Do You Know Your Daily Salary? Use it to Better Understand Your Money

I got dinged for an overdraft fee in my checking account 2 months ago. I was being lazy and made a transfer when I shouldn’t have. My account was charged $37. My first reaction was: “Eh, who cares? I make $37,000 a year; $37 is nothing.”

But I found myself making this excuse a lot. Using the large number of my year’s salary to justify tiny and unnecessary double-digit purchases (I know my salary’s not large, but 5-digits is larger than 2).

It’s difficult to fully grasp exactly how much a large amount of money is. That’s why you often hear personal finance tips for savings like, “save $15 per day” or “have 3 no-spend days a week.” It’s easy to wrap our heads around these small numbers, thus making them easier to accomplish.

LEGO CalendarThat’s why you should find your day’s salary.

This is an effective way to combat unnecessary purchases and a way to make your income tangible so you can truly understand your income.

What Your Daily Salary Does For Your Money

Brings perspective to your income and spending. Your day’s salary is small – 2 or 3 digits – and easy to compare to other items. For example, every day I make $95 – simple. My daily salary is the price of an expensive night out or 3 nice dress shirts. Therefore, if I have a large expense in front of me – maybe a new laptop, I know it’ll take 7 days of to pay for the item. It makes you think about the purchase a little differently.

Makes you understand the true cost of bills. Just because your day’s salary is $112 doesn’t mean you can spend that much and put your feet up at the end of the day with a job well done grin on your face. You can’t forget about your bills and how quickly they knock out day’s of your salary. A month of student loan payments costs me almost 3 days of salary. My rent deletes another 4 days. Finding your daily salary humbles your spending and shows you how quickly your money disappears.

Cuts out lazy and unnecessary purchases. I got my overdraft fee refunded, but a lot of people just shrug it off and forget about it. Would they do that if they knew that a $40 overdraft fee was 40% of their $100 a day salary? I really doubt they would when they comprehended that 4 hours of their day’s work will be done to pay for that overdraft.

Reminds you to save. I suggest taking it a step further. A good savings goal is 20% of your take home salary. If you make $100 a day, this means $20 is going straight to savings. Cut your daily number down to $80 and don’t even think about that other 20%. You don’t need it and will be better off saving it for a house, car, or vacation. The small number makes it easy to comprehend saving – just $20 a day – so you won’t put it off for another day that may not come.

Personal finance can be really confusing sometimes, but breaking it down to 1 day makes it easy to understand your income and will allow you to avoid dumb money mistakes or purchases.

How to Find Your Day’s Salary

If you’re a salary worker…

Find your last paycheck. Look at the after-tax income and divide it by 14 if you’re paid bi-weekly, or 30 if you’re paid monthly. For example, if your after-tax income for a bi-weekly paycheck is $1,500 (a salary of about $40,000) then your daily salary is $107.

If you’re an hourly worker or freelancer…

It’s a little trickier, but remember that the math doesn’t have to be perfect. If you’re $6 off with your daily salary it doesn’t matter. You just need a number to call your own.

Find your last 2-3 months pay stubs or income numbers. Add all of them together and divide it by the number of days in the months of your sample.


I look at my money differently since I found my daily salary. I feel like I understand my income better and can make more educated purchases. I cut out the junk purchases because I don’t want them to cut in to my $95.

Try it out for a week and see how it affects the perception of your money.

Photo by donut p. Carnivals from last week: money stories, frugality, economy and finances, personal finance.

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Last Edited: January 24, 2012 @ 2:47 pm