How much do you make per hour?
This is a simple question, but once you dive deeper things…get interesting.
The hourly wage is a fixture of everyday economics. The minimum wage, while imperfect, establishes the floor for survival. It’s easy to take for granted-the minimum wage was established less than 100 years ago when the Fair Labor Standards Act were enacted in 1938.
I’m interested in the hourly rate because it serves as a fundamental unit of accounting for your financial life.
You can use your hourly rate to make decisions about money, whether it’s how much to spend, save or invest.
Let’s say you’re feeling unsure about a new purchase.
It’s $2000.
If you make $50/hour, then it would take you 40 hours — a working week — to make that amount back.
Aside: mental math trick to convert between hourly rate and annual salary
For a $50,000 salary, divide 50 by 2 to roughly get $25/hour.
Or multiply your hourly rate by 2. If you make $25 an hour, then you make about (25 x 2) = $50,000 per year.This calculation is based on: 40 hour work week x 52 weeks = 2080 hours. We just multiply or divide by 2 (a proxy for 2000) to get a quick estimate.
I was blown away the first time I looked at my spending from the point of view of my hourly rate.
