A great lesson for anyone thinking about how money works is to think about the concept of real hourly wage.
If you’re paid an hourly wage, you know what you make for each hour that you work. And if you’re paid a salary, you can figure out approximately what you make per hour. For example, if you make $50,000 per year, your hourly wage is $25 per hour, assuming you work a standard 2,000 hours per year.
Here’s the thing though – very few of us actually make what we think our hourly wage is. That’s because there’s often much more that goes into work than just working. We have to commute. We have to get dressed and ready for work in the morning. Many of us have to do some work at home. Even when we have no work to do, we usually have to sit in our office for set hours of the day. And we spend many other countless minutes and hours of our day doing things that aren’t really for us.
A more accurate way to think about what we earn is to look at our real hourly wage. This is a concept that I first learned about in Your Money or Your Life, one of the most important books in the financial independence space. In the book, the authors discuss the concept of real hourly wage, which is the amount that we actually earn after we take into account all of the things we have to do for our jobs.
To figure out your real hourly wage, simply take what you earn, then add up all the time you spend working, as well as the time you spend commuting, getting ready for work in the morning, and everything else you have to do for your job. Your real hourly wage will show you how much you’re really making per hour.
I always knew that my salary was less than what it looked like on paper. When I worked at a big law firm, I spent so many hours of my day, not just working, but also being at work, thinking about work, and doing things that weren’t really for me. I had to do all of these things for my job. But I never really accounted for it when I thought about what I was really earning.
Delivering food on my bike with on-demand food delivery apps is an exercise in what real hourly wage is all about. Here are some lessons delivering food has taught me about real hourly wage.
Your Commute Time Can Destroy Your Real Hourly Wage
I regularly earn $30 to $40 per hour delivering food on my bike with apps like Postmates, DoorDash, Uber Eats, and Grubhub. When I calculate what I earn per hour with these apps, I always calculate it from the second I walk out my front door to the second I walk back into my house. I suspect that if I didn’t do this, people would challenge me on my hourly earnings, telling me that I need to calculate my travel time if I want to get an accurate picture of what my delivery income really is.
I’m fortunate that I live in a dense area where I can literally sit on my couch, turn on my delivery apps, and wait for an order to come before I walk out the door. Quite tellingly, if I had to do any sort of commute to busy delivery areas, it’d crush my hourly earnings. I can earn $40 in an hour most days with these apps (and that’s door-to-door from when I walk out of my house to when I get back). If I had to add 15 minutes of travel time each way, however, it’d cut my hourly earnings to $26.66 per hour. That’s still pretty good for just delivering food on my bike, but it’s not the $40 per hour that I see now.
It seems clear that I have to incorporate any commute time to get an accurate picture of what I’m really making with these delivery apps. But interestingly enough, it seems like many of us discount our commute time when we think about what we earn with our 9-5 jobs. Anecdotally, I can’t think of a single person that calculates their commute time when they think about how many hours they work in a week.
And all that time does add up. 30 minutes to get to work in the morning. Another 30 minutes to get home from work. That’s an additional 5 hours per week that we spend doing work-related activities. Add in another 30 minutes per day to get dressed and ready for work and it turns out many of us are spending an additional 7 hours or more per week doing unpaid work related to our jobs. Perhaps all of this isn’t as relevant today given that many office workers can work from home, but you have to assume that at some point, offices will reopen and people will be commuting again.
There are ways to take back some of your commute time (or at least repurpose it to something that benefits you). Biking to work comes with the added benefit of adding exercise time into your workday, which is a way to double-dip your time in a way – commuting and exercising at the same time. Many of us probably read or do other things when we’re taking the bus or train. I’m not sure if you can count all of it back as your time, but it’s at least something that gives you back some of those lost hours.
Trading Time For Money Makes It Difficult To Increase Your Real Hourly Wage
There’s a common misconception that doing something like food delivery is trading time for money. And undoubtedly that is what you’re doing. But it’s also not exactly that.
In truth, most of these gig economy apps aren’t about trading time for money. Instead, it’s about trading tasks for money. You don’t make an income for the hours you spend working. You make an income for the tasks that you complete. It’s a subtle distinction, but it does make a difference.
Every real job I’ve ever had paid me a salary. When I think about it, this salary wasn’t really in exchange for completing assignments. My employer paid me for my time. If I finished all my work, I needed to either find something else to do or wait for something else to come to me (or at least sit in my office and pretend I was working on something).
When you get paid for your time, it becomes really difficult to change what your real hourly wage is. The only thing you can really do is to reduce the amount of time you spend on work activities outside of work. That means creating a shorter commute or spending less time at work.
I had a friend of mine who increased his real hourly wage significantly when he went to remote work. He worked at a government agency that let everyone work remotely after 2 years of service. When he went remote, he removed hours per week of commuting time, while still earning the same salary. Thus, his real hourly wage increase.
When you trade tasks for money, you can vary what you earn. You can do this by being more efficient with the tasks you are getting paid to complete. And you can also opt to only take on only higher-paying tasks.
What are the action steps you can take here? If you’re trading your time for money, figure out what you can do to reduce the amount of time you spend doing work-related activities outside of work. Figuring out how you can shorten your commute can dramatically increase your real hourly wage. If you can finish your work sooner and leave work early without angering your employer, try to do that (easier said than done, I know).
Working Set Hours Makes It Difficult To Increase Your Real Hourly Wage Too
In the Four Hour Workweek, Tim Ferris points out an interesting fact – how is it that everyone in the world needs about 8 hours per day to do their job?
That’s the nature of how jobs work in the modern world. We have set business hours and regardless of whether we have any work to do, we’re still expected to be at work during those times. I had three different jobs when I was working as an attorney. And in all three jobs, I was told to be at work by a specific time (indeed, in two of those jobs, I got a light talking to when I didn’t get into the office by the time they wanted me to be there).
Entrepreneurial work like the type I’m doing now changes this up a bit. I work a lot of hours still. But these days, I don’t have to pretend to work or find work to do to fill up my day. Instead, I only do work that I need to do. I’m still admittedly not very efficient – I waste a lot of time when I’m working – but I’m no longer pretending to work or seeking out work that I maybe need to do but don’t really need to do.
Unfortunately, if you’re in a job that has set working hours, there’s not much you can do here to increase your real hourly wage other than what I mentioned previously – reducing the amount of time you spend on work outside of work.
Final Thoughts
Your real hourly wage tells you a lot about what you’re trading your time for. A more complete picture of how much we’re really getting for our time is always helpful. In some cases, maybe the amount you’re getting paid for your time isn’t enough.
I quit my regular 9-5 job two years ago to pursue writing and side hustling. My job was fine but it wasn’t a particularly good fit for me. I didn’t make that much at my last job, but my big fear was that I wouldn’t make enough money to support my lifestyle. When I think about how much time I really spent at work, the amount I actually made was even less than I thought.
That’s the advantage of what I’m doing now. There are ups and downs of course. Things aren’t always certain. But I have a lot more ways to take control of my real hourly wage.
This post may contain affiliate links. Financial Panther has partnered with AwardWallet and CardRatings for our coverage of credit card products. Financial Panther, AwardWallet, and CardRatings may receive a commission from card issuers. Some or all of the card offers that appear on the website are from advertisers. Compensation may impact on how and where card products appear on the site. The site does not include all card companies, or all available card offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.
More Recommended Ebike/Scooters
Check out these other ebikes and scooters I've reviewed:
- Urban Arrow Ebike – Last year, I made one of the largest purchases I’ve ever made – I bought a $9,000 electric cargo bike from Urban Arrow. In my Urban Arrow review, I will discuss what it is and why I decided to buy this bike, as well as discuss how impactful a bike like this can be on your journey to financial independence.
- Troxus Explorer Step-Thru Ebike – The Troxus Explorer Step-Thru is a fat-tire ebike that I’ve had the pleasure of riding for a while now. It has amazing power, great looks, and awesome range. If you’re looking for a great fat-tire ebike that offers a lot for the price, the Troxus Explorer Step-Thru is definitely one for you to consider. Check out my Troxus Explorer Step-Thru Review.
- Hovsco HovBeta Ebike – The HovBeta is a folding ebike with great specs and a lot of interesting features, and importantly, it’s sold at a good price point. I’ve had a blast commuting with it and using it to do deliveries with DoorDash, Uber Eats, and Grubhub. Check out my Hovsco HovBeta Ebike Review.
- Vanpowers Manidae Ebike – The Vanpowers Manidae is a fat tire ebike that I’ve been riding as my primary winter commuting bike and have also been using it to do food delivery with apps like DoorDash, Uber Eats, and Grubhub. After clocking in a decent number of miles with this ebike, I wanted to write a post sharing what my experience with the Vanpowers Manidae ebike has been like. Check out my Vanpowers Manidae Review.
- Sohamo S3 Step-Thru Folding EBike Review – A Great Value Folding Ebike – The Sohamo S3 Step-Thru Folding Ebike is an entry-level folding ebike that offers a lot of value for the price point. I’ve been riding the Sohamo S3 for a while now, putting the bike through its paces, and I have to say, this bike has exceeded all of my expectations. Check out my Sohamo Review.
- KBO Flip Ebike – The KBO Flip is an excellent bike. I’ve had a great time riding it and think it’s a versatile bike that can be used for a lot of purposes and can fit a variety of lifestyles. It’s worked out great for me as a general commuter bike and as a food delivery bike. Check out my KBO Flip Review.
- Hiboy P7 Commuter Ebike – The Hiboy P7 is an excellent electric commuter bike that’s offered at an affordable price point. The range and speed of this bike are both very good, so you won’t have any trouble getting anywhere you need to go with it. As a food delivery vehicle, this is also good – with how much range it offers, you’ll be able to work all day on a single charge. Check out my Hiboy P7 Commuter Electric Bike Review.
- Himiway Escape Ebike – The Himiway Escape is an interesting bike for anyone looking for a moped-style ebike. If you’re a gig economy worker, the Himiway Escape is particularly interesting and it’s possible to think of it as an investment, especially if you can opt to do deliveries with the Himiway versus using a car. It’s not cheap, but you can definitely make your money back when you compare the mileage you’ll put on your car versus using an ebike. Check out my Himiway Escape Bike Review.
- Espin Sport Ebike – The Espin Sport is a good ebike for someone who is looking for an ebike that feels and rides more like a regular bike. There are many ebikes that are really only bikes in name. In reality, they’re basically electric mopeds. The Espin Sport, by contrast, is a bike you could probably ride without the battery and you’d feel like you’re just riding a regular bike. Check out my Espin Sport Review.
- Varla Eagle One Scooter – The Varla Eagle One is an excellent scooter that can make sense for a lot of people. It can work as a primary mode of transportation. You can use it to work on gig economy apps like DoorDash, Uber Eats, and Grubhub. And it can also be a recreational vehicle if you’d prefer to use it for that. Check out my Varla Eagle One Review.
- Varla Falcon Scooter – The Varla Falcon is an excellent scooter that offers a good amount of power at a lower price point compared to more powerful scooters. It’s not exactly an entry-level scooter, nor is it a high-powered scooter. I think it fits somewhere in-between those two categories – an intermediate scooter if I had to give it a category. Check out my Varla Falcon Review.
- Hiboy S2 Scooter – The Hiboy S2 is an excellent entry-level commuter scooter that's perfect for someone looking to save some money in transportation costs and improve their commute. Check out my Hiboy S2 Review.
- Hiboy S2R Scooter – The Hiboy S2R is one of the more interesting electric scooters I’ve been able to test out. It’s not a high-powered scooter, but for an everyday transport option, it’s very useful, especially given some of the unique features that it has. Indeed, for the price, the Hiboy S2R might be the best value scooter I’ve used. Check out my Hiboy S2R Review.
- Fucare H3 Scooter – The Fucare H3 is a fun scooter and I’ve enjoyed testing it out. For a daily commuter or quick trips or errands, the Fucare H3 is probably the scooter I’ll use. It’s portable and easy to maneuver, so it’s just easier to take on the road when I need it. Check out my Fucare H3 Scooter Review.
More Recommended Investing App Bonuses
For additional investing app bonuses, be sure to check out the ones below:
- M1 Finance ($100) – This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account. Check out my M1 Finance Referral Bonus – Step-By-Step Guide.
- SoFi Invest ($25) – SoFi Invest is an easy brokerage account bonus that you can earn with just a few minutes of work. Use my SoFi Invest referral link, fund your SoFi Invest brokerage account with just $10 and you’ll get $25 of free stock. I also have a step-by-step guide for the SoFi Invest referral bonus.
- Webull (20 free stock shares) – Webull's current promotion gives you 20 free shares valued between $3-$3,000 each if you open an account using my referral link. Here’s a guide I wrote about how to earn your free shares using Webull.
- Moomoo (15 free stocks) – Moomoo is a free investing app currently offering 2 different referral bonuses if you open an account using a referral link. Read my Moomoo referral bonus guide for more information.
- Robinhood (1 free stock) – Robinhood gives you a free stock valued between $2.50-$225 if you open an account using my referral link.
- Public (1 free stock) - Public gives you a free stock valued between $3-$70 if you open an account using my referral link.
More Recommended Bank Account Bonuses
If you’re looking for more easy bank bonuses, check out the below options. These bonuses are all easy to earn and have no fees or minimum balance requirements to worry about.
- Upgrade ($200) – Upgrade is a free checking account that’s currently offering a $200 referral bonus if you open an account and complete a direct deposit. These bonus terms are easy to meet, so it’s well worth doing this bonus as soon as you can. Here’s a post I wrote with more details: Upgrade $200 Referral Bonus – Step By Step Directions.
- Ally Bank ($100) – Of all the banks out there, Ally is, without a doubt, my favorite. At the moment, Ally is offering $100 to customers who open an eligible Ally account and meet the requirements. Here are the step-by-step directions to earn your Ally Bank referral bonus.
- Fairwinds Credit Union ($175) – Fairwinds Credit Union is offering a referral bonus for users that sign up using a referral link. Fairwinds has no fees or minimum balance, so this is a particularly easy bonus to earn. Since this is a smaller credit union, my gut instinct tells me this offer won’t be around long, so if you’re in a position to meet the bonus requirements, grab this bonus before it’s gone. Here is my step-by-step guide on how to earn your Fairwinds Credit Union bonus.
- Chime ($100) - Chime is a free bank account that offers a referral bonus if you use a referral link and complete a direct deposit of $200 or more. In practice, any ACH transfer into this account triggers the bonus. This bonus is easy to earn and posts instantly, so you’ll know if you met the requirements as soon as you move money into the account. I wrote a step-by-step guide on how to earn your Chime referral bonus that I recommend you check out.
- US Bank Business ($800) – This is a fairly easy bank bonus to earn, since there are no direct deposit requirements. In addition, you can open the Silver Business Checking account, which comes with no monthly fees. Check out how to earn this big bonus here.
- GO2Bank ($50) - GO2Bank is an easy bank bonus that I recommend people take advantage of if they have an easy way of meeting the direct deposit requirement. I like that it’s easy to open the account and that the bonus pays out quickly. Check out my step-by-step guide on how to earn your GO2Bank $50 referral bonus.
- Current ($50) – Current is a free fintech bank that’s offering new users a $50 referral bonus after signing up for an account using a referral link. Current is an easy bonus to earn and also gives you access to three savings accounts that pay you 4% interest on up to $2,000. That means you can put away up to $6,000 earning 4% interest. That’s very good and makes Current an account I recommend to everyone. Check out my step-by-step guide on how to earn your Current Bank bonus.
- Novo Bank ($40) - Novo bank is a free business checking account that’s currently offering a $40 bonus if you open a Novo business checking account using a referral link. In addition to being a good bank bonus, Novo is also a good business checking account. It has no monthly fees or minimum balance requirements and operates a good app and website. Indeed, it’s the business checking account I currently use for this blog. Check out my post on how to easily open a Novo account.
- Varo ($25) – Varo is a free fintech banking app similar to Chime or Current. It’s currently offering a $25 bonus to new users that open a new Varo account with a referral link. The bonus for this bank is very easy to meet, all you need to do is spend $20 within 30 days of opening your Varo account. Check out my step-by-step guide to learn how to earn this bonus.
Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.
Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.
Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:
- SoFi Money. A really good checking account with absolutely no fees. You'll get a $25 referral bonus if you open a SoFi Money account with a referral link, and an additional $300 if you complete a direct deposit.
- 5% Savings Accounts. I'm currently getting 5.24% interest on my savings through a company called Raisin. Opening a Raisin account takes minutes to complete, it's free, and all of your funds are FDIC-insured. I explain how it works, why I'm now using it to store my emergency fund and any other cash savings I have, and why I recommend everyone check it out in this review.
- US Bank Business. US Bank is currently offering new business customers a $800 signup bonus after opening a new account and meeting certain requirements.
- M1 Finance. This is a great robo-advisor that has no fees and allows you to create a customized portfolio based on your risk tolerance. You also get $100 for opening an account.
- Empower. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.
Feel free to send Kevin a message here.
Seems like when you compute your real hourly wage, it should not only account for time spent to “access” the job, but money spent too. That is, you should subtract the *costs* of working from what you earn, i.e., compute your *net* earnings. Things like business attire you have to wear to your job, commuting costs (gas, maintenance, etc.), costs for eating meals (assuming you don’t brown bag breakfast and lunch), etc. Costs of working vary by the job you do and where it’s located so it affects your REAL hourly wage.
I don’t disagree with that and I do track my expenses and deduct those costs when doing my taxes each year. I use an electric bike, so my costs are very low. Just the cost to charge the battery (which is minimal – on the order of cents per day) and maintenance costs, which is a few hundred bucks every few months.
I would point out that there is a level of absurdity once we start going deep down that Money or Your Life rabbit hole of what’s part of your real hourly wage.
For example, if we’re counting our going out to eat lunch as a cost of working, then do we start counting our dinner costs when we buy food since we’re getting home late from work? Do we count the housing expenses for the city we’re living in now since we could live in a cheaper city? Do we count the fact we’re living in this country instead of living in a cheaper country? There’s not really a logical endpoint once we get too deep down that path.
Commuting is just unpaid work.
Yeah you are spot on here. Communite time should be taken into account. Sure you can make your commute time useful (and you should) by listening to podcasts, audiobooks, or reading (train commute). But there is an overarching problem in our society that is focussed around the amount of time at your desk versus your actual productivity.
This is why I always tried to utilize Four Hour Work Week philosophies to work smarter versus harder, even as a CEO. Now I “work” a few hours a day, but try to make those hours count as much as possible. I bet that even though I work a fraction of the time, my output is likely near many 40 hour week employees.
I wonder if the move towards remote work over the past year might change this office time thing. My guess is probably not – I have a feeling that as soon as employers can get people back in the office, they’ll do so.
I think we’ll see some employers decide that expensive office space is not worth it anymore (my former employer I know has already canceled leases left and right), but I’d guess that the bulk will return to the norm as soon as they can.
I wonder how much the productivity of workers will increase if companies incentivized actual work. If they said “if you finish all your work by 3pm, you can go home”. I bet a lot of people will kick it into overdrive and instead of going on twitter, they’ll finish that dreaded report.
That’s why working a set amount of hours isn’t a good model. Why work to produce as much as I can in a condensed timeframe when it’s not going to matter at the end of the day?
Agree on being happy controlling your own destiny. I used to not take the side hustle culture seriously until I started my blog. Turns out, I love it so much more than working a regular day job even though I make $0.
It’s all Parkinson’s Law – work expands to fill the time you give it. It’s why when I got 6 weeks to write a paper for school, I always took the full 6 weeks and ended up actually getting it done in the last day. Give me one day to do it and I’d get it done in one day.