How Much Do You Really Earn?

Most people mistake their net take-home pay as the amount they are actually earning. Most don't take into account the job-related expenses they make. Your real earnings can be determined by deducting the job-related expenses from your net take-home pay. Transportation and meals are the typical expenses you spend every time you report to work. Other jobs might require you to spend regularly on clothes or require you to make several cellphone calls in a month.

Actual Cash on Hand

Deducting these expenses from your net take-home pay will provide you with a more realistic figure on your actual earnings. This figure is known as your net spendable income. After computing your monthly net spendable income we need to convert it to annual net spendable income in order to add your thirteenth month and all bonuses you received for the whole year.

Gross Salary= Basic Salary + Allowance
Net Salary= Gross Salary - Standard Deductions
= Gross Salary - Tax - SSS - Philhealth - Pagibig
Net Monthly Spendable Income= Net Salary - Job Related Expenses
Net Annual Spendable Income= (Net Monthly Spendable Income x 12) + 13th Month + Bonuses

Apart from computing your net spendable income, you will also need to measure the total number of hours spent doing job-related activities. Asides from the hours you spend working at the office, you also need to consider the hours spent traveling to and from the office, the hours you spent taking your lunch and coffee breaks. Once you establish the total number of hours you spend doing job-related activities in a day you need to calculate the total number of working days in a year. There are minimum standards set by the government but the employer has the option of giving their employers longer day-offs and leaves.

Working Days in a Year= Days in a year - (Weeks in a year x Day off in a Week ) - Regular Holiday
- Special Holidays - Vacation Leave - Sick Leave
Total Job-Related Hours in a Year=  Working Days in a Year x (working hours + travel time + breaks)

Jaime who is single and no dependents work for 8 hours a day and have 2 day-offs each week. His company provides him 15 days of paid vacation leave and 15 days of paid sick leave. 

He travels to and from his office for 2 hours every day. He has two 15 min breaks and an hour for his lunch break every day.

He earns Php17,500.00 basic salary and Php 2,500 tax-exempt allowance every month. Asides from his 13th month pay his employer pays him an additional mid-year bonus of  Php 17,500.00.

He spends Php50 for commuting and Php60 for his meals every day. He also spends Php300 every month for load for his phone every month.

Gross Salary= Basic Salary + Allowances
= 17,500 + 2,500
= Php20,000
Tax= Php2068.30
Net Salary / Net Take Home Pay= Gross Salary - Tax - SSS - Philhealth - Pagibig
= 20,000 - 2068.30 - 581.30 - 212.50 - 100
= Php17,037.90
Annual Net Salary= (Net Montly Salary x 12) + 13th Month + Bonuses
=  (17,037.90 x 12) + 17,500 + 17,500
=  Php239,454.80
Total working Days= 208 days
Daily Expense= Commute + Meals
= 50 + 60
= Php110
Annual Phone Bill= 300 x 12
= Php3,600
Total Annual Expense= (208 x 110) + 3600
= Php26,480.00
Net Annual Spendable Income= Annual Net Salary - Annual Job Related Expense
= 239,454.80 - 26,480
= Php212,974.80
Office Hours in a Day= 8 hours
Travel Time= 2 hours
Lunch and coffee break= 1.5 hours
Days in a Year= 365 days (366 days if leap year)
Weeks in a Year= 52 days
Day offs in a Week= 2 days
Regular Holidays= 10 days *
Declared Special Holidays= 9 days **
Undeclared Special Holidays= 4 days ***
Vacation Leave= 15 days
Sick Leave= 15 days
* regular holidays for 2016
** proclaimed a national special nonworking holiday
*** regional holidays such as charter day and other undeclared special non-working holidays.
Working Days in a Year= Days in a year - (Weeks in a year x Day off in a Week )
- Regular Holiday - Special Holidays - Vacation Leave - Sick Leave
= 365 - (52 x 2) - 10 - 13 - 30
= 208 days
Office Hours in a Day= 8 hours
Travel Time= 2 hours
Lunch and coffee break= 1.5 hours
Total Job-Related Hours= 11.5 hours
Total Job Related Hours in a Year= 208 x 11.5
= 2392 hours
Real Hourly Rate= Annual Net Spendable Income / Annual Job Related Hours                               
= 212,974.80 / 2392
= Php89.036 per hour

You will value your money more by equating money with the hours you spent working to gain it, you will value your money more. Knowing the effort it took you to earn that amount will make you think twice about making unnecessary purchases. Is that Php30,000 phone worth the 336.94 hours you lost in your life working to purchase that item? Using this mindset will get you the most out of your hard-earned money. Whenever you purchase clothes, food, or gadgets, always ask yourself if you are getting your money's worth.

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