How Long Did You Have To Work For That?

 

I’m bringing you math on Monday! Stay with me. This won’t hurt.

I am the worst with math! My eyes glaze over any time someone throws numbers at me, but add a dollar sign, and my interest returns with interest.

I think the biggest reason people overspend is because they’re not seeing the real cost behind each item, but there’s an easy way to calculate the real costs of any item.

• Look at your check stub and find your NET pay. That’s take-home pay after taxes and deductions.

• Divide your take-home pay by the number of hours you worked.

For example: Let’s say your take-home pay for a two week period was $1000. Divide by 80 (assuming you work 40 hours a week). You have a net worth of $12.50 per hour and after taxes and deductions.

The difference between Gross and Net pay will vary depending on your tax bracket and the number of deductions you take.

None of this matters in the big picture. Well, it does, but only on April 15th when it’s time to pay taxes. For our purposes, (what it costs to buy something) we want to focus only on your hourly take-home pay.

If you earn $12.50 an hour (Net) that’s going to be your magic number.

• So if a paperback costs you $11.00 that means you will have to work 52 minutes to earn that book.
The calculation is: 11 (the book) divided by 12.50 (your net pay). The sum equals .88 (or 88 hundreths).

88 is a percentage of 100% of your take hourly home pay.  88% of 60 minutes (the hour you worked) is 52 minutes.

• If a dinner out costs you $25 (with tip), you will need to work two hours for that meal. 25 divided by 12.50 equals 2 hours.

• If a new coat costs you $95.  95 divided by 12.50 equals 7.6 hours.

By now you’ve gotten the picture. Things are way more expensive than you think once you bring the numbers down to how long you have to work to earn them.

When I was at my 9-5 job, I certainly didn’t want to be there any longer than necessary. This meant I better really appreciate that new pair of jeans or that dinner out because that’s not just money, it’s my time.

Today of course, we’re on a fixed income. We’re living on whatever we saved for our retirement. You bet we’ve cut back on eating out and entertainment. Tangible goods and services are scrutinized for long term value. We can’t afford to impulse buy. We make allowances for birthdays and anniversaries, but for the most part we’re good with our money.

This week we’re on a prescribed No Spend Week. Mandatory things like insurance and medical expenses came due last week, so it’s a good time to cut back and not buy anything for a whole week.

We did a No Spend Month here, with mixed results that I blogged about here. a No Spend Week/Month works magic if you can swing it.

Have you ever looked at how many hours you had to work to buy something? Was it a revelation? Will you look at impulse buys differently after this?

Are you good at math? Greg is the math wizard in the family. The dogs are pretty good too. They always know whether they got a whole cookie or a half cookie.

 

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12 Comments

  1. Madeline: You’re brave for making the effort to read the post. 🙂 I’ve never liked math. I was satisfied just to balance a checkbook.

    But the point of this article is that it’s not just money, but your time. My time is way more valuable to me, so if I commit to something it’s got to be worth it in the long run.

  2. I’m actually good at math and like it. My husband is still working so we have his income, my itty-bitty writing income and our pensions. We’re investing in our house at the time so we’re not spending much on eating out and any kind of entertainment. Looking at your actual hourly income after taxes is always sad.

    • Susan: I never got too excited when potential employers flashed these big numbers at me as a salary. Once you take out all the deductions and taxes, that big number gets mighty small. I was more interested in the job itself. If it’s fascinating or satisfying I could live on a smaller paycheck.

  3. Angela Brown

    I haven’t really looked at how long it would take me to work to earn certain extras, but when it comes to the budget, I’ve made some not so smart decisions that I’ve learned from, particularly when it comes to learning the value of knowing your debt to income ratio and how to improve your situation as you analyze it over time.

  4. We don’t do the net hourly income, but we do “joke” about how many hours hubby has to work something (say like groceries when we go to the store) versus how many hours I have to work for the same. Its pathetic the difference, but that’s another story for another day (not happy with my work situation right now, long story). Anyway, it is good to put purchases, etc., into that perspective. It makes you wonder if you really need that item versus just a want. I’m sure in the weeks ahead we will be having no spending or little to no spending weeks (again work related, grrrr………..)

    I’m good at math if I can have a paper to work some of the things if I need to. Hubby is good with math in his head (but then I can spell better than him without spell check 🙂

    betty

  5. Betty: When you break it down to how long you have to work to buy something it makes you think.

    I think our biggest mistake as a nation is that we’re raised on the ideal that we should all have what we want. Anything less is cruel, which is of course totally ridiculous, but that’s the power of the masses. Jimmy has something so I should have it too.

    I’d like a fancy vacation, but I don’t need one, nor do I feel cheated because my friends go on nice vacations. It’s all a matter of perspective.

    PS Sorry about your work situation. I hope you find something better.

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