The quickest way to calculate this number is to look at your most recent tax return. Find the total gross income and subtract total tax paid. Now divide that number by the total hours you worked in that year. Unless you work fixed rostered hours you’re going to have to guesstimate that number. Take into account public holidays (typically we get 8 every year). Remember all the sick days and mental health days and ‘fuck it, it’s Monday’ days that you didn’t work. The final number gives your Nett Hourly Rate.
I created a spreadsheet to make it easier for you.
Why is this dollar amount so important? Well, whenever you go to buy something that is non-essential just ask yourself how many hours do I have to work to pay for this? The answer can sometimes make you sick, and save your money. And when I say ‘you’ I mean me. Working a uni job to pay the bills and support my new family meant my Nett Hourly Rate was crappy. Just because there’s money in the bank doesn’t mean it can be spent; budgeting 101.
When I discovered this number all of a sudden the appeal of Sunday morning cafe dining wasn’t as appealing. The bill wasn’t $X. It was X/NHR hours work. Now that’s OK if you love your job. But I didn’t so is it was an easy equation; this experience isn’t worth 2 hours of my slavery. Then I started apply it other aspects of my life. Suddenly the basics of economical rationalism moved from theory to practical. Labour exchanged for pay does not always equal exchange of pay for goods and services.
This process has helped to reduce waste and increase cash reserves in our household.