By The Hour: A 'Working' Mom's Wage
by Myrna Giesbrecht
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You go to work, you put in your time, you do your job, and you get paid. You take the money, you buy stuff with it, you go back to work and the cycle starts all over again. That's the way it goes.
So what do you really make? Have you ever stopped and thought about it? Sure, you say, $10.00 per hour (or whatever it is you get). But, is that what you really make? Whether you get paid by the hour, on commission or salary, you work X number of hours for X number of dollars. If you work 40 hours a week at $10.00 an hour, you bring home a gross wage of $400.00.
But gross wage is not what you really make. Oh yeah, you say, there's those deductions - income tax, benefits, pension plan, whatever. That's true. But gross wage minus deductions only equals net wage and that's still not what you really make.
To spend money wisely, you need to know what your real wage is. Look at it this way. If a shirt costs $40.00 and you make $10.00 per hour, it takes 4 hours to pay for it. Right? Wrong! Actual take home pay is not $10.00 per hour. To calculate real hourly wage, the total amount of money needed to get to work must be divided by the total amount of time spent getting or being there. The true cost of working includes all expenses directly related to working the job including travel time, unpaid breaks, transportation, clothing, lunches, and daycare. Any time and expenses that would not exist if you stopped working.
Figuring your real wage is both interesting and frightening. It's easy to see why home based businesses and working from home are becoming so popular. A lot of time and money goes into maintaining a job that can not be recovered.
Look at the following example. Working seven paid hours per day with one unpaid hour for commuting and one unpaid hour for lunch equals nine job-related hours per day. Expenses include taxes, parking, and vehicle maintenance, clothing, lunches and daycare. Here's how it goes over a two-week period.
Hours and Income
Paid hours - 70
Unpaid hours 20
Total hours 90
Total Income $700.00
Taxes at 22% - $154.00
Parking at $1.25 per day - $12.50
Vehicle maintenance at $50 per week - $100.00
Lunches at $5.00 per day - $50.00
Daycare at $25.00 per day - $250.00
Clothing at $25.00 per week - $50.00
Total Expenses - $616.50
Total Income - $700.00
Less Total Expenses - ($616.50)
Sub Total - $83.50
Divided by work hours - 90
Real Wage $0.93
Now you and I both know that these expenses are pretty minimal for most people's situation, especially in the bigger cities. Yet, in this scenario, real wage is $0.93 per hour, quite a big difference from $10.00. Using the real wage, the same $40.00 shirt would take 43.01 hours to pay for. It sure changes your thinking process.
Calculating your real wage can be depressing, but don't let it get you down. It's a fact of life. What it shows you is how much you actually make and that in turn allows you to make more reasonable and responsible spending decisions. It's easy to see why huge debt loads accumulate when purchases take weeks and even months to pay for. In one day, it's possible to rack up debt that will take several months' worth of work to pay for.
Grab a scrap piece of paper and figure out what you really make. Use this figure as a guide to making spending decisions. Develop a spending plan and put money away ahead of time so you don't get into debt. Real wage applies not only to luxury purchases like extra clothing but also to monthly expenses like the grocery bill. At a dollar an hour, how many hours would it take you to pay for this week's groceries? Knowing that answer might make you consider purchasing sale and brand name items more often. The phrase "its only 50 cents" takes on new meaning when 50 cents is half an hours work.
The first time I calculated my real wage was after the birth of my third child when I was about to return to work. I had a decent job, not bad pay and great hours but after deducting my expenses from income and dividing by the number of work related hours I realized that going to work was going to put me in the hole. I'd be working for negative dollars. It was actually going to cost my family financially for me to go to work. I quit!
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I'm not recommending you quit your day job but I am saying if you know how much you really make per hour and you think of purchases in terms of how many hours of work it will take you to pay for them, it will change many of your decisions and you'll spend less money. You'll start turning the lights off in empty rooms to conserve electricity, finding a way to use up leftovers, shopping at wholesale outlets and other cost saving measures. It might even be the springboard to finding a different job, house or town.
For me it was a great motivator to getting my business up and running from home. It's a lot less expensive to go downstairs and turn on the computer than it is to get on the heels, nylons, "dress for success" suit, power hairdo and co-ordinated accessories. And I like the boss!
Debt is preventing me from taking a vacation this year or the vacation I'd like to take this year! Tell us: Yes, debt is affecting my vacation plans! or No, we're going exactly where we want to go but we'd love to learn make our trip as inexpensive as possible!
Myrna Giesbrecht is the author of You Can Be Debt Free. This article is adapted from text in the book. To get more information about the book or You Can Be Debt Free workshops contact her office at 1-250-828-6734.
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