One very key factor playing in to how well you can enjoy your life is going to be your financial position. Early on in life, young kids are likely to be saddled with debts and obligations and have a very big need to work and accumulate resources to pay those debts off and then start building up wealth.
Ideally, with a lot of hard work, careful financial planning, and avoiding traps; a man can accumulate a good amount of wealth. An amount of wealth that would sustain him for a long time. At this point, his need to work and accumulate resources may not be as great as when he was younger.
This could happen to a man in his 30's, 40's, 50's and onward.
He may come to the point where he won't need to work as hard and decide to take an easier, lower paying job with less hours to increase the amount of leisure time he has.
When thinking about this, he should really consider how much money he makes per hour. Actually, a better way to put it is how much money does he get to keep per hour dedicated to working.
To do this, take your total paycheck after taxes and divide it by the amount of hours you work per pay cycle.
My first job, I made a salary of $28,600. While most people wouldn't consider it a good paying job, it was still better than a lousy job. I was paid weekly and my paycheck after taxes were taken out was $445.34 per week.
Each week, I worked 40 hours. So divide $445.34 by 40 hours and that comes out to be $11.13 per hour.
This isn't all of it though. Each week I spent 5 hours at lunch. Even though I wasn't working, I would have much rather been at home sleeping. So I'll add 5 hours to the calculation.
$445.34 divided by 45 hours is $9.89.
The result is a little disheartening, but it actually gets worse. I had to commute to get to work. Had I not been working, I would have been doing something enjoyable. So add the commute time to the equation.
I had to commute an hour and a half each day round trip. Over one week, that is 7.5 hours commuting. So the time spent inside the office and commuting for one week equals 52.5 hours.
$445.34 divided by 52.5 hours equals $8.48.
To put this into perspective, minimum wage where I live is $7.25. If you make less than $5000 a year, you are not required to pay state income tax so your tax burden would be close to 0. I would think the only money you lose is the money taken out for social security which is 2.5% if I recall correctly. So, without factoring in the lunch break and commute time, each hour of work would yield a man $7.07 per hour. Factoring in the lunch and commute will drag this figure down.
When comparing jobs, most people only consider the salary. And when you are young, you need as much money as possible to start establishing yourself in the world. However, when you do become established, you have the option of factoring in a few more things.
Not only do you consider the salary, but you should also consider the amount of hours you spend working as well as the time you spend commuting.
When I finally got a good paying job, I had the expectation that I would have 40 hour weeks.
I was very mistaken.
People who do have good careers can expect to work in excess of 45, 50, 55, or unfortunately 60 hours a week. My successive jobs also had me commuting farther than my first sometimes causing my commute to increase to an excess of 10 hours a week. Ultimately, this increases the amount of time that you dedicate to work while the amount of money you make stays fixed resulting in a lower ratio of money to hours worked.
Why then do we put up with this? Be forced to work more hours to make more money.
Oh yeah. It is because we need the money.
So, to escape this rat race, I have a very general strategy.
1. Work as hard as you can to accumulate a lot of capital and make sure you save it
2. After you save up enough capital, go Galt.
When you have a lot of capital, you have much more options available. Money is a resource just like anything else in life. If you have a lot of it, your demand for more goes down. In contrast, you will have a higher demand for leisure.
If you get well established, you could leave your high paying and stressful job for a lower paying less stressful job with less hours.
It is up to each individual to decide what balance they want to have.
There is one last thing I want to mention. These concepts only look at the money that gets earned. Switching jobs can lead to an increase or decrease of your living expenses. This is really important to consider if you job is currently providing you with health insurance. You want to make sure to take the benefits in consideration if you want to leave your job as an engineer to work part time in a restaurant within walking distance from your house. I guess I can try to expand on this in the future though.
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