Of all the chapters in all the books I’ve read in my life, one has impacted me more than any other. It was Chapter 2, “Money Ain’t What It Used to Be–and Never Was”, in the book Your Money Or Your Life by Joe Dominguez and Vicki Robin. The chapter outlines perspectives on money as a whole, presents the concept of calculating your “real hourly wage”, and wraps up by promoting the tracking of every penny you spend. It’s an absolutely amazing read and if I had to recommend one chapter to anyone looking to improve their financial life it would be this one.
I was recently calculating our “real” hourly wages, when I found myself deep in thought about what expenses could be contributed as job related. Anyone who has struggled with this question before knows there is a lot of gray area when crunching the numbers. For example, a big part of this calculation involves examining areas of your life and determining on which things you are overspending due to stress from overworking on the job. The authors suggest categories such as vacationing, weight loss programs, entertainment expenses, and even “recreational substances” can easily see increased spending when we are stressed and need a release.
Note: I’m not going to go into the process of outlining the calculation of your “real wage”. For those readers who are new to the concept of calculating your real wage altogether, I strongly suggest you check out two of J.D.’s (Get Rich Slowly) posts from last year:
Revisiting this concept got me brainstorming to see if I could come up with any categories or ideas I was leaving out. Before I knew it…
EDIT 4/2/09: The majority of the following list was originally published in Your Money Or Your Life. Although I’ve added, removed, and combined categories based on my personal experience, I in no way claim this content to be original.
Shut-up and give me the list!
- Gas spent commuting to work
- Oil used as part of commuting
- Regular maintenance from commuting
- Tires (percent due to business use)
- Depreciation in car’s value due to commuting miles
- Car Lease Payment
- Car Loan Interest
- Amount overspent on fancy or new car to impress clients/co-workers
- Speeding tickets during commutes
- Insurance deductibles from accidents while commuting
- Increased car insurance rates (see above)
- Parking pass/fees
- Tolls, highway passes, etc…
- Public Transportation
- Bicycle costs and maintenance
- Car expenses for any of the items listed below (shopping, eating out, etc…)
- Uniforms (non-reimbursed)
- Business Outfits (stuff you don’t wear on days off)
- Accessories (high heels, neckties, purses, etc…)
- Specialty dry cleaning
- Make-up for work
- Jewelry to impress clients/co-workers
- Specialty perfumes and colognes
- Fancy hair care, shaving, eye brow plucking, other toiletries for work
- Hardhats, earplugs, welding masks, safety glass, etc…
- Briefcases, laptops, jump drives, pens, notepads, etc…
- PDA’s, smart phones, personal productivity products, etc…
- Increase in personal cell phone plans due to work
- Trade magazines, online subscriptions, other paid media
- Federal Taxes
- Social Security/Medicare (if not included above)
- State Income Taxes (if applicable)
- Local Income Taxes (if applicable)
- Caffeinated beverages for work energy (coffee, energy drink, etc…)
- Eating out before, during, or when “off” if too tired to cook/pack food
- Increase in groceries from expensive, prepackaged, precooked, but convenient foods
- Specialty weight loss programs from stress/lack of focus due to work
- Childcare expenses
- Office parties, contests, competitions, gifts, etc…
- Unfulfilling job seminars, specialty training, books, etc…
- Professional licensing, association dues, union dues
- Money spent “unwinding” with alcohol, tobacco, etc…
- Increase in entertainment “releases” from stress (shopping, movies, dinners, HBO, etc…)
- Big “escapes” (Exercise equipment, speedboat, timeshare, etc…)
- Hired help for household chores (housecleaning, lawn mowing, dog-walking, etc…)
- Extra vacations to “escape” work
- Increased vacation costs from lack of time to plan/shop fares, expenses, etc…
- Increased sick time (uncompensated)
- Increased costs associated with stress-related illnesses.
Don’t forget to include the time spent on a lot of the activities above as well. This time should be added to the actual amount of work hours before running the calculations.
Also it should be noted that some of these ideas do have positive benefit as well. In addition, some jobs have added benefits in the form of reduced insurance, paid sick days, company cars, etc… This isn’t meant to be a negative list. Actually, the end point of all of this is to accelerate the accomplishment of your goals by realizing that you are constantly trading your “life energy” for money (and not as much money as you think). The quicker you can get out of this process, the more time you’ll have to live your wildest dreams!
What things did I forget? What other things do you use to calculate your real hourly wage? Let me know below and you just might get it added to the main list above!