Saturday, June 5, 2010

How much is your hourly worth?

I have a friend who teaches me how to calculate one’s hourly worth. The formula is simple, just divide the total amount of money you earned from your job by the total time spent in your job. By using this formula, he mentioned to me that if you are working overtime (OT) without any type of compensations like OT pay or day off, your hourly worth will drop.

I have improvised his formula by adding more details to reflect a more accurate calculation for the hourly worth. My formula is simply using “Net total Incomes per month” divided by “Total time spent on all the incomes sources per month”.

Net total incomes per month = your normal job income per month including all the bonuses (just total up all bonuses per year and divide it by 12 months) + your passive incomes per month - amount of money spent in order to generate for all incomes per month (this includes transportation, working clothing, shoes etc).

Total time spent on all the incomes sources = Normal working hours including travelling time, overtime + time spent on building up your passive incomes per month.

For example, let’ say a man has an income of $3000 and bonuses of $6000 per year. He has a passive income of $700. He spent $200 to generate all the incomes per month. He has to spend 160 hrs during his normal working schedule and 40 hours of overtime work per month. He will need to spend 40hrs on transportation per month.

Based on the above example:
His net total incomes per month = $3000 + $6000/12 + 700 – $200 = $4000
His total time spent on all incomes per month = 160hrs + 40hrs + 40hrs = 240hrs
His hourly worth = $4000/240hrs = $16.67

So how much is your hourly worth based on the formula?

Have you started your journey towards financial freedom?