By Vicki Robin and Jacquiline Blix

You would think that how much money you make is fairly self evident – just look at your paycheck stub, right? Well, there is more to it than that. Our paychecks don’t give us a true picture of how much money we really make because most people don’t consider how much it takes to support their jobs.

What? Aren’t jobs supposed to support us, not the other way around? Actually, our jobs are like a dependent (one the IRS doesn’t recognize, unfortunately!), in that they take both time and money to maintain.

A key to transforming our relationship with money is to become aware that we’re trading our time and life energy for a paycheck. Essential to this awareness is what we call the Real Hourly Wage – the result of deducting all the costs associated with work and adding in all the non-paid work-related time. Figuring out your Real Hourly Wage usually holds some surprises, so be prepared. For instance, not all jobs that pay the same are equal when you factor in maintenance. Jacque’s husband David found that time spent on business travel made his Real Hourly Wage about half of what he thought it would be.

To calculate your Real Hourly Wage, start with a weekly figure. (If your income varies over the year, take a projected annual amount and divide by 52.) Use the example in the table below as a framework to see how much – in time and money – your employment is costing you. Be honest and thorough when you list your expenses and time expenditures

Once you know your Real Hourly Wage, you can evaluate purchases in terms of how many hours of your life it took to get the money you traded for each item. Using our example of a Real Hourly Wage of $4.80-, a $40 restaurant meal would represent 8.3 hours of life energy traded at work. Now you can ask if this trade was worth it. Only you can decide whether it was, but you can see how using the Real Hourly Wage to do some honest soul-searching will point you in the direction of financial intelligence.

Calculate Your Real Hourly Wage

Here are some additional categories to consider using in your own Real Hourly Wage calculation:

• Restaurant Meals
• Fast Food (too busy or tired to cook.)
• Escape/Entertainment
• Vacations/Toys (“I deserve it. I work hard.”)
• Union/professional dues
• Work related publications
• Personal services (housecleaning, dog walking, home repairs –anything you’d do yourself if you weren’t working.

(Note: Some of these examples might be “tax deductible,” which some people might think is “free.” However, when you deduct a business expense on your taxes, the amount you pay is the same percentage as your tax bracket. In other words, if you are in the 28% bracket you get a deduction of 28%. You still pay 72% of the cost of the item. This applies to mortgage interest as well.)

Originally Published Fall 2000 in Real Money Newsletter
Reprinted Here with Permission of Co-op America