So I wanted to do a deep dive into something I’ve learned since the beginning of the year, especially since all you lovely people helped (thanks, boo!) That is the emotional importance of recognizing your actual gross and net incomes.
Quick definitions for those who don’t know: gross income is the total amount you earn per paycheck; net income is your income after deductions – things like your retirement account contributions, taxes, health insurance, etc.
As a supplement to these more established concepts, I’d also like to introduce an idea I’ve been calling true-net income. This is something discussed in Your Money Or Your Life by Vicky Robin – which is a true classic I urge you all to run out, read, digest, read again, implement, then read again – as one of her action steps. She asks that you calculate the true cost of your job.
You do that by taking your gross income and deducting absolutely everything. The usual deducted items, but everything else as well. The cost of gas, insurance, and wear and tear on your car, the cost of clothing for work, the cost of lunches/snacks while you’re at work, any professional organizations, and on, and on, and on. Then you’ll have a closer to net actual pay amount. Taking that (now vastly smaller) amount of pay, you divide it by the number of hours required by your job – note this isn’t time you actually work, but the actual number of hours required to perform your job. Do you get to log off/go home and enjoy your one hour lunch? If not, your work week is now 45 hours a week. One hour commute each way? Congrats, your work week is actually 55 hours. Take a call or check email for 15 minutes per night, and 30 minutes a day on weekends because you can’t be out of touch? Oooops, you’re up to 58.5 hours per week.
As you can see, this is a more valuable calculation than traditional net income, because true-net income validates why we all feel so busy, harried, and exhausted. No, you’re not just complaining about your 40 hour a week job. You’re trying your best to thrive with a job that sucks away 60 hours per week, and pays you for 40. If you’re also working a side hustle or two, and most people are whether they’re trying to get ahead or just need more income to stay alive, your supply of waking (and sometimes sleeping) hours are increasingly spoken for.
My confession is that I haven’t yet found my true-net income. I’ve been avoiding it because it seems so depressing to calculate the true cost of my job, and demonstrate how little they value my work. Your Money Or Your Life says it’s routine that people who go through this calculation find that their hourly rate of pay is under $5 per hour. I do promise I’ll figure out my own true-net income at some point, but it just ain’t yet because it’ll hurt my fee-fees (strongly recommend only reading the first definition!)
Love to all!
