This is a fun financial management exercise I thought of it the other day in the good ol 9-5 job. What if everything you bought, saved, or spent was tracked by you and broken down by the hours you worked.

The exercise is done to show you how to gauge if what your spending is worth it on a per hour per paycheck basis. Every financial payment should be calculated by dividing the monthly sum by 160 hours because most employees are paid biweekly, and expenses are paid monthly.

Obviously doing it this way will yield you the results on how each expense or savings transaction ends up divided by the 160 hours. If you make 50 per hour net and your total expenses add up to 40 per hour, then you have effectively learned how to maintain a surplus of 10 dollars. See below for the example of sometimes spendthrift and sometimes frugal Joe Blow who has debt and makes about 55K per year.

Break Down Expenses by Hours Worked:

A $400 Dollar car Payment = 2.50 dollars per hour

Rent of about $1300 monthly – 8.12 per hour

Random Purchase $125– .78 per hour (1 Time Costs)

Student loan payment $350– 2.18 per hour

Lunch out for the month $100– .62 per hour

Credit card payments $500– 3.12 per hour

Cell phone payment $100– .62 per Hour

Dollars for gas & car Insurance monthly $500– 3.12

Groceries $600 per month – 3.75

Total = 24.81

Now if you can just think how hard you must work for every paycheck every two weeks, and all these expenses are taking a slice of income away per day. If you take into account all of the costs broken down, it can add up really quickly. In this example alone it is already up to about 24.81 per hour for the whole month.

One of the reasons people live paycheck to paycheck is because they don’t have margin between income and expenses, and if you do this trick you can find ways to trim expenses. – Rich Uncle EL

Mind you this example above does not take into account bar tabs, gifts, charity, other insurances, school / club activities, kids lessons, fund raisers, eating out, road trips, savings, investing etc. 

How difficult is it to find some wiggle room for this person who makes for example $30 dollars per hour, and spends $24.81 per hour on the list items above, not including the misc stuff life throws our way. Let’s do our best to try to find the wiggle room and excel with financial money management by tracking expenses.

Comment if you will Break down expenses by hours worked?

Rich Uncle EL