by Jonte Rhodes

Created on: August 10, 2008   Last Updated: January 21, 2009

Converting your salary into an hourly wage sounds like a simple enough thing to do, however there are several things that must be taken into account for an accurate measurement. Things such as overtime, vacation pay and leap years will also affect wages but not salary. So getting an accurate calculation needs to factor in the value of other things that your job brings other than just what you are paid.

The other important factor that most people tend to overlook is the fact that tax brackets can be affected by you earning a little more or less each year. So for example with wages you might make a little more money, but then fall into a higher tax bracket and actually end up with less money in the long run.

Many people tend to get confused as to whether they would prefer to take a yearly salary or an hourly wage, and the financial ramifications of either of them. Certainly each have their good and bad points and should be researched thoroughly before a decision is made in favor of either. Certainly making the wrong decision in these matters can mean the difference between making the money you want and seemingly working your fingers to the bone for a pittance.

Aside from the actual monetary differences of a wage against a salary there are also other differences that should be considered. For example with a salary you are usually entitled to more rights and have guaranteed employment period, usually of at least a year. Some jobs that pay a wage have no such guarantees in place, as well as often having less provision for things like sick pay and vacation time.

The basic method for conversion is as simple as:

Salary divided by 12 (for months), divided by 4 (weeks in a month) and then divided by 40 (hours).

So taking a $40,000 per annum salary as an example:

40,000 divided by 12 = (3333.33) divided by 4 = (833.33) divided by 40 = 20.8

This makes the hourly rate roughly $20.80 per hour.

This then gives you a basic hourly rate based upon a 40-hour working week. This isn't entirely accurate however because not every month has exactly four weeks and not every job is based on forty hours of work per week either. So to work this out to an exact figure requires additional information and would need each month to be worked out separately.

Many jobs also require you to world overtime which isn't paid for if you are on a salary, meaning this could be quite different if you were on a wage.

Another consideration when converting salary into wages is that over the long term, leap-years must

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