How Much Did Those New Shoes Really Cost You?

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Experts say that before you buy something you should look at the cost in terms of how many hours of labor it is going to cost you. This is a unique way of looking at how you are spending your money and may even make you think twice about spending it. Let’s take a look at what a purchase is really going to cost.

Caluculate your annual salary and then multiply it by .7. The figure you arrive at will be a relatively accurate number for what you are making after you have paid Uncle Sam. Let’s say you make $40,000, a year. By the time you pay the government you will be left with $28,000.
Think about all the expenses associated with working. This list will probably include gas, food and clothing at the very least. These expenses can vary greatly, but let’s say you spending $40 on gas, $40 on lunch and $30 on clothes, per week. This will make your annual expenses $5,720. Now you are looking at an annual income of $22,280.

Divide this figure by the number of hours worked in a year, which is roughly 2,000 and you arrive at your actual hourly wage. In this example it is $11.14. This is what you are truly ending up with for every hour you give your employer.

Now, let’s talk about those shoes. For the sake of this example, let’s say the shoes cost $50. You will have to trade about 4.5 hours of your life with your employer to be able to buy those shoes and they may still be worth it to you, but you may decide that the pair that you own will do just fine.

Now, let’s look at what you could have had if you would have invested the $50 for 20 years. You will arrive at that figure by multiplying by 6.7. The answer is $335. This may not seem like a lot, but if you think about everything you have purchsed that you don’t use or did not need and everything that you could have purchased for less, I guarantee this will add up to a lot of retirement money. If you purchased these item with credit cards and are paying interest you can also add that to the bottom line.

You may want to think twice before making that purchase. There is nothing wrong with buying things, but you may want to think about what it is really costing you before you make that purchase.