For most of us, an hourly wage is the first method of payment when we enter the workforce at a young age. It is a simple form of pay, where you get paid for your time. As we grow older, become more educated, and seek a career, we often shoot for jobs that offer an annual salary. The question is, is a salary really better than an hourly wage?
It’s a tough question to answer. There are so many scenarios where one method sounds better than the other. For example, if you accept a job that pays by the hour, and you tend to work quickly, and they are often letting you head home an hour or two earlier than your normal schedule, that’s time that you don’t get compensated for. However, with a salary, you get paid no matter how little or how much you work; this often means unpaid overtime, as well as more paid time off.
A good way to look at it is a wage pays for your time, while a salary pays for your work. If you have a tough job that requires a lot of time, an employer may need to fork out a lot of money should they decide to pay you by the hour; in most cases, the employer will simply send you home whether or not you have finished your job simply to avoid paying for overtime. However, if you need to stay late to get a job done, a salary position will allow you to do so.
Hourly wages are often inconsistent because, more often than not, if you finish your daily task early, you get sent home early; more often than not, an employer will ask you to leave early before asking you to stay late. If you’re paying rent, or trying to keep an organized budget, you will constantly be making adjustments to your lifestyle depending on how much time you spent at work. One month you may end up with $2,500, while the next month you may only end up with $1,000, and the following month you may end up with $2,800. Inconstancies like this can end up being a pain when you’re out on your own with multiple bills to pay.
Salaries are usually totally consistent. Let’s say you have an annual salary and get paid every week. One week, you worked a full 40 hours, and brought home a $1,500 check. The next week, you worked 20 hours, but still brought home a $1,500 check. The next week, you worked 60 hours, but still brought home a $1,500 check. The next week, you worked 30 hours, but still brought home a $1,500 check. I’ve found a consistent paycheck is worth the occasional extra hours per week because I know I’ll always be getting paid the same during each payment cycle, allowing me to keep a strict, consistent budget and ultimately save money.