How this is calculated
This calculator was popularised by the book Your Money or Your Life and the broader financial-independence community. The idea is simple: the salary line on your payslip is not what your job actually pays you. The honest figure subtracts the time and money the job extracts before you ever sit at your desk, and adds back the recovery time it costs you on the way out.
We start with the official picture. Annual salary divided by official annual hours, where official annual hours is your declared work days × 8. The default of 235 work days is roughly 260 weekdays minus 12 public holidays, 10 vacation days, and a few sick days. If you're in a country with five weeks of vacation or a state with more public holidays, drop the number; if you grind out an extra day every weekend, raise it. That gives the official hourly wage — the number you'd quote at a dinner party.
Then we calculate the true hours given to the job. To the official 8 hours we add commute time and decompression time. Commute is straightforward: minutes per day divided by 60, multiplied by work days per year. Decompression is the time after work when you're physically off the clock but mentally still cooked from it — the half-hour of staring at a wall, the scroll session before you can cook dinner, the second drink that wouldn't have happened on a Saturday. If your job didn't ruin you, those minutes would be yours. So we count them. The default of 30 minutes is the conservative low end; for high-stress roles, an honest answer is 60–90 minutes.
Notice we don't add lunch or coffee breaks. Those are usually unpaid in the official calculation already, and including them would double-count. If your employer makes you work through lunch, that's an issue worth a real conversation, not a calculator.
On the cost side, we subtract commute cost (fares, parking, fuel, depreciation), work clothes (the suits, shoes, dry cleaning, and laundry runs that wouldn't exist if you worked from home in pyjamas), and work meals (the daily coffees, takeaway lunches, and after-work drinks that are direct consequences of being in the office). We don't subtract childcare, because it's a fixed cost in many households regardless of work — but if you genuinely only pay for childcare because you work, you can fold that in by adding it to the work meals field. We don't subtract taxes, because the calculator is about the gap between official salary and lived hourly wage; tax is a separate (large) story.
True annual earnings is salary minus those costs. True hourly wage is true annual earnings divided by true hours. The hourly difference shows the gap between the two — for a typical white-collar job in a major city, the gap is shocking. Many people find their true hourly wage is 60–70% of the number they thought it was.
The point isn't to make you depressed about your job. It's to make every spending decision honest. If your true hourly wage is $26 an hour, that $130 jacket isn't "a Tuesday" — it's five hours of your real life. That changes a lot.
Limitations: we assume work hours don't fluctuate week-to-week, we don't model bonuses or equity vesting, and we don't account for the value of benefits (health insurance, retirement matching). Benefits are real money but they're paid in time, not life-energy, so we keep them out of the trade. If you want to be more generous to your job, add benefits to your annual salary input before running the numbers.
The calculator is calibrated for the United States — 8-hour workdays, dollar amounts, 235 default work days. The math works in any currency; the output will appear in dollars but the relationship is what matters.