Do This 1 Exercise To Discover How Much Money You’re Really Making

When you ask the average person how much they make they can spit out a number without much hesitation. They’ll say something like, “I make $67,000 a year.” Or they might share, “I make $21 an hour.” The number that most people share (and what likely popped into your head) is their salary or hourly wage. 

Why should you know this number? Why does it matter?

Because this is the primary number that you’re using to judge the opportunities that cross your path.

Think about it, what’s the first thing you look at when you get a new job offer? If you’re like most of us it’s probably how much it pays.

Your doubt and second-guessing keep your business ideas on hold because you’re not sure any of them can replace what you’re already making.

Not understanding your real wage could be part of the reason you feel stuck in your job.

But here’s the thing. The dollar amount that shows up on your W-2 or 1099 isn’t your real wage. There’s more that goes into it than that. And once you have your REAL wage you have better information to use when making decisions. Knowing this figure gives you a new level of awareness and confidence with your money.

So how do you figure out how much you really make?

It starts with your salary, the number you’re most familiar with that shows up on your paycheck.

The first thing I want you to do is to add in any benefits you receive from working that aren’t reflected in your paycheck. This could include insurance premiums, paid time off, tuition reimbursement, and any additional perks that have a monetary value.

I’ve noticed that many people already do this part of the exercise, especially when they’re deciding between two job opportunities. It’s the next part of the exercise that most people aren’t doing.

For this next part, I want you to add up the expenses associated with how you earn your income.

If you own a business you are likely already doing this, since these deductions lower your tax bill at the end of each year. However, if you’re not a business owner you’ve likely never considered how much your job costs you each year. For each of the items below I want you to calculate the monetary cost as well as the time cost where applicable.

Your Commute

Fuel, parking, tolls, and wear and tear on your vehicle all come with a cost. Even if you use mass transit or rideshare, there’s still some outlay of cash. Also, ask yourself, how long is your commute on an average day? I’ve always included my commuting time as part of my work time. If you work 55 hours a week and you have a 2-hour commute each day aren’t you really using 65 hours of your life, not just the 55 that show up on your pay stub?

Clothing

What clothing are you buying for work that you wouldn’t buy otherwise? This Includes uniforms and other attire that you are required to wear for your job. This also includes the accessories you buy to keep up appearances. I saw this behavior repeatedly when I worked in the corporate world, and yes, I even participated. I see your sparkly Tiffany watch and raise you a sleek Michael Kors tote (or in my case, diamond jewelry, and a Gucci purse). As for your time, think about how much time you spend shopping for clothing as well as how long it takes you to get ready for work each day.

Meals

Are you grabbing a coffee on your way to work? How often do you hit the drive-thru for a grab-and-go breakfast? What about lunches out? Do you hit the vending machine once or twice a day like I did? This all adds up and I can tell you from personal experience this is a cost that vanishes when you’re able to work from home. Your time cost for this category would include any breaks where you’re basically still at work (or near work) but you’re not being compensated for your time.

Your Social Circle

Do you participate in extracurricular activities that if it weren’t for your job you wouldn’t otherwise attend? This could include sporting events, golf leagues, and happy hour gatherings after work. Do you feel required to participate in team-building and networking events to maintain your position at work? If this weren’t the case would you be doing something different with your leisure time? If this is true for you then please consider the time commitment here along with the monetary costs.

Decompression and Escape                                                                                                               

Where are you spending money and time on things that help you decompress because “it’s been one hell of a day” … again? When we spend day after day feeling unfulfilled, we reach for numbing devices to help us cope. This could include alcohol, drugs, food, gaming, or binging one series after another. Whatever it looks like for you, if you’re constantly seeking an escape from your work this is an area to dig into to see what impact it’s having on your life.

Work-Related Illness

This last one is the most overlooked, but maybe the most valuable area to consider. If work-related stress has started to manifest itself physically in the form of illness and/or pain, I beg you to take a closer look at what it’s costing you. You might consider therapies like massage or chiropractic care if you’re dealing with pain from sitting for too many hours. You may also think about medications you’re taking to cope with symptoms of stress and/or illness related to your job. It could be difficult to come up with a specific dollar amount here but sit with this information and see what comes up for you in this area.

So why is this exercise important? I can give you a few reasons.

1. It gives you a framework to use when making financial decisions.
2. It puts your job into perspective, so you know what you’re actually getting paid.
3. It helps you assess current and future employment opportunities by leveling out the benefits and expenses so you can accurately compare them.
4. Knowing your financial numbers increases awareness which ultimately leads to action. And consistent action inspires confidence! Don’t you want to feel more confident with your money?!

After you finish this exercise feel free to answer these questions in the comments!

How do you feel about your results from this exercise?

Were you surprised? Disappointed? Inspired to make a change? I wanna hear about it!