Counting all the hours work takes
The book Your Money or Your Life by Vicki Robin and Joe Dominguez popularized a simple exercise: work out your real hourly wage by including every hour your job really takes and every dollar it really costs. Commuting, getting ready, answering email at night and decompressing after a hard day all belong on the time side. Commuting costs, work clothes, bought lunches and convenience spending you would not otherwise do belong on the cost side.
With $1,100 a week take-home for 40 paid hours, the headline rate is $27.50. Add 12 unpaid hours and $120 of work costs, and the real wage falls to about $18.85, roughly a third less.
Using the number
Your real hourly wage is a powerful way to price purchases in life energy. A $95 dinner is about five hours of real work at $18.85. It also helps compare jobs: a slightly lower salary with a short commute and remote days can pay more per real hour than a higher one with a long drive.
What working from home does to it
With the starting figures, $1,100 of weekly take-home pay, $120 of work costs and 52 hours spent on work in total gives a real wage of about $18.85 an hour. Remove the six hours of commuting and cut work costs to $40 a week, as a fully remote role might, and the same pay works out to about $23.04 an hour, more than 20% higher.
That gap is worth weighing when you compare an office job against a remote one at a slightly lower salary.
Common questions
What is a real hourly wage?
Take-home pay minus work-related costs, divided by all the hours your job really takes, including commuting.
Should I use gross or net pay?
Net (take-home) pay gives the most honest number, since that is what you can spend.
Where does the idea come from?
It was popularized by the personal finance book Your Money or Your Life.
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