What this calculator does

It takes your pay after tax, subtracts the spending the job causes, and divides by every hour the job consumes rather than only the contracted ones. Then it uses that rate to price anything you enter, in hours rather than dollars.

The method comes from Vicki Robin and Joe Dominguez, whose argument was that money is something you trade your life for, so the only honest way to price a purchase is in the hours it cost to earn.

What each input means

  • Take-home pay a week. After tax, what actually arrives.
  • Contracted hours. The hours somebody is paying you for.
  • Commuting hours. Door to door, both ways, across the week. You are not at home and not free, so it is work.
  • Unpaid overtime. Hours beyond the contract that nobody pays for.
  • Hours spent recovering. The time after work when you are technically at home and functionally useless. It did not exist on your days off.
  • Commuting cost and other job costs. Fares, fuel, parking, car wear, lunches, work clothes. Childcare you pay for in order to work belongs here.

Worked example

$1,200 a week take-home on a 40-hour contract is $30 an hour on paper. Add an hour each way commuting, five hours of unpaid overtime, an hour a day recovering, $95 a week in fares and $60 in lunches and clothes:

  • The job takes 60 hours a week, not 40.
  • It costs $155 a week to hold down, leaving $1,045.
  • Real hourly wage: $17.42, which is about 42% below the payslip rate.
  • A $1,200 sofa is 40 hours at the payslip rate and 69 at the real one.
  • An $18,000 car is 600 hours on paper and 1,033 in practice.

Which adjustment does the damage

The hours, not the spending, and it is not close. The three time adjustments take $30 an hour down to about $20. The $155 a week of job costs, which feels like the serious number, accounts for the last $2.58 of it.

Which has a practical consequence. You can cut your work spending with real discipline and barely move your rate. Cutting an hour a day off the commute moves it more than every packed lunch you will ever make.

Frequently asked questions

What is a real hourly wage?

Your take-home pay minus everything the job costs you, divided by every hour the job takes rather than only the hours you are paid for. That includes commuting, unpaid overtime and the time you need to recover before you are any use to anyone. It usually lands 30% to 50% below the rate implied by your salary.

Should I enter gross or take-home pay?

Take-home. Tax never reaches you, so counting it would make the rate look better than your life does. Use what actually arrives in your account each week.

Is counting recovery time fair?

It is the adjustment people push back on hardest, and the test is simple: do you need that hour on a day you did not work? If not, the job caused it. If your job genuinely leaves you fine at six o’clock, enter zero and the calculator will agree with you.

What counts as a job cost?

Only spending that exists because of this job. Fares, fuel, parking, the car you would not otherwise need, clothes you would not otherwise wear, lunches bought because you are not at home. Rent and groceries are not job costs. Childcare you pay for so that you can work is, and for many households it is the largest entry on the list.

Why does the calculator show a negative rate?

Because that situation exists. A long, expensive commute against part-time pay can cost more than the job pays, and clamping the answer at zero would hide the single most useful thing the sum can tell you. It is worth checking twice, and if it holds, it is a real result.

What is the point of pricing things in hours?

A budget asks you to compare a purchase against an abstraction, and abstractions lose arguments against things you can see and want. Everybody knows what a Tuesday feels like. Being told a purchase costs six of them is information you cannot argue your way around, and it works in both directions: plenty of spending is obviously worth the hours.

How do I do this with irregular hours?

Track one ordinary week honestly rather than estimating a typical one, including evenings and weekend work. People underestimate their own working week by a surprising margin, and salaried professionals underestimate it most.

Read more

The full argument behind this, including the crossover point where investment income covers your spending, is in your real hourly wage. For the same arithmetic applied to the largest purchase most people make, what salary a $700k house really needs. If the sum has you weighing a second income, what another child actually costs prices the childcare years directly.

A planning estimate based on the figures you enter. Nothing here is financial advice.