Which route you choose is largely dependent on your career choice.įor ideas on how to maximise your income in your current role, spare five minutes reading my post on How to get promoted quickly. This is where your hourly rate comes in – to maximise your income and therefore increase your surplus, you can either set out to earn as much money from your formal job as possible (high annual salary, a high number of hours worked) or you can diversify your income streams and earn from a number of different places. To achieve this level of wealth as quickly as possible, you need to increase your income surplus (total income minus total expenses) and wisely invest the difference. To achieve this, you need to amass a level of wealth that provides you with this annual income.įor those interested in the simple maths behind financial independence, click on the following link to have a read of my post on the 4% rule which can help you calculate how much money you’ll need to retire. How the hourly salary calculator can help you become financially independentįinancial independence can be defined as the point in your life when the passive income your investments (stocks, bonds, real estate, business ventures) earn you exceeds your living costs. Hopefully how to calculate your hourly gross salary and why it’s important should be clear by now, so let’s move on to how this information can help you achieve financial independence. Taking this point further, if I were to reverse our hourly salary calculator formula from above, a 1st-year auditor working 61 hours a week or above, is earning less than the minimum wage of £8.72 an hour on an hourly basis (and this does happen, particularly within the financial services arms of these firms) – the maths is shown below for those interested with X being the hours worked. In my previous job as an auditor for example, I was contracted to 35 hours per week but averaged closer to 50 hours per week over my audit career.Ī first-year auditor in a Big 4 firm in London could expect to earn £27,500 in their first year so the number of hours you work per week can make a significant difference as shown below.ģ5 hour week – £27,500 / (52 * 35) = £15.11 per hour.ĥ0 hour week – £27,500 / (52 * 50) = £10.58 per hour.Īs you can see, working long hours can have an incredible impact on your hourly rate and somewhat shockingly, in a reputable professional services firm, the hourly income is only marginally better than minimum wage when working 50 hours plus a week. It’s important to use the average number of hours you work in a week rather than simply what you are contracted to work. This number can often come as a bit of a surprise to people, particularly when you realise that the minimum wage in the UK is £8.72 per hour. 52*35 = 1,820.įor example, let’s say you earn a gross salary of £32,000 per year and work an average of 35 hours per week, your hourly rate is £32,000 divided by 1,820 = £17.58 per hour. The 1,820 is simply the number of weeks in the year (52) multiplied by the number of hours worked per week (35). If this is the case for you, working out your hourly salary is simple – just divide your annual salary by 1,820. the 9-5 with an hour for lunch routine we’re all familiar with. Most salaried workers in the UK are on a typical 35 hour per week contract, i.e. Using the hourly salary calculator to work out what you earn each hour To understand the simple maths behind this, how this information can help you achieve your financial goals and for an easy to use table showing hourly salary by different salary levels, read on below. If you don’t work 35 hours a week, divide your annual salary by 52 weeks multiplied by your average weekly hours. an annual salary of £50,000 would give you £27.47 per hour. To work out your hourly salary, simply divide your annual salary by 1,820. Once you know how much your time is worth to your employer by the hour, you have the information you need to make all of the important financial decisions in your life. Making use of the hourly salary calculator laid out below can be a significant moment in understanding your personal financial situation.
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