Hourly Budget

One way to look at money is time. They say "time is money" and that’s particularly true if you work at an hourly job.

But even if you are salaried, it can still work out similarly. Take your annual salary (e.g., $80,000), divide it by 1,000 (e.g., 80) and divide that in half (e.g., 40). That’s your hourly rate approximately. So for $80k/year, you make $40/hour.

Now base your spending decisions on that. Let’s say something costs $40. Are you willing to work for an hour for that?

If something costs $320, are you willing to work a day for that?

It’s just a rule of thumb. It just helps you measure the cost/value of something.

For small things, this process often doesn’t discourage what you might spend (e.g., it only "costs" 5 minutes). For things you really want, same (e.g., this 5-day cruise only costs 3 days!).

It doesn’t apply on all levels. And you have to remember, you don’t have an unlimited number of days you can work. You have to remember that the bulk of your income is likely going to mandatory costs of living. So maybe you only have a couple of hours every day you get to choose how to "spend."

If nothing else, it can help put things into perspective.