Want to make more money per hour?
If you want to start thinking more like an entrepreneur, don’t just focus on how to raise your annual salary; instead, start figuring out how to make more money per hour. After all, your time is one of your most valuable assets.
Understanding your true hourly rate (not just the hours you put in at the office) will help you assign a cost to all of your work-related activities. It will help you look for ways to work more productively and to better assess opportunities in your career.
All that extra effort you put into chasing after a promotion or a 5% bump in your annual pay actually drives down the value of your hourly rate today.
You are working extra hours in the short term for delayed rewards in the future that you have no control over.
When you work as an employee, someone else decides if you will be rewarded with a promotion, raise, or new opportunities for your hard work. Entrepreneurs make that decision for themselves because they are constantly thinking about how to boost their short-term hourly rate.
When you are aware of your true hourly rate, you will value your time and the impact of your work very differently. First, let’s help you calculate your hourly rate before I offer you some recommendations on how you can boost it.
Calculating the Hourly Rate of Your Salary
If you’re a salaried employee, you can probably determine your weekly salary by checking your paycheck or by dividing your annual salary (after taxes because that’s your real take-home pay) by 52 weeks.
Here’s an example: say you make $50,000/year after taxes
1. Calculate your weekly salary
$50,000 annual salary / 52 weeks = $961.54 weekly salary
To calculate your hourly rate, divide your weekly salary by the average number of hours you work each week.
2. Calculate your hourly rate
$961.54 weekly salary / 50 hours = $19.23 per hour
This calculation represents your hourly rate after taxes for the time you spend working in the office. Unfortunately, this isn’t your true hourly rate.
Calculating Your True Hourly Rate
Most people only consider the number of hours they spend at the office when calculating their hourly rate.
Entrepreneurs know the true cost of work includes all related and supporting activities. Think of it as your personal Cost of Goods Sold (COGS).
To calculate your true hourly rate, you need to also include:
- Your average commuting time
- The time you spend working at home
- Even the time you think about work outside the office
Let’s expand on our above example: say your average daily commute to and from the office is 1 hour and you spend an average of 5 hours a week thinking about and/or performing office work at home.
3. Calculate your TRUE hourly rate
50 hours at office + 5 hours of commuting + 5 hours of working at home = 60 hours
$961.54 weekly salary / 60 hours = $16.03 per hour
Once your time commuting and work-related activities at home are included in the calculation your hourly rate drops by just over $3 per hour to $16.03 per hour!
When you are putting in even more time at work in hopes of a promotion or a raise, will that bump in your salary offset the short-term losses in your hourly rate?
After performing this calculation, if you think you need a raise or want to work more productively, you’re getting my point. Your time is more valuable than the salary you’re being paid.
You can always save money or make more of it, but all of us only have 24 hours in a day, and unfortunately none of that time can be banked for future use.
5 Productivity Hacks to Make More Money Per Hour
Now that you know your true hourly rate, here are some ways you can boost it without even asking for a raise or a promotion!
1) Stop staying late at the office.
Don’t work more, work more efficiently. The quickest way to increase your hourly rate is by giving yourself a fixed start and end time to your workday. You’ll be forced to work more productively on the tasks with the biggest impact on the quality of your work.
2) Work outside the office as much as possible.
I’m not advocating to work more outside the office on top of all the hours you already spend there! Instead look for ways to shift a few of your office hours to outside the office.
There are no bigger time sucks than meetings, managers, and traffic. If you can, try working from home at least a couple of days a week.
When you need to get important and quality work done, close your office door, work in a conference room, or even go to a local library. Minimize office distractions and do everything you can to reduce the amount of time you spend commuting.
3. Eliminate, automate or delegate more of your work.
Successful entrepreneurs understand they can’t do all the work of running their business, so they hire people.
As an employee look for ways to automate as many of your administrative tasks as possible. Have the courage to eliminate unnecessary tasks.
Even if you don’t have anyone to manage, look for ways to delegate work that isn’t helping you grow professionally or really isn’t one of your core responsibilities.
Here are three strategies for delegating work when you don’t have anyone directly reporting to you:
- Delegate to people more junior than you. If there is anyone hired after you, ask your manager if you might be able to delegate tasks to them, so you have time to work on more advanced work.
- Ask your direct peers for help when you need it. If you are taking on a new work challenge and need to pass along some of your easier duties to someone else, then ask for help!
- Guard against temporary tasks turning into permanent ones. More often than not, a temporary duty turns into a permanent one and you need to bring that to the attention of your superiors if you feel it’s not within your core job description.
Show your managers you are interested in producing more valuable work, rather than trying to get out of work.
4. Don’t multitask, group related tasks together.
Multitasking is an illusion. Monotasking is far more productive. If you want to get more work done in less time, group related tasks together.
For example, email is one of the biggest office time sucks because we allow it to constantly interrupt us throughout the day. Spend less time on your email by processing it in batches no more than 3 times a day. Respond to urgent emails first and spend the last half hour of your day answering the rest.
5. Start a side business.
Each of the previous recommendations to increase your hourly rate focuses on reducing the amount of time you spend at work.
But you can also increase your hourly rate by starting a side business. How? You can start a side business by becoming a consultant or freelancer to generate income off your existing expertise. You’ll discover that you can get paid more per hour for the exact same work you do in the office!
The real magic of increasing your hourly rate is by creating a source of passive income. This can be a side business you build that continues to generate income without your direct involvement. I do admit, you’ll have to put in a lot of work up front for long-term financial rewards, but at least you’ll own all the work you put in!
Calculate Your Ideal Lifestyle
Knowing your hourly rate helps you better assess the value and impact of the work you do. It also provides you with a benchmark for better determining your own monetary and work/life balance needs on a daily basis.
While you’re maximizing your true hourly rate, you might also want to understand how much money you really need to support your ideal lifestyle. To do this, download our free Lifestyle Calculator.