Welcome to reThinkable, a weekly newsletter where I share actionable ideas to upgrade your money and life.

Today, we’ll cover:

Why you’re making less money than you think.

How your Work Overhead might mean you actually earn below minimum wage.

Why taking a lower paycheck could be a smarter move.

Read time: 2 minutes and 36 seconds

The Paycheck Lie

You don’t know how much you’re getting paid.

Most of us eagerly await payday, knowing exactly how much will hit our bank account.

But knowing the deposit amount isn’t the same as knowing what you’re actually earning.

When I worked on Wall Street, I thought I was rolling in cash. I was making $120,000 a year but my true hourly rate was below minimum wage.

Today I’ll show you how to calculate your true hourly rate, and 3 ways to optimize your paycheck.

PS: I want to hear from you! Want to see more (or less) of this content? Let me know your feedback here!

Finding Your True Hourly Rate

To know what you’re really getting paid, you need to know your Work Overhead.

Your Work Overhead is everything you spend—in both money, time, and effort— to do your job.

Commuting costs and time

Mental Energy

Work clothes and appearance

Meals away from home

Childcare

For instance, let’s find the true hourly rate for 2 business analysts who work in the same city:

Daniel earns $120,000 at Company A (paid $60 per hour on paper)

Martin earn $95,000 at Company B (paid $47.50 per hour on paper)

At first glance, Daniel earns $25,000 more than Martin, but there’s more to consider:

Daniel has to commute to the office everyday which takes 2 hours round trip. He spends 500 (unpaid) hours per year just getting to and from work. 

On the other hand, Martin is remote and can choose when to go to the office. If he only spends 100 hours per year commuting, he gets back 400 hours of life compared to Daniel.  

Between gas, parking, office clothes, constant wear on his car, meals and coffee in the city, Daniel’s Work Overhead adds up. In contrast, Martin doesn’t have to worry about any of this.

After accounting for the Work Overhead:

Daniel’s seemingly impressive $120K job actually pays about $39 per hour

Martin’s $95K position comes out to roughly $44 per hour

The “smaller” salary turns out to be the better deal.

How to Optimize Your Paycheck

Once you understand what your job really costs you, you can make smarter financial decisions. Here are 3 ways to optimize your paycheck.

1. Cut Down on Work Overhead

Start by reducing job-related expenses that don’t add value. You can consider:

Negotiating more work-from-home days

Finding cheaper and faster commute options (carpooling, public transit)

Meal prepping instead of buying lunch daily

Simplifying your work wardrobe

2. Consider a “Strategic Downgrade” 

Sometimes taking a lower salary is actually the smarter financial move. 

A position that pays $20,000 less might seem like a step backward, but look at the complete picture. A job with flexible hours and remote work options can dramatically reduce your Work Overhead.

For example, if the lower-paying job cuts your Work Overhead costs by $25,000, you might end up with a higher real hourly rate and a better work-life balance.

3. Guard Your Hours

Time is your most valuable currency. A job that consumes your waking hours isn’t just draining – it holds you back financially. With mental/physical energy, you can explore side hustles or learn new skills, boosting your earning potential beyond a single demanding job.

Remember, every hour at your day job is an hour you could be earning money elsewhere. Make sure you’re getting the best return on your time investment.

PS: I want to hear from you! Want to see more (or less) of this content? Let me know your feedback here!

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