My fellow salaried workers, take a moment to read this:
In a (very good) Quora post, [film producer Christopher] Pollock lists 10 lessons everyone should know about personal finance. They're all great, and many are lessons we've talked about before—but this one caught our eye:
"Your hourly earnings are important. Your annual earnings are not. Someone making $50,000 a year at $500 an hour has more of their time (meaning their life) than someone making $100,000 at $50 an hour. This is the single most important concept in understanding who is rich and who is not.Someone is not living an enriched life because they have amassed wealth and material possessions. Someone is living an enriched life because they have the freedom to spend their time how they wish!"
Only you can really decide what balance is best for your life, but the general takeaway applies to us all: being rich is about more than money. You have a limited number of hours in your life, and that's an important part of the equation.
Now, before you do the math (after all, you're a mathlete because accounting amirite?), think about this for a moment. Do you really want to know how much you make per hour? Worse, do you want to know how badly you are getting ripped off on overtime?
When I first started in CPA review, I was paid hourly. I didn't bill hourly, mind you, so even though I was making decent money for an office jockey living in the Bay Area, I might as well have been salaried. No overtime, but I did get a nice daily payment for working live classes on weekends. Filming our live classes (which some of you "enjoyed" online) was an even better "deal" — I got a nice daily payment for a 12 hour day (8 hours live class + 2 hours commuting + registration of students + setup and breakdown of classroom). At the time, it was pretty sweet getting extra money for what was fairly easy work (having to stay awake through 8 hours of CPA review class I've seen a thousand times aside). But if I really calculated my hourly rate, I was getting screwed.
There is a reason people will tell you to enjoy being an intern while you can. It's the only time you're not only getting paid by the hour but getting overtime on top of it (unless, of course, you're in one of those states where a Big 4 firm has gotten sued for ripping people off on overtime). From there, you may look at the extra zeroes on your offer letter and think "man! That's a ton of money!" but just wait…
Let's say your offer is $50k. Divided by 52 weeks, if you're working 40 hours a week, that's a smidge over $24 an hour. Now, we all know 40 hour weeks are not the norm in public accounting. It's crunch time and you realize you've put in 60 hours this week between late nights at the office and working from home on a Sunday. How much are you pulling in an hour? $16. Just think, there are CPA review employees out there making more than you.
Let's average it all out and say you work 50 hours a week, every week — we're throwing out vacations here because I'm no mathlete and that will just make things harder. That's $19.23 an hour. The guy who rings up your groceries at Safeway probably makes more than that and he's union so he probably doesn't work more than 40 hours a week.
Using lazy math, there are 8766 hours in a year. If you're making $50k a year and working 50 hours a week, that means your entire year is worth $168,570.18 (feel free to check any of my math here, they don't pay me to count).
Now, the truly crazy thing here is that your time is worth a lot more than what your employer will pay you for it. There's a whole opportunity cost calculation in here that is far beyond my mathletical abilities.
Oh, and in case you're curious, I get paid about $6 an hour now1. It's alright, though, I'm happy with my nice apartment and flexibility to clean up kitten shit during work hours. How much are you making an hour?
1 I'm joking. I get paid in exposure.
