# How to Calculate How Much You REALLY Earn

When I decided to get my financial life in order, the saddest realization I had was that I didn’t get as much money as I thought. Once I asked myself: $40,000 a year is how much an hour? If I work 50 weeks a year and 40 hours a week, I should earn $20 an hour. Quite logical, isn’t it?

Well, everything is not that obvious.

## What Reduces Your Take-Home Pay?

Taxes are the first point to mention. If you wonder how to calculate how much you make after taxes, the following kinds of taxes are essential for you: state income taxes, FICA taxes, and federal income taxes. Federal taxes take away 11% of your salary, state taxes take away around 4%, and FICA eats roughly 2% of your paycheck.

The second point is commuting. I drive over 10 miles each way, that’s why I have my own vehicle. I pay roughly $180 a month for it, over $40 in gas, $30 in maintenance costs, and $30 in car insurance. **Every single day I spent 40 minutes commuting.**

A nice wardrobe is the third point. To look appropriately at conferences and meetings, I spent $250 a year on clothes. Sometimes I had to attend meals related to work or other activities, that ate down extra four hours a month.

When you consider all these points mathematically, the equation starts changing.

After getting my $40,000 salary, I would spend $6,400 in taxes every single year. I would pay out $3,420 in commuting by my car, and $250 in clothes each year. Extra meals would set me back about $1,000 out of pocket each year, plus $300 from travel expenses. I don’t include the money paid for the resume help online, as it was a one-time fee for the professional job application writing assistance.

Suddenly, my $40,000 salary turns into $28,330.

Next, I would work 40 hours per week, which means 2,000 hours a year. Except for that, I would add 10 unbilled hours a week (more than 50 weeks), three hours spent on commuting a week (more than 50 weeks), 250 hours spent on traveling, and 48 hours spend on extra activities.

As a sum, we get 2,848 hours or 57 hours a week devoted to my job. Suddenly, my salary turns into $10 an hour. Now you know how to calculate how much you make. You are warned that revealed numbers will shock you.

For sure, my job has other valuable benefits, but I have never used them. After my wife and I compared our health insurance plans, it has appeared that her plan is better than mine, so I used her insurance. I didn’t use their option of life insurance or retirement plan as well. Such things are valuable only if you are using them.Some bright sides:

### How Can Undergraduates Earn More Than Graduates?

Surprisingly, I earn even more when I was an undergraduate. My salary was $12 an hour. I did not have to spend money on travel, wardrobe, extra activities. I didn’t have unbillable hours as well. I didn’t pay for commuting because I worked close to my home. As a result, I got more than $10 I earn at this job.

**On a per-hour basis, the part-time job I had as an undergraduate was more profitable than my first “real” full-time job.** It was also much more stressful and less intrusive in my life.

One of my friends got $7.50 an hour working at a gas station on the night shift. This gas station was next to her home. Consumers appeared once every 15 minutes, so she spent most of her time sketching and reading books. She didn’t have a car. When she needed to go somewhere, she just took a bus.

Sometimes it seemed to me that she spares more money than I do. Yet, when I began running numbers this way, it is not surprising, especially if she paid lower rent and utilities than I was.

My other friend earns $15 an hour. She wondered 15 dollars an hour is how much a year. I advised that she uses the same method as I did, but vice versa. If she works 50 weeks a year and 40 hours a week, her annual income should be $30,000 per year. However, you see that this number is not always true.

If you wonder how to calculate how much you make an hour, you can also take advantage of the desired salary calculator.

## 5 Tips on How to Calculate How Much You Really Earn

- Figure out your yearly pay or calculate it if you are paid hourly.
- Consider your tax rate and how much state, federal and FICA tax you have to pay each year.
- Add up your commuting, wardrobe, meals, and travel costs.
- Subtract all the applicable expenses from your yearly salary to discover how much you really make.
- Wonder how to calculate how much you make a month? Just multiply your hourly salary by the number of working hours and working days a week.

### When It Appears Your Salary Is Not Worth It

Such a realization encouraged me to make a career leap and begin working on writing full time. It excluded commuting, wardrobe costs, and eating costs. The time I spent on work was really spent on work. I didn’t travel anymore.

When I made this move, my salary dropped through the floor. Yet, after running such numbers, I discovered my annual income didn’t go down that much.

There is one more simple way to **calculate how much you earn a day**:

- Consider your pay stub and look at how much you earned for that pay period and how many weeks this pay period consisted of.
- Divide how much you get for the whole pay period by the number of weeks in it.
- Divide the amount you earned per week by the number of working days in a week.

## Bottom Line

Your salary can be expressed in terms of an amount per hour, per week, or per day. Yet, you should check how much you really make.

When changing a job or career, think through such things. Sometimes a job that may seem to be great is not great at all. On the contrary, a job offer that does not seem to be a good deal may fill your purse with a lot of money.

Now that you know how to calculate how much you make a year, you can reveal what your real income will be before taking a new job and answering the ‘desired salary’ question. Don’t forget about such aspects as schedule flexibility and stress. Sometimes a “low-end” job can be good for you if you are developing a side business or other opportunity to make a fortune. After having read this article, you can figure it out.

If you know other methods of calculating your actual salary, you are welcome to share them in the comments section below.