What Is You Real Hourly Rate? It's Much Lower than You Think

bl1027 on 17/11/2016 - 14:56

And no, I don’t mean your net hourly rate. I mean the rate after you factor in all the expenses and time incurred to generate your income.
 

My gross rate is $45/hour.

My net rate is $30/hour or $1140/week

Then I add all the expenses I incur to generate income (train fare ($40/week), work clothes ($600/year), lunch once a week ($10/week), miscellaneous eg. office charity donations ($10/week)). Could also add child care, petrol/parking, lots of work clothes/shoes.

 
Then, on top of the usual 38 hours/week, I add all the time spent on work related activities - getting to and from work (2 hours/day), overtime (2 hours/week), getting ready for work in the morning (2.5 hours/week), after work drinks (1 hour/week).

So (Net pay – expenses incurred)/(38 + incidental time) = $20/hour.

 

$20/hour. Less than half my gross rate…

What is your real hourly rate?

Education & Work

Comments

  • [Deactivated] on 17/11/2016 - 15:28
    +6

    I think there is much more to it than that.

    I spend a lot of time flying, usually overnight, early morning or over the weekend. That is more or less "working" time.
    But what I get in return is having a company pay for me to travel and I get to spend my time in places like Singapore, Malaysia, Thailand, etc.

    The experiences I make for myself in my off time while overseas or interstate can't easily be quantified by a dollar amount.
    Those experiences are far more valuable to me than the financial remuneration.

    I've had offers that would have bumped up my salary by 60%, but I would have lost the experiences I can enjoy now and that is far more valuable to me than more money.

    • dogboy on 17/11/2016 - 17:25
      +5

      Personally I hate travelling as it takes me away from my family for extended periods and they only fly people coach which is painful on long haul.

    • esq on 21/11/2016 - 08:42

      Just curious, what do you do?

      • [Deactivated] on 30/11/2016 - 20:36

        Short answer, cloud computing.

        Past two weeks was a big one. Went to Jakarta, Surabaya, Singapore, Bangkok and now in Kuala Lumpur until Sunday night.

  • dasher86 on 17/11/2016 - 15:42
    +2

    you're not taking into account sunk costs.
    you'd still have to eat lunch every day.

    the rest is all hear say.

    • JIMB0 on 18/11/2016 - 18:52

      You still have to eat lunch if you don't go to work.

  • altomic on 17/11/2016 - 15:44
    +1

    What your employer doesn't want you to know.

  • bonezAU on 17/11/2016 - 15:54
    +1

    $10 per week for office charity donations?

    • The Wololo Wombat on 17/11/2016 - 17:32

      Maybe a few big ones thought the year? $520 per year is reasonable.

      • ms_caz on 17/11/2016 - 18:54
        +3

        $520 a year is reasonable - ??? I donate to one or two charities of my choice but i don't give $520/year! I think that is far more than "reasonable'!

        • pais on 18/11/2016 - 00:44
          +1

          It's a perfectly reasonable amount. We donate about that each year, usually in 100 or 200 lumps, to charities that personally impact us. If you don't give that much, that's fine; it doesn't mean you're being unreasonable just because you're not hitting half a grand.

        • Euphemistic on 19/11/2016 - 08:11

          @pais: $480 per year if you take your leave.

  • SnoozeAndLose on 17/11/2016 - 15:58
    +1

    $30 per week for coffee? $10 to wash work cloth?$5 for electricity to wash clothes?

    $200 per year to buy glasses to read? health insurance? income protection?

  • PcisT on 17/11/2016 - 16:14

    I thought charities were optional. Am I missing something?

  • mskeggs on 17/11/2016 - 16:30
    +4

    This is the key conceit of the book "Your Money or Your Life" where the authors argued if you work out your real hourly rate you can more easily manage your expenses. So that pack of eneloops equates to 2.5hrs of work or whatever. This was the key tool to use in cutting down your expenses to the things that were critically meaningful to you.
    The goal being to cut your expenses low enough that you could quite the rat race and live off investments and a bit of part time work.
    The rest of the book was about investing in inflation hedged bonds, which isn't viable in our current extraordinary financial climate as they are yielding well under 1%.
    Unluckily/ironically, one of the authors died quite young before traditional retirement age, so provided good evidence of the benefits of living life to the full.
    This link appears to be a good summary, and to be honest, while I found the original book eye opening as a young adult, it was a bit long winded:
    https://ymoyl.wordpress.com/summary-of-your-money-or-your-li…

  • PAOK11 on 17/11/2016 - 16:31

    Do you work in a bank ?

  • Savas on 17/11/2016 - 17:28
    +7

    lunch once a week

    You must get very hungry.

  • Olokun on 17/11/2016 - 17:50
    +4

    Not being at work = spending money, therefore being at work not only earns me money, it saves me money!! So does that make my real hourly income higher then my net?

    Edit. But then I need to factor in time at work on ozbargain buying things I don't need and wouldn't have seen otherwise.. crap this is getting complicated.

  • shadowarrior on 17/11/2016 - 23:20
    +3

    Tonight, live on A Current Affair; are you paying out of your pocket to work for your employer? Find out about all the expenses hidden behind your pay package!

  • affable on 18/11/2016 - 07:52
    +1

    I negotiated to work from home about 11 years ago exactly because of this. There are huge hidden time and money costs involved in going to work. However my rate is about 30% less than a city job. For me its about lifestyle, especially while kids are still at home.
    Irony is that while I only go into the company's office for work around 2 to 6 times a year, I end up "commuting" about 45mins 5 days a fortnight driving the kids to school in the morning. Just as well it doubles as a driving lesson for one kid right now.

  • boccos on 18/11/2016 - 07:53

    You probably need to add some back in such as Superannuation, which is one thing you also get because of your employment. Also any perks you get along the way.
    Just saying…..

  • StuffnStuff on 18/11/2016 - 08:35
    +2

    Your employer probably has an hourly rate that its costs the to keep you….. your hourly rate +super, sick, vacation, maternity leave, smoko breaks, office space, extra long lunch break, facebook time, twitter time, texting time, having a chat about the footie/masterchef and the list goes on…. :-)

    I'm not an employer, just a contractor that often has to justify my hourly rate and existence I look on many employees and think they could never make it in the real world.

    The question is, if you were an employer, would you employ yourself knowing what you get upto during the day.

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