Short on time? Here’s what you need to know:
$50,000 a year is how much an hour? If you account for 52 working weeks per year and a 40 hour work-week, a salary of $50,000 equates to about $24.04 per hour. While this might seem like a simple calculation, there might be more to it than you think. Below you’ll find a full rundown of why you should care about your hourly rate, especially while comparing job offers.
$50,000 a year is how much an hour?
Here’s how to calculate it:
The key is to correctly calculate the number of hours you work per week and multiply that by how many weeks you work per year. 40 hours per week and 52 weeks per year may are relatively standard, but there can be quite a bit of variability in these numbers for a variety of reasons, such as:
- Some jobs may pay for a full 30 minute or 1 hour lunch break each day, which actually means you may only work 37.5 or 35 hours per week
- Some jobs may be more time-intensive than average, and you may actually work closer to 50 or 60 hours per week
- Some jobs may offer 2, 3, or even 4 weeks of paid time off per year (PTO, holiday, etc)
So, once you’ve figured out how many hours you actually work each week, and how many weeks you actually work each year, you can use the following calculation:
Salary ÷ (hours worked each week * weeks worked each year)
Let’s look at a few examples:
Reduction in Hours
First let’s see how the number of hours you might actually work each week impacts your real hourly rate:
$50,000 ÷ (40 hours each week * 50 weeks each year) = $25 per hour
- This could be representative of a job with no paid lunch breaks
$50,000 ÷ (35 hours each week * 50 weeks each year) = ~$28.57 per hour
- This could be representative of a job that offers a 1-hour paid lunch break each day
$50,000 ÷ (50 hours each week * 50 weeks each year) = $20 per hour
- This could be indicative of an hourly-intensive job that requires an above average time commitment per week
Reduction in Weeks
Next, let’s see how the number of weeks you might actually work each year impacts your real hourly rate:
$50,000 ÷ (40 hours each week * 49 weeks each year) = ~$25.51
- This could be representative of a job that offers 3 weeks of PTO/holiday
$50,000 ÷ (40 hours each week * 48 weeks each year) = ~$26.04
- This could be representative of a job that offers 4 weeks of PTO/holiday
$50,000 ÷ (40 hours each week * 52 weeks each year) = ~$24.04
- This could be representative of a job that offers no paid PTO/holiday
The obvious trend here is the less hours you work each week and/or the less weeks you work each year (for the same salary) results in a higher hourly wage. The opposite is also true. The more hours you work each week and/or the more weeks you work each year (for the same salary) results in a lower hourly wage.
A very important thing to note, however, is that changing the number of hours you work each week and/or the number of weeks you work each year will not impact your actual take home pay in a salaried position. That is, of course, unless you have the ability to take a bonus payout for things like unused vacation time or overtime pay for extra hours worked.
What’s the take home pay for a $50,000 salary?
Now that we’ve calculated what your hourly rate might be in a variety of situations with a $50,000 salary, it’s important to go over what your actual take-home pay will be. Calculating your exact take home pay will vary depending on a few factors, such as:
The schedule your paid (weekly, biweekly, monthly)
Obviously, the more frequently you’re paid, the lower each paycheck will be. And the less frequently you’re paid, the higher each paycheck will be. Here’s some examples of pre-tax and pre-deduction calculations:
$50,000 a year is how much per week?
- Weekly pay example where you are paid every week (52 times per year): $50,000 ÷ 52 pay periods = ~$961.54
$50,000 a year is how much biweekly?
- Biweekly pay example where you are paid every other week (26 times per year): $50,000 ÷ 26 pay periods = ~$1923.08
$50,000 a year is how much per month?
- Monthly pay example where you are paid monthly (12 times per year): $50,000 ÷ 12 pay periods = ~$4166.67
Pre-tax contributions and deductions
Your real take home pay will likely be impacted by a variety of pre-tax contributions and deductions like:
- Medical, dental and/or vision insurance
- 401k contributions
- FSA and HSA contributions
Post-tax contributions and deductions
Your real take home pay will also likely be impacted by some post-tax contributions and deductions, such as:
- Roth 401k contributions
- Life insurance
- Disability insurance
Taxes
Finally, your real take home pay will be impacted by taxes. As they say, there are only two certainties in life: death and taxes. Your real tax rate will be dependent on a number of factors such as your filing status, spouses income, state residency, etc. If you aren’t sure what effective tax rate you should apply, check out the IRS tax table.
Why you should care about your hourly wage?
Your time is important
Now we’ve gone over how to calculate your hourly wage and take home pay, it’s important to look at this information through the lens of how you value your time. Why, you might ask? Because employers are paying you for your time. That amount they pay you will be impacted by what you can bring to the table: skills, experience, relationships, etc. But the general trade you’re making in a job is the company’s money for your time.
Time is your most valuable resource. It’s finite. You cannot make more of it and you cannot buy it. No one gets to choose how much time you get on this earth. But, you do get to choose how you spend your time.
The average person spends 90,000 hours at work which equates to about one third of your life.
So with that in mind, it’s important that you trade only what you deem to be an adequate and fair hourly wage for your time. If you find that you’re on the losing side of a trade, there’s a number of options outlined below – so keep reading.
How much you can save is proportional to how much you make
We all know how important it is to save money. For emergencies, to save up for a house, to cover the loss of a job, plan for retirement, etc. If you aren’t saving as much as you need to be, or want to be, there’s only two real ways you can go about saving more. Either by reducing your expenses, or increasing your income. For many of us, there’s only so much you can do to feasibly reduce your expenses. So that leaves you with the option of making more money.
How can you increase your hourly wage?
There’s a number of ways you can go about increasing your hourly wage. A common path is to go back to school or invest in re-training. While those are good options, it’s always important to consider your return on investment and the opportunity cost of pursuing formal education. Especially if going back to school would require you to reduce your hours or quit your job to complete it. Below we’ve outlined some other options available to you that wouldn’t incur an upfront cost.
Ask for a raise
Outside of a cost-of-living increase, it might be feasible for you to ask your employer for a raise. But make sure you come prepared for that discussion. An employer isn’t going to pay you more money unless you can demonstrate why it’s in their interest to do so. Have you increased efficiency in your department? Have you consistently surpassed expectations and/or goals set forth for you? Have you brought additional value to the team such as a newly developed skill, expertise, or relationship? Take the time to put together a solid proposal and be ready to defend it.
Get a new job
Believe it or not, switching jobs every few years is one of the most efficient ways to increase your salary. Studies show that individuals who job hop every few years ultimately earned 50% more over their careers than their counterparts. That’s because you tend to have the most opportunity to negotiate at the point that a position is being offered to you. It puts you in a position of power because you know the employer is interested in obtaining you as an employee.
Leverage another job offer
Keeping an eye on other (external or internal) job opportunities is another way for you to try to negotiate a higher salary. But, if you’re job hunting solely for the purposes of trying to leverage a better salary in your current position, proceed with caution. Because once you put your new job offer on the table with your current employer, you have to accept the fact that they may not be willing – or have the ability – to beat it. That puts you in the position of either having to stay with your current employer even though they didn’t offer you any more money, or make the decision to proceed with the new position.
Consider a job where you aren’t trading time, but rather input for output
Another way to increase your wage without going back to school or doing a major re-training program is to consider a position that rewards output, rather than input. What does that mean, exactly? To state the obvious – all jobs care about your performance. But not all jobs pay you for exceeding the required duties and expectations.
Consider the example situation below:
Suzie and Sally both work for the same company in a customer service role. Suzie and Sally work the same hours, have the same level of seniority, and get paid the same hourly wage.
Suzie meets her job expectations but hasn’t excelled in any particular way.
Sally, on the other hand, has stellar customer reviews, has decreased her customer resolution time, and because of that, typically handles a caseload that’s 15% larger than Suzie’s.
The bottom line is that both Suzie and Sally are being paid for their input (time), rather than their output (performance). If Sally were to instead take a job that paid her commission (like sales, client relations, real estate, etc.), she would likely be able to attain a higher wage directly attributable to the performance she’s capable of.
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