As a simple baseline calculation, let's say you take 2 weeks off each year as unpaid vacation time. Then you would be working 50 weeks of the year, and if you work a typical 40 hours a week, you have a total of 2,000 hours of work each year. In this case, you can quickly compute the annual salary by multiplying the hourly wage by 2000. Your hourly pay of $12.50 is then equivalent to an average annual income of $25,000 per year.
Want to reverse the calculation? Start with the annual salary and answer the question: 25,000 a year is how much hourly?
Now let's consider the case where you get paid $12.50 an hour, but you work all year with no vacation time. In the previous case, we assumed 2 weeks of unpaid vacation, but if you worked the entire year without any breaks, that would be 52 weeks. Assuming 40 hours a week, that equals 2,080 hours in a year. Your hourly wage of $12.50 would end up being about $26,000 per year in salary.
If you wanted to be even more accurate, you can count the exact number of working days this year. 2013 starts on a Tuesday (January 1, 2013) and ends on a Tuesday (December 31, 2013). It has a total of 365 days in the year including both weekdays and weekends. There are 104 weekend days (counting every Saturday and Sunday in the year), and 261 weekdays (Monday through Friday). So if you worked a normal 8 hour day on every weekday, and didn't work any overtime on the weekends, you would have worked a total of 2,088 hours over the 2013 year. You can then convert your hourly pay to a yearly salary of roughly $26,100 per year.
Remember that most companies give employees time off for various holidays, so that should really be included in the calculation. If your company decided to switch you from hourly pay to salary, you might get paid $26,100 per year, but you wouldn't actually have to work 2,088 hours since some of those days would be holidays. So your yearly income wouldn't necessarily change, but the actual number of hours you work over the year might be slightly less.
If you're working a regular 8-hour day, then you can simply take your hourly wage and multiply it by 8 to get your daily rate. So making $12.50 per hour is equivalent to making $100 per day.
Assuming you work 40 hours a week, you would make $500 per week.
If you look at an average month as 4 weeks, then you can estimate the average monthly earnings from $12.50 per hour to be $2,000 per month. Of course, some months are longer than others, so this is just a rough average. Another way to estimate the amount you make each month is to divide the annual salary by 12 months. For example, if you calculate the yearly total to be $26,100 per year, then your monthly average would be $2,175 per month.
Now here's an interesting twist. Let's say you start a business that earns you passive income. Your business runs without you, and if it's an online business, the internet is running 24 hours a day, 7 days a week, with no breaks on weekends or holidays. Just for fun, we can calculate how much you would make in a year if your website was generating $12.50 per hour.
Over 24 hours, you would make about $300 in a day. That means over 7 days (including the weekend) you'd bring in $2,100 in a week. Let's assume a month averages out to 30.5 days, then you'd end up with roughly $9,150 each month. Finally, in 2013 there are 365 days, so you could be making $109,500 a year. Now that would be a nice salary!
ConvertUnits.com provides a tool you can use to calculate the equivalent annual salary based on your hourly wage. You can factor in paid vacation time and holidays to figure out the total number of working days in a year. The salary calculator will also give you information on your daily, weekly, and monthly earnings. Remember that a full salary with benefits can include health insurance and retirement benefits that add more value to your total annual salary compared to similar hourly rates. You may also want to factor in overtime pay and the effects of any income taxes on your take home pay. Type in your own numbers to convert hourly to annual pay.
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