How Much Do You Sell Your Time For

Employment is a contract between you and another entity where you sell your time in return for some sort of compensation.

Take your after tax income from employment and deduct any work related costs, divide it by the number of days worked. and you will come up with what price you are selling your days for.  I use days of work not hours worked, because most of the day is spent either at work, preparing for work or recovering from work.

I am a full time employee, my annual salary here is $93,000 sounds decent sure, but after deducting Tax, EI and CPP my job nets $61,980.00

However to get to work and back, i have to include my monthly transportation costs which include
$200 gas, $250 ETR407 (toll route) and $250 depreciation for the extra mileage on my car. This adds up to $700 a month. I will still keep my car if i didn't work. however these extra costs are only to get to work and back.

This brings my net employment income to $53,580

I get 3 weeks of paid vacation. so that 53,580 gets divided by 49 weeks x 6 days = $182.24 a day.
I used 6 day a week because I usually sleep in on Sundays this is included as " time recovering from work"

I am selling my time for $182.24 is it worth it?  definitely not. But welcome to the real world my friends, no job is worth it. your time is priceless and no amount of money can be worth it. but this is a good reminder of the value of money.

Now whenever you consider a purchase, instead of thinking of it in terms of dollars and cents. think of it in terms of days.  Is this new shiny IPAD for $599 + tax really worth 4 days of work?  would you rather have this toy or have 4 days off?

An even more disturbing yet realistic way to evaluate the opportunity cost of this purchase assuming 7% compounded returns these 4 days of work off now would be worth 8 days of work 10 years later. or 16 days of work 20 years later. or 32 days 30 years later. purchasing an IPAD today will delay your retirement by 1 month !

looking at it in terms of an income stream, the opportunity cost for this IPAD, purchasing a dividend stock yielding 4% a year comes up to 9.5 cents a work day.  This single purchase could have replaced 0.05% (1/2000) of your income perpetually and inflation adjusted. your salary is not perpetual and is not inflation adjusted. in other words this purchase could have provided for 1/2000 of your needs for the rest of your life and then leave it for your kids to inherit.

Now before you run back to the apple store to return your IPAD.  Life is not about money. Life is about enjoyment, if you enjoy your IPAD keep it. The whole point of personal finance is to maximize enjoyment.  but first you must build your assets then start spending. otherwise you will be doomed to the rat race forever.