[vc_row][vc_column width=”1/6″][/vc_column][vc_column width=”2/3″][vc_column_text]
By calculating your dream hourly rate, you will:
- Identify your ideal work/life balance.
- Learn how much money you need to make per hour to have the life you dream of.
- Set a goal for increasing your compensation.
[/vc_column_text][/vc_column][vc_column width=”1/6″][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text]Taking the time to calculate your dream hourly rate is an incredibly powerful exercise. Arriving at this number is accomplished with a very simple formula:
Annual Compensation / Total Hours Worked per Year = Dream Hourly Rate
The following method will allow you to calculate your dream hourly rate.
Choose Your Ideal Annual Compensation
How much money do you currently make per year? Is it enough for you? What if you made an additional $25,000 $50,000 or $100,000 per year? Would that be enough for you? There’s no way of knowing exactly what your ideal annual compensation is, but you can take a guess. Choose the number that you would love to make per year. Be realistic (please don’t choose 1 trillion dollars), but also reach high. Anything is achievable. Keep in mind that studies have shown varying levels of the relationship between income and happiness.
Got your ideal annual compensation? Good. Remember that number.
Determine How Many Hours per Year You Want to Spend Working
What is your perfect work/life balance? How many days off do you want each year? The number of days you work will depend on your career, your personal life, and several other factors unique to you. I suggest you start with the maximum number of work days per year (not including weekends, unless you’re a workaholic), and then start subtracting the time off you’d like to have. Let me show you:
260 Weekdays per Year (52 weeks per year x 5 days per week)
– (number of holidays)
– (number of vacation days)
– (number of personal/sick days)
= Number of Days You Want to Work per Year
Now that you know how many days you want to work each year, you need to think about how many hours you want to work during each of those days. Are you a late sleeper, or do you get started bright and early? Do you want to work three 12-hour days each week, or five 6-hour days? Think about what your perfect work day would be, and add up the time you would spend working during that day.
Now that you have the number of days you want to work per year and the number of hours you want to work per day, multiply those two numbers together and you’ll have the total number of hours you’d like to work per year.
Got how many hours you want to be working each year? Great. Keep that number in mind.
Calculate Your Dream Hourly Rate
Ideal Annual Compensation / Total Hours You’ll Work per Year = Dream Hourly Rate
You’ve now got all the information you need to calculate your dream hourly rate. Divide your ideal annual compensation by the total hours you want to work per year, and boom! You now have your ideal hourly rate.
Is this hourly rate achievable? What can you do to work towards reaching it? If your dream hourly rate is in line with your current or anticipated hourly rate, congratulations! If your dream hourly rate seems incredibly high, don’t be discouraged. Reconsider your options, or simply begin working on increasing your hourly rate.
My Dream Hourly Rate
Using the above method, here is my calculation of my dream hourly rate:
Ideal Annual Compensation: $175,000 per year
Total Hours I’ll Work per Year: 1,332 total hours worked per year (see my math below)
260 Weekdays per Year
– 13 Holidays per Year
Thanksgiving – 2 days off
Christmas – 5 days off
July 4 – 1 day off
Labor Day – 1 day off
Easter – 2 days off
Memorial Day – 1 day off
New Years Day – 1 day off
– 20 Vacation Days per Year
– 5 Personal/Sick Days per Year
= 222 Work Days per Year
222 Work Days x 6 Hours Worked per Day = 1,332 Total Hours per Year
$175,000 (annual compensation) / 1,332 (hours worked) = $131.38 per Hour[/vc_column_text][/vc_column][/vc_row]