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# How much do I really make?

## Breakdown my dollars!

When I got my first job, I knew exactly how much I made an hour because they offered me \$4.00 an hour. (I'm old!) When you are paid a salary, you may forget what you make for an hour of work. Why is that important?

Have you ever thought about translating a purchase into the time it took you to earn enough to pay for it?

Here's a simple way to look at it using round numbers. Divide your salary by 2,000 hours. If you make \$60,000, you are making roughly \$30 an hour.

If your taxes and benefits are 30% of your paycheck, then your \$30 an hour translates into bringing home \$21 an hour with \$9 an hour paying your taxes and benefits, like health insurance. [I am using 30% as an estimate of taxes and benefits. This varies. To calculate your personal take home percentage, divide your take home pay (net wages) by your gross wages.]

 Salary Hourly rate Taxes & fringe benefits per hour Take home pay per hour \$45,000 \$22.50 \$6.75 \$15.75 \$60,000 \$30.00 \$9.00 \$21.00 \$75,000 \$37.50 \$11.25 \$26.25

Now that you know one way to calculate what you make an hour, how can you use that information?

Making your dollars work for you.

Suppose you are considering buying a new pair of boots. If those boots cost \$105 and you made \$60k a year, how does it feel to know that you worked five hours to pay for the boots? If the boots cost \$210, how does it feel to know that you worked ten hours to pay for them?

The thing is, only you can answer the question. For some folks, that's a bargain. For others, the translation into hours of work makes the boots too expensive.

If I know my hourly rate of take-home pay, I can use that as a quick tool to assess purchases. Once you have an idea of your take-home pay per hour you have a new lens to evaluate purchases. If you have had trouble in the past with making poor impulse purchase decisions, using this rule of thumb may be helpful.

How do you think knowing your true hourly rate of take home pay could influence your purchase decisions going forward? Share below many hours would you work for a great pair of boots? Are there other ways you can use this easy tool? Leave notes below to inspire others!