# 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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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

Sunday at 9:25 PM Report abuse rate up rate down Reply
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July 17 2014 at 2:36 PM Report abuse 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 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 -1 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 -1 rate up rate down Reply
3 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 rate up rate down Reply
progressivehoax

It's the country's moocher.

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

This is why the number of stay-at-home moms (or dads) is increasing. Once they factor in the business expenses of wardrobe, transportation & add in the cost of child care, the reality is that they are paying in order to work. There is also an additional thing that more & more people are paying for.... some businesses are freeloading off of employees' cell phones. They have 1 number which then forwards calls to employees' personal phones... same for computers, etc..

April 21 2014 at 12:22 PM Report abuse +1 rate up rate down Reply
Tom Wilson

Scottilla
Of course you are including Medicare and Social Security, programs for which the beneficiaries have paid their own money and is not costing workers anything.*******

, SS pays out about \$60 billion more than
it takes in from payroll taxes. that shortfall needs to be made up by increased borrowings by the federal government.   Most Americans take out far more than they pay into Social Security, but the biggest net "winners" are middle class americans.
Medicare, the same. Consider an average-wage, two-earner couple together earning \$89,000 a year. Upon retiring in 2011, they would have paid \$114,000 in Medicare payroll taxes during their careers.
But thy can expect to receive medical services -- from prescritions to hospital care -- worth \$355,000, or about three times what they put in.
Like it or not, the fact that you paid in for 40 years is irrelevant. We run deficits today, and SS now pays out more than it takes in. Therefore, the government has to borrow to fund SS. At some point, the bond markets stop lending to us. If that happens, you can try taxing the rich all you want, it won't make a damn bit of difference.

April 21 2014 at 11:52 AM Report abuse -1 rate up rate down Reply