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What Is Your Take Home Hourly Wage?

Despite popular belief, clocks still tick while you’re commuting.

With everyone scrambling to find employment, it seems important that I continue my posts on employment. If you’ve missed any of them be sure to read:

Today, we’re talking about what your Take Home Hourly Wage (your real hourly wage) is. You have an hourly wage, everyone does.

Even salaried people have an hourly wage, it just can’t be calculated until the end of the year. Most people make a set hourly wage such as $8.00 an hour, but there is far more to it than just that.

You might be thinking “of course there is, taxes!” but that isn’t what I’m talking about either. Jobs come with costs (taxes are one of them), and if you don’t account for them, then you’re going to lose ground quickly.

The Costs of Employment

Do you commute? Do you eat food? What are the costs that you incur when you go to work? It would be a good idea to write your costs down and quantify them. Think of everything:

  • Gas
  • Tolls
  • Food
  • Materials

Think of all the different costs that you have because of your job, that you wouldn’t have if you didn’t work there. Quantify these numbers into one monthly amount, and keep that number on hand.

The Time of Employment

Do you work 40 hours each week? I’d be willing to bet you work more, but you don’t count it. This is especially true if you commute. Obviously, while you are commuting you aren’t making your company money, but that time isn’t just free! You pay for it.

It would be nice if that time didn’t count, but it does. Unfortunately, people tend to not calculate this lost time and it skews their numbers. If you commute 1/2 hour each way 5 days a week, you are commuting 20 hours each month. With a 40 hour work week, and that commute, you should be calculating 60 hours a month on your hourly wage.

Hourly Wage Analysis

As an example, we are going to do a little math. Here are the numbers we will work with:

  • Hourly Wage: $20
  • Number of hours each month: 40
  • Taxes: 15%
  • Gas: $150 each month
  • Tolls: $40 each month
  • Lunch: $80 each month
  • Length of commute 1 way: 30 minutes

Let’s start doing some math. $20 per hour times 40 hours each week times 4 weeks in a month is $3,200. You earn $3,200 each month, not bad! Now, take out taxes: $2,720. You’re still in pretty good shape! Now, let’s subtract gas, tolls, and lunch: $2,450. How much time do you spend commuting?

That would be 30 minutes times 2 ways which equals 1 hour, then multiply that by 20 work days each month: 20 hours. Add that to the number of hours that you work: 60 hours. Multiply that by 4 work weeks, and we’re at 240 hours each month.

So, you earn $2,450 take home pay, and it requires you 240 hours in a month to earn it, what is your hourly wage? Answer: $10.21. That is a far cry from the $20 an hour that you think you make!

Take Home Hourly Wage

Some people might say this is an unfair calculation, but I don’t think so. What you bring home is what matters. The reality of it is that someone has to account for the drive time and the costs, and your employer isn’t doing it. These are all costs associated with working and they need to be considered. Fair warning: before you calculate your Take Home Hourly Wage, be prepared to see a relatively depressing number.

This number may be meaningless to you, but to other people, it could be a real eye opener. If you’re only bringing home $4 – $8 per hour, you might realize that you could do better at home starting a business. Looking at numbers like this helps you make important decisions including:

  • Is the commute actually worth it?
  • Would a local, lower-paying job be better?
  • Could I work fewer hours locally, maintain the same quality of life, and enjoy more time doing what I want?
  • Can I make more working for myself?
These are important questions to consider. You have many options available to you if you really look hard at the situation.
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