![\"How](\"https://thinksaveretire.com/wp-content/uploads/2015/09/pinterest-job-costing-you.jpg\")
Unfortunately, far too few of us take the time to learn about the flip side of that equation - how much money WE are spending in order to do those jobs.
Effectively, we're slowly and mercilessly killing our hourly wage by spending more than we think in order to maintain our jobs.
If you've ever read Your Money or Your Life, you know this to be a calculation of your real hourly wage, and the math is pretty simple. If you work 40 hours a week and bring home $950, then divide 950 dollars into 40 hours to determine your hourly wage - in this example, $23.75 an hour.
But that's not the real story, is it? Of course not. If it were, then I wouldn't be writing this blog post. The truth is most people - me included - spend money in order to work. The money we spend decreases our effective hourly wage. Every dollar that we spend because of our jobs cuts into our profits from doing that job.
And the sources of these cuts are dreadfully incestuous, too. They come out of nowhere, and most of us have no idea that our jobs are causing us to spend a ton of money on crap that we wouldn't ordinary buy. Most of us don't think about WHY we are making some of the purchases that we are. More of them are job-related than we probably realize.
What if I told you that your real hourly wage can easily be cut in half by hidden (and not-so-hidden) job-related spending?
Let's dig in here a little bit and consider some of these sources of expenditures and what their weekly drains are to our job-related profits. Some are obvious, like gas and car maintenance, but others are much more stealthy, like that vacation you took to \"get away from it all\". Let's face it - the responsibilities of your job are probably part of what you're trying to escape from.
The numbers that I am using below are purely hypothetical. Consider these as an example and substitute your own best guesses. The larger point, as you will soon see, is that our jobs cost us a lot of money, and our hourly wages take a gigantic hit because of it.
Cars and transportation - this is probably the most obvious source of drain to our hourly wage. We may all have cars even if we didn't hold jobs, but what about your daily commute? The oil and tire changes due to the miles that you're putting onto your car? The pothole you hit on the way home from work, requiring a new fender or wheel? Toll roads. Parking fees. If you don't drive, bus or train fees. Even within Cars and Transportation, the most obvious money drain category of job-related spending, hidden expenditures are everywhere and the costs go up, fast. When I commuted for a living, this easily set me back around $90 a week, all-in with car maintenance included.
Food - some of us like to be social and grab a bite to eat during lunch with a few co-workers. Clearly, this adds into our food-related expenses for our job. Don't forget that morning coffee you buy on the way into work, or the bag of chips or cookies that you pick up on your way home after a long and stressful day because, well, you need to relax and unwind. Let's average around $30 a week for food, assuming we bring our lunch at least some of the time.
Unwind and decompress - if you're a human, you probably want time to relax away from your job. For some of us, that might mean food. Or an adult beverage. Or buying a new book or movie. However you satisfy your need to unwind, these costs too cut into your real hourly wage. The more stressful the job, the more potential it has to destroy your profits from work. If this is a tough one to quantify, think about what you do when you get home from work. How many of those things are directly, or indirectly, costing you money? Let's assume $25 a week is spent on items to help you decompress from the job and relax at home.
Wardrobe - most organizations require something other than a t-shirt and shorts. Button-down shirts, blouses, jeans or khakis, dress shoes. And don't forget that all these clothes need to be washed, which requires the use of soaps and other detergents. Also, hair cuts or hair styles can also be a part of these expenditures, too. Let's say this amounts to $20 a week averaged over a year of buying new clothes and keeping yourself generally hygienic enough to work daily at your job without grossing out your co-workers.
Our \"away\" time - even if we enjoy our jobs, they always, at least to some degree, account for our need to get away. This could mean a vacation to somewhere, or a membership to a country club, exercise equipment or your weekend jet ski. You may find that you'd do or have these things anyway, even without a job. But those numbers are exceedingly tough to quantify. The truth is if we didn't have a job, there would be much less to get \"away\" from. Averaged over the year, let's assume $15 in this category.
Stress and ickiness - the more stressful our jobs, the greater the likelihood that we will work ourselves until we are literally sick. Expenses in this category include medicine or prescriptions for your job-induced headaches, weekly massages or any expense related to a medical or health issue from work. Averaged, let's assume around $20.
The Catch-all - here, any other job-related expense gets tracked, like daycare for your kids, a therapist (that was hired due to job-related issues), any shopping that you might do while at work because you are bored or otherwise actively disengaged. Let's use $30 on average (this could add up to MUCH MORE if you're paying for daycare for your child or pets).
If we add up our expenses from all the categories above, we get a total of $230. Remember, that is a weekly figure - in the hypothetical scenario above, we are blowing through $230 every week due to our job. Now, let's see what effect this has over our hourly wage.
Before these costly hits, our hourly wage was $23.75, which was the result of dividing 40 hours worked by the number of dollars that we make in a week, $950.
To determine our real hourly wage, subtract the total weekly job-related expenses from our wage and try the math again. Now, instead of using $950, we will use $720, which is the difference between 950 and 230.
What is our real hour wage: 720/40 = $18. We've gone from making $23.75 an hour down to an effective $18 due to the expenses incurred simply to work.
And honestly, I was fairly conservative with some of those expenses. Many would find their Food category significantly higher than $30. Go out for lunch five days a week for an average of $10 a meal and you're already at $50, and that doesn't include the morning coffee or snacks throughout the day from the vending machine, nor any of the treats that you allow yourself after stressful days or significant achievements.
These costs can easily add up to draining half of your hourly wage away, leaving you with something a bit more modest to be proud of. Most people can expect a least a third of their wages to be stripped away due to job-relates spending. If you work from home, maybe less. If your commute is long and tedious, there is a good chance that it's quite a bit more.
Have you tried calculating your real hourly wage? How much are your job-related expenses taking from your life?
","tags":[{"name":"How to Save","slug":"how-to-save"},{"name":"cost","slug":"cost"},{"name":"expenses","slug":"expenses"},{"name":"Jobs","slug":"jobs"},{"name":"Live Differently","slug":"live-differently"},{"name":"Change Your Life","slug":"change-your-life"},{"name":"How Life-Changing Things Happen","slug":"how-life-changing-things-happen"},{"name":"Save Money","slug":"save-money"},{"name":"Retire Sooner","slug":"retire-sooner"},{"name":"Retiring Early","slug":"retiring-early"},{"name":"Psychology of Spending","slug":"psychology-of-spending"},{"name":"Generating Income","slug":"generating-income"},{"name":"Leaving Corporate America","slug":"leaving-corporate-america"}]}},{"node":{"slug":"stay-in-school-or-you-will-wind-up-at-michigan-state","feature_image":null,"title":"Stay in school or you will wind up at Michigan State?","published_at":"2015-03-12T12:00:22.000+00:00","primary_author":{"name":"Steve Adcock","profile_image":"https://www.gravatar.com/avatar/ae0b2f8d459bad06e6d287fa4a74b1ea"},"html":"I was at the gym the other day - in the morning on a weekday because I quit my \"I'm a prestigious manager\" job and now work from home and design my own schedule - and couldn't help but notice a guy walk up to some middle-aged woman using a treadmill next to me. He walked up to her, grasped her arm and said, with a smile on his face, \"stay in school or you will wind up at Michigan State\". Laughter ensued.
![\"Michigan](\"https://thinksaveretire.com/wp-content/uploads/2015/03/1024px-MSU_Seal_2010.svg_-300x300.png\")
Clearly they knew each other, and that comment may have been said in jest (perhaps she went to Michigan State). But true to my own peculiar form, it got me thinking once again about education in this country, and particularly higher education and how different schools automatically conjure up assumptions on that person's fitness for a job or potential to succeed.
Quite frankly, I find it disgusting.
I wrote previously how college may just be saddling young people with mountains of student loan debt without a lot of real purpose. It gets the ol' foot in the door at your next employer, but at what cost?
But adding in the so-called prestige of the university brings this question to a whole new level of tomfoolery.
Several universities throughout our country are generally recognized as \"top\" schools. I'm referring to names like Standard, Harvard, MIT, Princeton and so many others. Graduates from these universities are assumed to be better prepared to confront the real world.
Then, we have \"average\" universities that have big names, but probably wouldn't exactly rise to the level of ivy league prestige.
And then there's me. I went to a completely no-name technical university in Colorado and completed a 4-year degree in Information Technology, taking the easiest classes that I could find, scoring the best grades and graduating summa cum laude. I admit it - I took the easy way out. I chose an easy degree. My classes didn't require much work outside of class at all. College may have been the most mindless 4-years of my life.
But look at my life. I am 33 and on the path to retire by 40 under the comfort of complete financial independence and living in our dream city (Sedona, AZ), long before the large majority of the more prestigious students who stressed their way through Harvard.
Of course, my intent here is not to brag about my success. And yes, I also admit that everybody's goal is different. Early retirement simply isn't on everybody's most people's minds. Working until your 60 does not make you less successful than someone who worked until 40. Or 35.
The point of this article is to question the validity that these prestigious schools somehow graduate better prepared students from the upper echelon of society, while students who graduate from, say, Michigan State, are mere \"commoners\".
Certainly, it is easy to view a student who makes it into an ivy league school to be determined and focused. Regardless of his or her degree's difficulty or grades while in college, their mere admittance into one of the toughest schools in the country might be a positive indication of that person's potential to succeed and do great work. I can probably buy this argument.
It cannot be argued that ivy league students stand out more than graduates from regular schools - perhaps Michigan State.
But all this comes at a price, as these colleges are generally expensive. Just like plopping down extra cash to have that Nike logo on your shorts rather than the logo from an \"off brand\", students pay for that prestigious name on their resume. \"Whoa, this one went to Princeton?!?\"
There's a question begging to be asked: is the education worth the cost?
As I continued pouring through Internet research, something very profound suddenly became much more clear to me - it's not about the education.
It's not about an expectation of a better education. It's about an expectation of a better salary. As someone who loves the color and smell of money, this is something I can respect. Work your ass off and plow through a university that, statistically speaking, appears to average larger incomes for its graduates.
But even a higher salary is not necessarily a given. A report from the Washington Post cited a study that reveals military institutions, rather than our nation's most elite universities, average much higher salaries. In fact:
\"Princeton, Harvard, Yale, and Columbia, the country's top four universities by U.S. News's measure, for one, wouldn't crack the top 10, or 20, or even 30.\"
Not even the top 30? Maybe students from Michigan State or any other \"normal\" university have a chance at keeping up with ivy league prestige after all - and at a fraction of the cost.
Or, how about this report: \"A rejected Yale applicant with a high SAT score, for example, who ends up attending Miami University or Tulane would earn as much, on average, as the Yale grads.\"
I am convinced that the assumption of prestige, potential or influence based solely on the university is bullshit. Even so, let's be honest - there are many amazingly smart and talented students who work hard and attend an ivy league school, make big bucks right out of college and proceed to spend the next 45 years of their lives basking in the glory of that resume-highlighting gem.
And hell, I'm happy for those people. I genuinely respect the hard work and determination it takes to achieve that level of credential'ed education in this country. All that extra time doing homework, taking those tougher advanced placement classes in high school, engaging in extra-curricular activities and joining all kinds of groups and clubs is wonderful. You meet lots of people, make good friends and probably have a good deal of experiences to help shape the rest of your life. These are all very positive things.
However, there are plenty of students who lead extremely successful lives without the help of ivy league prestige - or even college altogether. As the Washington Post article revealed, high salaries, even for those from our nation's top institutions, are not automatic. In fact, the most successful and richest person that I have ever worked with graduated from West Point.
Long time CEO of Oracle Corporation, Larry Ellison, never graduated college. Bill Gates dropped out of Harvard to start Microsoft along with Paul Allen (another college drop out), the world's largest and most wide spread operating system in use today. IKEA's founder, Ingvar Kamprad, no college. Michael Dell, the guy who founded Dell Corporation, dropped out of the University of Texas.
At the end of the day, most of us want happiness out of life. We want to feel genuinely at ease with our lives, comfortable in our achievements and proud of the people whom we have become. When it comes to achieving true happiness out of life and totally kicking ass each and every day, education probably does not make much of an impact.
I graduated from a no-name technical university, but I would put my level of happiness and stress up against anyone from a more prestigious university. At the end of the day - nay, at the end of our lives, it is that happiness that matters the most. Stay grounded and keep smiling, regardless of your education.
I couldn't be happier. What about you?
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