How to calculate hourly rate from monthly salary
Whether you’re a freelance worker or a salaried employee, understanding how to calculate your hourly rate is important for various reasons. Knowing the correct rate can help you understand your true worth and negotiate better contracts, job offers, or project fees. In this article, we’ll walk you through calculating your hourly rate from a monthly salary.
1. Know Your Monthly Salary
Before calculating your hourly rate, you need to know your monthly salary. If you don’t know your monthly salary, check with your human resources department or reference the employment contract you signed.
2. Determine Your Total Annual Salary
Once you know your monthly salary, multiply it by 12 to find your total annual salary.
Total Annual Salary = Monthly Salary x 12
For example, if your monthly salary is $3,000:
Total Annual Salary = $3,000 x 12 = $36,000
3. Calculate Your Working Hours Per Year
Next, determine the number of working hours per year. A common assumption is that full-time employees work 40 hours per week for 52 weeks in a year. However, you should consider holidays and other non-working days to get an accurate number of working hours per year.
Working Hours Per Year = (Total Hours per Week x Total Weeks) – Non-Working Hours
For example, if you work 40 hours per week:
Working Hours Per Year = (40 x 52) – Non-Working Hours
Working Hours Per Year = 2080 – Non-Working Hours
4. Calculate Your Hourly Rate
Now that you have your total annual salary and the number of working hours per year, divide the former by the latter to get your hourly rate.
Hourly Rate = Total Annual Salary / Working Hours Per Year
Using our example:
Hourly Rate = $36,000 / 2080
Hourly Rate = $17.31
Calculating your hourly rate from your monthly salary is a simple process that can give you valuable information about the value of your time. Keep in mind that this calculation does not include benefits, such as healthcare or retirement contributions. Be sure to factor in all aspects of your employment package when comparing job offers or negotiating contracts.