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Do you really do need to know how much you make in a year?
When you are an hourly employee, you understand what your hourly rate is, but when you try to translate that into a weekly, monthly, or even yearly amount is may be a struggle.
That is totally fine. In this post, you are going to get the math behind exactly how much do I make per year.
All you have to do is follow a simple equation and plug in your numbers for your personal situation. The end result is you will know how much do I make per year.
Right now, there is not going to be a super fancy calculator to help you all through this. (Just kidding… We have calculators below for you!) In all honesty, though, this is something very basic for you to figure out.
You will figure how do I calculate how much I earn a year.
At the end of the post, we are going to go into detail about ways to increase how much you make per year, as well as tips to thrive on your current salary.
Calculating an Annual Salary from an Hourly Wage
When you are an hourly employee, there are many variables that can go into your annual salary. Primarily, the first variable is how many hours do you work in a given week. Next, is how many weeks do you work in the year. Finally, if you get paid time off.
For example, you may work less all year, but then in the busy season around Christmas, you might increase the number of hours you work. Or vice versa, if you are in the landscaping business, you are more likely to work more hours during the summer, and less in the winter (unless you find other jobs off-season of your main job like snow shoveling duties).
To calculate your annual wage, you need to multiply your hourly pay times by the number of hours that you work in a day.
Then, take that number and multiply it by the number of days that you work in a week. Next, take that number times the number of weeks that you work per year.
The most you can work in a year is 52 weeks.
Steps to Calculate an Annual Salary from an Hourly Wage…
- Write down your hourly rate (before taxes, FICA, 401k contributions, etc)
- Figure out how many hours you work in a week.
- Figure out how many weeks you work per year.
Hourly Rate * (weekly hours worked x weeks worked per year) = Annual Salary
– or –
Hourly Rate * weekly hours worked = Weekly Salary
Weekly Salary * weeks worked per year = Annual Salary
**Either formula will get you to the right answer.**
Example #1 –
Your hourly wage is $14.26 that is before anything is taken out like FICA, taxes, insurance, or 401k contributions. In a typical work week, you work 34 hours. You receive paid time off, so you can count working 52 weeks per year.
$14.26 * (34 x 52) = $25,211.68
– or –
$14.26 * 34 = $484.84
$484.84 * 52 = $25,211.68
Example #2 –
Your hourly wage is $22.70 that is before anything is taken out like FICA, taxes, insurance, or 401k contributions. In a typical work week, you work 45 hours. You receive do not receive paid time off, so you can plan on working 48 weeks per year.
$22.70 * (45 x 48) = $49,032
– or –
$22.70 * 45 = $1,021.50
$1,021.50 * 48 = $49,032
Calculating an Hourly Wage from an Annual Salary
A lot of salaried people do not take into account how much they make per hour because they just are paid a flat salary rate. That salary is divided up by the number of paychecks over the course of the year.
You need to take your full yearly salary and divided it by the number of weeks per year, and then, divide it by the number of hours worked per day.
This will give you an estimate of your hourly pay as a salaried employee.
Steps to Calculate an Hourly Wage from an Annual Salary…
- Figure out how many hours you work in a week.
- Figure out how many weeks you work per year.
- Write down your annual gross salary (before taxes, FICA, 401k contributions, etc)
Annual Salary / (weekly hours worked x weeks worked per year) = Hourly Wage
Example #1 –
Your annual salary before anything is taken out like FICA, taxes, insurance, or 401k contributions is $76,500. In a typical work week, you work 52 hours. You receive paid time off, so you can count on =working 52 weeks per year.
$76,500 / (55 x 52) = $26.75 per hour
Example # 2–
Your annual salary before anything is taken out like FICA, taxes, insurance, or 401k contributions is $42,800. In a typical work week, you work 45 hours. You receive do not receive paid time off, so you can plan on working 49 weeks per year.
$42,800 / (45 x 49) = $19.41 per hour when working
How much do I make a year calculator?
As presented above, figuring how much I make per year is fairly straightforward.
A little math won’t hurt anyone. Plus it makes the money earned more real and difficult not to spend.
But, here is a calculator to help you out.
This will show you how to calculate how much you make a year.
There are two versions based on if you are starting with hourly wage or annual salary.
When budgeting your income, it is always better to underestimate how much you can make in a year.
For tax purposes, choose to overestimate your income, and then you won’t have big surprises come tax time.
Overtime can influence these numbers if you are paid time and half. In that case, run your numbers without overtime and gain just for overtime pay. Then, add those numbers together.
How much Do I Make per Year Before Taxes or After Taxes
Income taxes is one of the biggest culprits of reducing your take-home pay as well as FICA and Social Security. This is a true fact across the board with all salary ranges
The amount of taxes taken out hurts your hourly wage.
Every single tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Thus, on average you can take out 23.65% just for taxes!!
Your gross salary is before taxes are taken out. Your net salary is when taxes are taken out.
Since every tax situation is different and varies greatly depending on your personal situation and potential deductions. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Un-Factored Costs of How Much Do I Make per Year
One factor that does not come up in this calculation is everything required for you to get to your job. In these examples, the assumption is you are getting paid for every hour that you are actually working.
However, you should take into account everything that needs to happen for you to actually get to your job.
Some examples include getting ready in the morning, driving to and from work, attending the “must-attend” social events after work, the amount of time to decompress from your day, etc.
It is important to know how much do you make after you account for those variables, because the answer may be surprising to you!
Here is an example…
Your workday is normally a 10 hour day, but you have an hour commute on each side. It takes you an hour to get ready in the morning and two hours to decompress from your day.
Thus, you have already added on an extra five hours of your workday on top of your normal 10 hour workday.
So, in essence, you are working 15 hours a day in order to be able to do your job and function as a human being.
That is much less than the 10 hours per day that you thought you were putting in.
Once you account for those variables, many people may realize the extra hours to make life bearable at their job or their commute is not worth it.
So, they make look at changing jobs, even though they will be paid less per hour, they gain an extra three hours back in their life. Making their real workday just 12 hours. So, even though the pay is less, they are actually earning more when you account for these additional variables.
This is called time freedom.
3 Ways to Increase Income
While it is great to know how much do I make per year, it is more exciting and more enticing to actually figure out ways to increase your income.
Even better if you can find ways to increase your net worth.
By increasing the types of income sources that you have, you are going to fast-track your net worth. Then, you can look at retiring early or finally enjoy your work.
There are plenty of ways to increase your income, but we are going to focus on the ones that will make the most impact right now.
1. Ask for a Raise
Too many people are afraid to ask for a raise because they are nervous they may actually lose their job.
When in reality, if you believe that you are underpaid and overworked, then ask for a raise – especially if you do a great job!
There is no reason that you shouldn’t ask for a raise.
While your raise may not be huge, it may only be 50 cents an hour. That adds up to an extra $1,000 over the course of the year! That is still more income in your pocket than you had by not asking.
Don’t settle for the average cost of living increase that most companies typically give out; you deserve more for your continued years of work. Even worse, do not accept that getting the minimum wage increase is enough because it is just not fair. You need to find a new employer ASAP.
You work hard, so you should be paid for your hard work.
2. You Gotta Hustle (Like Another Job or Side Hustle)
In today’s society, you cannot have just a paycheck as earned income.
You must diversify your income sources to more than just trading your time for money.
You would be pleasantly surprised by the increase in TOTAL income at the end of the year.
If you want to make progress further this is something that you need to start doing today.
You can do simple side hustles, such as walking somebody else’s dogs, pet sitting, house sitting, watching somebody else’s kids, or cleaning somebody’s house. Basic skills.
It may not be a huge amount, but let’s say your side hustle made you an extra $100 a week. That right there will help increase your income over the course of the year to over $5,000!
That makes a solid difference on your bottom line.
Let’s say you want to hire out your specialized skills… You make $250-500 per gig and can handle four per month. That is an extra $1000-2500 a MONTH!
Passive income is one of the best ways to increase your income on a consistent basis. You put the hard work in upfront and then you get to reap the rewards, aka the money that flows in without you actually having to work on that. Possibilities include rental income, affiliate marketing, or online courses.
3. Start Selling Stuff
One of my good friends makes at least $500 each month by flipping kid’s toys and clothes. Yes, you read that right. She buys used clothes and toys and resells them for a profit. She has become very good at what she does and is well known in the local market for her items always being quality and at a fair price.
She is increasing her income by doing flipping stuff. It’s not a hard concept.
There are people that will go into goodwill and buy designer brand clothes with the tags still on them for a fraction of the price and flip it on Poshmark. The next day for a profit of over 900%.
I am not joking with you; you can sell things to increase your income.
And all of this selling is during your free time, so it should not take up a whole lot of your time. Maybe an extra hour a day, maybe four hours on the weekend, but would you be happy to walk away with little extra cash in your pocket.
There are so many options for you to increase your income.
How to Live on what I Make per Year
These money management tips are simple to embrace.
That is because you can focus on a few key areas and not be distracted by every piece of financial advice.
Pick up one new habit and focus on building another on top of it. Slowly and surely, you are more likely to make long-term progress.
1. Spend Less
The formula for this one is the same regardless if you were making minimum wage, or if you are making over $100,000 per year.
You have to live on less than you make.
That is the simple thing. It does not matter what your situation is or how much income you make.
If you are spending more money and have greater expenses than your income, you will never get ahead. Period. You will be on a hamster wheel and living paycheck to paycheck, and for what my readers say – they don’t enjoy that life.
Also, I know many of my readers that they have broken that paycheck to paycheck cycle. They followed the Money Bliss Steps to Financial Freedom.
You need to live below your means.
2. Save more
Save for the future now; stop delaying saving for tomorrow.
Because when tomorrow comes, you are not going to feel like saving money; thus, you are not going to have any more money than you do today. Start saving.
Even if you start right now with saving 5% of your paycheck, that is a WIN!
If you know you are a natural spender, then save more money than the minimum of 20%. If you consistently save 20% of your paycheck by the time you retire, or maybe even sooner, you will become a millionaire.
It doesn’t matter how much you make per year if you do not prioritize saving sooner than later.
3. Set Goals
First, you will never make any progress if you do not set goals.
Yet, most people say they will start setting goals tomorrow; and tomorrow comes and no goals are set.
Carve out time to set goals in all areas of your life – personal, professional, health, wealth, family.
Create a bucket list for your long-term goals and make smaller short-term goals to make sure you reach those big goals.
As with anything in life, if you set a goal, you’re more likely to achieve it.
If you write down a goal, you have a greater probability of achieving your goal.
When it comes to your money and your finances and your income, you need to set smart financial goals.
You have to drive and decide what you want to do in your future.
If your goal is to have more time in life then you need to figure out how to make time freedom a priority. If your goal is not to work until you are 65 and afraid to learn what happens if you don’t save for retirement, then start putting money into a retirement account.
You have to put the plan together to reach your goals. Focus on taking action, not being in motion.
4. Positive Mindset
There are two ways that you can go in life:
- You can control your future.
- You can let your situation pass you by and let life get in the way.
It is totally up to you what you want to do, but you need to have the mindset that you choose to make the most out of this life here now, and that all starts today.
You make be wondering… what does this have to do with how much I make per year?? Well, if you are focused on that number not being enough, then you will struggle to get pay raises and increase your income.
Your mind is a powerful thing. Stay positive.
5. This is Your Journey
Lastly, this is one we tend to forget. Count your blessings.
Be grateful for what you have today as well as the opportunities in front of you.
Don’t worry about what the future holds today.
Be reminded that this is your journey with twists and turns, hills and valleys. Every step you take is guided on a path only made for you.
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