Want to know how much money you make per hour if you earn a $45,000 per year salary?
You can earn money from a full-time job, from contract work or from part-time employment like freelancing. But when you add up the income from all these sources and the number of hours you work, how much do you get paid per hour?
$45,000 a year may sound like a lot of money, but when you break it down into an hourly wage, the number looks more like $20.00-$22.00 per hour.
If you want to know the answer to “$45,000 per year is how much an hour?” keep reading! $45,000 Per Year is How Much an Hour?
To calculate this you need to know how many hours per year you work, then just divide $45,000 by that number.
That means, if you work the standard 40 hour work week, 52 weeks per year, you’d need to divide $45,000 by 2,080 hours (40 * 52).
If this is your measure, $45,000 per year is $21.63 an hour.
However, if you freelance, side hustle or work as an independent contractor, you might not work 40 hours per week. Instead, you could work more or less depending on the nature of your work.
In the case where you work more hours, that hourly wage decreases because the numerator remains constant ($45,000) while the denominator (number of hours worked) increases.
The lowest hourly wage you can with a $45,000 income in a year is $5.14/hour. That’s not quite half of the federal minimum wage.
Though, to achieve such a low average wage, you’d need to work every hour of the year: 8,760 hours (24 hours per day * 7 days per week * 52 weeks per year)!
While it’s important to learn how to make money while you sleep , something tells me no one could work literally every hour of one year.
We do have to sleep, eat, relax and be social. That takes away at least a third of those hours (at an absolute minimum). You’ve also got to factor in weekends, holidays and vacation.
On the other end of the spectrum, when you work fewer hours but still take home $45,000 per year, you actually earn a much higher wage.
Perhaps you only work part-time at 20 hours per week but still earn $45k per year. If so, your average wage actually comes to $43.27 per hour (same pay but half as many hours).
As you can see, the amount of income remains constant, but the hours you work may vary. Therefore, it is important to get the most out of your time. Know the Opportunity Cost of Your Time
It’s important to know what your average hourly wage is because you can then judge the cost of your time and then what your opportunity cost is. This means the cost of your next best alternative.
In this case, if you earn $45,000 per year and work 2,080 hours per year (40 hours per week), you know your opportunity cost is $21.63/hour.
That means if you have an opportunity to earn more than this wage per hour and you have the ability and desire to do so, it is worth your time to pursue this opportunity.Doing so makes you better off financially and earns you a higher return on your time than your current job.You can increase the opportunity cost of your time (or earn a higher wage at your current work) by working fewer hours but making the same annual pay.This works by accomplishing the same work responsibilities in less time and more efficiently.You can accomplish this by: gaining on the job experience going to school to get a specialized education to work more effectively and efficiently in your job automating routine, time-consuming tasks outsourcing work where possible This last one requires an even deeper understanding of opportunity cost and return on investment.Outsourcing work likely entails added expense and lower margin. However, if you can take this saved time to earn even more money, you’ve made a great investment .Do it enough and at scale and you’ve made yourself an entrepreneur capable of arbitraging an income from a company and managing freelancers or contractors to handle your responsibilities.As another outlet for increasing your hourly wage, you can also earn money from income generating assets. While these don’t directly relate to how many hours you work, it can increase your annual income and result in a higher net effective wage.Investments like these are some of the best assets to invest in because they don’t require you to take […]
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