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How long does it take to earn what we spend on?

07 Jan 2022 - Contact Sayan Sircar
9 mins read

This article introduces a simple budgeting tool that shows how much time it takes to earn something using our hourly wage.

How long does it take to earn what we spend on?

Table of Contents


The price of anything is the amount of life you exchange for it - Henry David Thoreau.

Most people, especially those with a salaried job or profession, trade-off their time for money in the form of salary or income. This leads to the concept of the hourly wage: How much do we earn on an average for the entire amount of time spent in work and related activities per hour. Work and related activities include:

  • Morning and evening routine for getting ready for office
  • Commute to and fro between the office and home
  • Time spent in the office (work and breaks included)
  • Time spent working from home (whether you went to the office that day or not)

Money’s greatest intrinsic value—and this can’t be overstated—is its ability to give you control over your time. - Morgan Housel, The Psychology of Money

We use the same premise in the quote above to see how much time our expenses are costing us. This post will use a simple calculator to find out your hourly wage and use that as a tool to prioritize discretionary expenditure like entertainment, travel and buying consumer goods like electronics, clothes and jewellery.

How to calculate your hourly wage

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Hourly wage calculation

The concept of the hourly wage is reasonably straightforward to calculate for professionals who bill hourly (like lawyers) or doctors who know how many patients they see in an hour. For salaried individuals, we perform the following calculations:

  • A: Annual income: Current monthly take-home salary, employer’s contribution to provident fund and NPS times 12. Also, include any bonus received in the last twelve months
  • B: Days spent working per year: working days per year after all leaves and holidays (e.g. weekdays minus leaves minus holidays like Republic Day etc.)
  • C: Average daily time spent in activities like getting ready, commute, time spent in the office and working at home

Simple calculation: Hourly wage = A / (B * C)

If you are not salaried and instead have income from business, freelancing or profession, you will need to use averages in the calculations shown here.

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Hourly wage split between incidental or productive time

The calculator will also show the split of time spent in actually earning money (time you spend doing the work or Productive time) and the rest (commute, preparation etc.), which is the Incidental time. Therefore, reduction of incidental time will not only boost your hourly wage but will also free up time for non-work activities.

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How to use your hourly rate

Once you know how much you earn per hour of your time, it will feel like a new superpower that you can use throughout your day for all kinds of decision-making, in the context of Henry Thoreau’s quote above. We will use ₹500/hour in the examples as per the calculations in the screenshot above.

For budgeting

This article does not say that everyone should stop watching Netflix and never buy an iPhone. However, it does want to make the point that be aware of the time cost of activities and discretionary stuff.

Knowing your hourly wage can help answer questions like:

  • Should you buy a ₹75,000 iPhone (150 hours), an Android flagship (120 hours) or is a mid-range phone (30 hours) good enough? The flagships may last 4-5 years, but you will have the option of upgrading the mid-ranger every two years
  • Is 4 hours of work justify a party where you spend ₹2,000 as a habit every Friday?
  • Do you want to buy a ₹10 lakhs car where the down-payment is 33 days of work, and the EMI is three days of work/month or buy a ₹5 lakhs car where these numbers will be cut in half?
  • Do you want a ₹50,000 vacation with family every six months that cost just eight days of work and creates a lifetime of memories by saving for it first, or spend 5-10 days a month on EMIs for loans (credit card and personal)

Here is a thumb rule:

Using the framework of the wealth ladder, we have a decision-making level depending where in the wealth-ladder we currently are. For example, if your wealth is ₹10 lakhs, then your decision making criteria for choosing a product or service is 1% of that or ₹10,000. Convert that to hours of work using your hourly wage and see how long you have to work for earning that 1%.


  • If you are earning that 1% in less than a week, plan the purchase for a week and then go ahead
  • If you are earning that 1% in more than a week, plan the purchase for a fortnight


  • Net worth of ₹20 lakhs, the threshold at ₹20,000, the hourly wage is ₹500/hour
  • 40 hours or 4 days of work is needed to reach the threshold of ₹20,000
  • A new phone costs ₹18,000, which is lower than the threshold and costs 36 hours of time
  • Spend a week reading reviews and knowing the pros and cons and then buy it

While you are waiting, consider opening up a sinking fund to save for known expenses like vacations and gadget purchases.

Read more:

For controlling impulse purchases

Impulse purchases happen without advanced planning, with a decision made within minutes or hours at most. Some signs of impulse purchases are:

  • Are you worried that you are spending too much ordering food or buying stuff online?
  • Did you take an EMI based card solely for purchasing electronics and white goods?

Have a thumb rule in place like this:

  • anything that costs less than 2 hours of work can be bought after a day
  • anything that costs a day of work can only be bought after a week and so on

Just ask yourself: Is this worth spending 5 hours or 5 days of my life working? You can just leave the product in the cart and come back later.

The delay acts as a brake since our emotional state at the point of considering the impulse purchase has a significant impact on the decision making. For example, if you are angry, hungry or sad, you are more likely to make certain purchasing decisions that you would not make otherwise. Just letting some time pass might change your mind. Afterwards, if you still feel like buying, research the product/service and go ahead.

For choosing where you work

There are two things, apart from the actual salary, that impact your hourly wage:

  • how long do you commute from home to office and back?
  • how many days/month can you work out of home vs going to the office?

You can play around with the inputs to the calculator to see this. In the example above, going to the office for 25 more days/year drops the hourly wage by 10%, while negotiating 25 days more WFH leads to a free 10% increase in money earned per unit time.

If you have an alternative house on rent that will save an hour of commute a day, that is worth ₹10,000/month in free time if you go to the office daily. This, of course, assumes that you have productive usage for the free time like spending more time with family, hobbies, leisure or learning new skills.

Additionally, if your income is scalable like freelancing or profession-based then reducing the incidental time will greatly increase your earnings. For example, a video editor who upgrades their computer by making it faster will recoup that cost based on additional time they can spend working on assignments instead of staring at the screen while rendering.

For choosing what activities to perform

Time is money: The saying is intended to convey the monetary cost of laziness, by pointing out that when one is paid for the amount of time one spends working, minimizing non-working time also minimizes the amount of money that is lost to other pursuits - Wikipedia

This concept is an extension of the idea in the previous paragraph. Is there a better usage of your time given that you now know what you can earn every hour?

Hourly wage will also show the value of outsourcing regular activities, which are time sinks (e.g. laundry or dishwashing) or leads to time wastage (watching ads during a movie with cable TV vs zero ads in OTT; grocery shopping from a physical store vs online ordering; parking and fuel vs app-based taxis for a mall visit etc.)

You can also answer questions like is it worth having someone to handle chores (for example a having a housekeeper when staying outside India) vs. using that time (say 5 hours/week) to actively pursue a productive activity like taking a course online, working out in a home gym or 1 hour daily gaming/reading session with your child.

Overall, once you know the actual value of your time, you will automatically start making better decisions on time management. Since this blog focuses on personal finance, the biggest return you can get is using your free time to increase your income based on your Human Capital. After all, Human capital is the most critical asset is one of the axioms of personal finance.

Link to calculator: here

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