 9-to-5 job in 2008. She's traveled to 30 countries, owns six rental units and runs a six-figure business from her laptop. Her blog, Afford Anything, is a gathering spot for rebels who refuse to say, "I can't afford it." Visit Afford Anything to learn how to shatter limits and live life on your own terms.

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james revzin

Many American have a steak taste on a hamburger budget . The problem is that most Americans borrow to the max and then whine about not having enough money . So you have a nice house, car, and boat. Can you afford them or does it really matter at this period of time?

I'm just gonna make smart decisions with my money so I don't end up with an empty bank account:

1) Paying off my debts as they come to me. Never holding a credit card balance longer than a month. If this means living in a small studio apartment and eating ramen, rice, and beans, so be it.

2) I will always buy small, fuel efficient and durable cars. I drive a 2006 Honda Civic now. It costs me nothing to fill up and next to nothing to insure (\$24/month from Insurance Panda… woohoo!). I will not drive when I don’t need to, and use public transportation whenever possible.

3) Developing multiple revenue streams. Doing side jobs. Building up small businesses. Doing contract work. Basically doing whatever I can to generate income from multiple sources.

4) Grow my revenue and assets no matter what. Make sure I am always expanding and develop them to the point that they consistently generate reliable cash flow.

5) The most important one - make as much as I can. Save as much as I can.

iPhones... ecigarettes... Starbucks... Chipotle Burritos...new clothes.. organic lipgloss... expensive yoga classes. Why not try living in your means for once? No wonder we have a debt crisis

Saturday at 1:04 PM Report abuse -3 rate up rate down Reply
3 replies to james revzin's comment
njenel

let's forget calling them "dollars" they're actually "coupons" worth a fraction of a cent! we are covered with smoke & mirrors in many things, money especially. my grandfather made 9 cents an hour in 1900 = \$188 dollars a year, in todays dollars, that is a yearly salary of \$188,000.00. so if your making \$30,000 a year today, that was actually \$ 30 a year in 1900. oh one other thing, if your Government sits on it's ASS any longer China with it's illegal money manipulation will be the death of the once great US of A.

Saturday at 8:48 AM Report abuse +1 rate up rate down Reply
rbearland

The sky is falling...the sky is falling!
Go poke you heads in the sand and say a prayer.

Sunday at 4:45 PM Report abuse rate up rate down Reply
kevin

I only needed to make \$100 a week to equal what I would have worked 40 hours and paid day care. http://www.charlotteplumbingsvc.com/garbage-disposals.htm

August 24 2014 at 9:25 PM Report abuse rate up rate down Reply
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July 17 2014 at 2:36 PM Report abuse +1 rate up rate down Reply
jsnowdon

It desn't make much difference which party is in power, nothing will change since congress is where canges would be made and they are controled by the money controled by an oligarchy. Congress people want to keep their jobs so they do as they are told. Congress (can't) won't decrease spending and increase taxes in an amount that will keep the debt from increasing. To do so would doom their chances of being re-elected.

April 25 2014 at 6:49 PM Report abuse -1 rate up rate down Reply
armed_infidel

Earning less? No. Try spending more for same items.

April 21 2014 at 11:27 PM Report abuse -1 rate up rate down Reply

Or you could invest in the new 3,250 feet high Saudi office building. Sorry, not a typo. It's going to be 3,250 feet high to beat the Khalifa tower in the United Arab Emerates by 600 feet. The Khalifa tower has 3% occupacy, mostly maint workers getting a free apartment. Basically the Khalifa is an empty hulk son to be rivaled by an even bigger empty hulk.
All of this foolishness would be academic only these people are paying for this junk with your \$3.85 a gallon gas money. And when something fails miserably and you need an office building on a sand dune like you need dehumidifier in the desert, sometimes you can re-putpose the dud for something else, but this giant hood ornament can't even be used as a camel stall, it's too high.
I love the Saudis, but I'm not happy even with people I love if they dip into my wallet and take money out of it against my will.

April 21 2014 at 2:58 PM Report abuse -3 rate up rate down Reply
philiclese

You were going to make this comment no matter what the subject matter of the next article you saw was, right?

Monday at 8:44 PM Report abuse rate up rate down Reply
jim.lapt

You loser conservatives keep crying because you're broke, keep feeding the Tea Party.

April 21 2014 at 2:48 PM Report abuse +3 rate up rate down Reply
4 replies to jim.lapt's comment
teapartyisdying.uall

d.barack,....has a crush on evan. d.barack,...talks about him in every sentence.

d.barack,...you are a waste of space.

April 21 2014 at 1:44 PM Report abuse -5 rate up rate down Reply
progressivehoax

It's the country's moocher.

April 21 2014 at 1:50 PM Report abuse -3 rate up rate down Reply
sam54ct

And yet, we need to earn even less, if we intend to balance the budget, and pay off our debt, rather then leaving it for the younger generation to resolve. We need to cut the Federal budget by 25% of balance the budget, and raise taxes by a large amount, to repay our debt over the next 25 years.

April 21 2014 at 12:30 PM Report abuse -1 rate up rate down Reply
armed_infidel

Do you work for the federal government sam? How in the eff would private citizens earning less do anything to balance the budget?

OY VEY!

April 21 2014 at 9:44 PM Report abuse -2 rate up rate down Reply
2 replies to armed_infidel's comment
SPQR

Obama promised that if he gets amnesty for 5 million up to 20 million illegals who cannot read or write they will save us!!!

Sunday at 10:37 AM Report abuse -2 rate up rate down
user349842

Well, SPQR, trying to deport them all would bankrupt us, or do you not care?

Sunday at 11:41 AM Report abuse +1 rate up rate down