When we think about the financials of our career, we often go straight to salary.
When considering job moves, we also compare insurance and days off.
However, we rarely put all the financial aspects of our career on paper.
We don’t consider the cost impact of different job choices.
I think it’s important to audit our career financials every few years to know our baseline.
Here are 3 steps to take:
Step 1: Break Down Your Income
- Determine your “Day Rate”. There are 260 weekdays per year (52 x 5). Your salary divided by 260 is your day rate. For example, $100,000 / 260 = $385 Day Rate
- Using this example, if you get 20 vacation days, your vacation days are worth $7,700.
- 10 holidays would be worth $3,850
- This way you see the value of your working days and the value of the time off.
Step 2: Document Additional “Income”
Some companies offer an annual bonus based on performance. Ensure you consider that when calculating your annual pay.
In addition, a hidden income is the company match to a 401K program. For someone contributing 5% of pay (based on $100K salary above), that is $5,000 the company is adding to your retirement fund. Over the years, that contribution can really add up to much more value.
Step 3: Health and Life Insurance
While employers provide health and life insurance, you typically pay a fixed amount out of your paycheck each month. Understanding that annual cost will help with trade-offs for any other opportunities that come up. You can benchmark what the cost would be if you had to purchase insurance without employer support.
Step 4: Expenses
Working outside the home carries other expenses as well that should be understood. A few examples to consider:
Commuting costs
No matter how you commute, there are likely costs to be considered. For those who drive to work, here’s the formula:
- Total Miles = # of days per year you commute * the number of round-trip miles driven daily
- Gallons of Gas = Total Miles / the mpg fuel efficiency of your vehicle
- Commuting Cost = Gallons of Gas * Current price of gas in your area
Food & Beverage
These are sneaky costs that can creep up throughout the year. Consider the average price of your morning coffee, lunch, and/or afternoon snacks. Take that daily cost and multiply it by the total # of days per year you go into the office.
Clothes and Accessories
Are your clothes for work different than your day-to-day clothing, if so, consider how much you spend each month on work clothes (& dry cleaning).
Services
The final category are the services you need to support your work. Costs that fall into this category include childcare, cleaning services, lawn service, grocery delivery, etc. Consider all costs that could be optional in a different work environment.
A Template
If this is something that you are interested in tracking to understand the details, below is a sample spreadsheet that you could create, adjust to your line items, and track.
Your Turn
Have you ever assessed your total work cost?
Which of the expenses do you need to keep in check?
How might the chart have you looking at a new opportunity differently?