I’ve been reading this book lately, called “Your Money or Your Life” by Vicki Robin and Joe Dominguez. The basic premise of the book is that you can have both – your money and your life. They talk about people “making a dying” rather than “making a living.” If we were all going to work to make a living, wouldn’t we come home more energized?
The part of the book that stood out for me, especially as it pertains to budgeting, was figuring out what you are actually making per hour. This was particularly helpful for me, as I was offered a job this week and I was trying to decide whether or not to take it. The authors of the book said to decide what you make hourly (after taxes) and then subtract any expenses that you incur because of the job. This might be daycare, clothes (or uniform), phone, gas, car (would you drive a different one if you weren’t working there?) and put a figure on all those expenses. Then figure out what your actual, hourly wage is. For example…
$45,000 (based on a 40 hour work week)
$31,500 – Hourly: $16.40
Expenses because of this particular job…
$200 a month / Hourly:$1.25
Gas to get to and from work:
$200 a month /Hourly: $1.25
Clothes for work:
$100 a month /Hourly: $0.63
Phone (have to have a blackberry because of work):
$65 a month /Hourly: $0.41
Lunches once a week at work, coffee shop each morning:
$20 a week /Hourly:$0.50
Take out once a week:
$30 a week /Hourly:$0.75
After expenses, my hourly would be: Hourly:$11.61
So, in this example, I would be making $11.61 an hour after the expenses I incur because I’m working.
I’m not saying it’s bad or good to make $11.61 an hour (specifically for this case); I am saying that it is worth knowing how much you are actually making.
This not only helps when deciding if you are going to change your employment but it also helps when you are planning to make purchases. For example, if you want a new pair of shoes and they are $50, you might be thinking,” I make good money, I’m going to buy those shoes.” After doing this exercise, you would now think, I have to work five hours for those shoes, do I really need them?
Obviously there is much more to working than the money we make – it also has to be fulfilling. Often people choose work for the satisfaction of it and sacrifice being compensated well financially for it.
I hope this just gives you something to think about. It definitely helped me figure out whether I was going to take that job offered to me or not.
Carmen publishes a blog at: www.budgetobsessed.blogspot.com