Respecting Your Money
Mary Lou explains how money is sacred, and two key aspects of respecting your money: figuring out your real hourly wage, and keeping tabs on where it all goes. You'll never look at a latte the same way again.
From the Baha'i Writings we learn that work done in the spirit of service to humanity attains the status of worship. Baha’u'llah tells us, “When anyone occupieth himself in a craft or trade, such occupation itself is regarded in the estimation of God as an act of worship; and this is naught but a token of His infinite and all-pervasive bounty.” (Tablets of Baha’u'lah.) Thus, we can say that our work, whether it be in a trade, art, or profession, is sacred in the sight of God.
Because our money is what we get in exchange for that work, it stands to reason that our money is sacred, too. Indeed, money is what makes this material world of ours go ‘round, both for us as individuals and for the advancement of the Faith. Baha’u'llah states, “In this day it is incumbent upon everyone to serve the Cause of God, while He who is the Eternal Truth -- exalted be His glory -- hath made the fulfillment of every undertaking on earth dependent on material means.” (The Compilation of Compilations vol. I, p. 500.)
Wow. When I first read that passage, it really made me think. I’d gone through my life thinking it was somehow unseemly to pay too much attention to money and that it was too much work or just plain too hard to try to be a good money manager. But if my money represents my life energy, and if it’s the sacred product of my work-as-worship, then maybe it should have a little more respect!
Part One: Figuring Out Your Real Hourly Wage
What does it mean to respect our money? For starters, it means to be conscious of and
pay attention to just how much work we have to do to get a spendable dollar. Let’s say a young worker (let’s call him Bob)
has got a pretty good part time job as the front desk attendant at his local health
club, making $8.00 an hour. Seems like
an easy equation – he’ll need to work one hour for that $8.00 meal at Denny’s,
two hours for that $16 DVD movie, and so on. Right?
Wrong. When Bob started his job he had to fill out all that paperwork including a W-4 form for the IRS. That was so his employer could take the correct amount out of his paycheck before he even sees it. You can see a sample W-4 form on the IRS website here: http://www.irs.gov/pub/irs-pdf/fw4.pdf?portlet=3. Most young people claim one withholding exemption because they aren’t supporting any children or spouses who would entitle them to additional tax exemptions. If you’re sure you won’t be making more than $7,550 in taxable income for the whole calendar year (this is true for many full-time students), you can choose to have no federal tax withheld by writing “exempt” on line 7 of the W-4 form. Keep in mind, though, that even if you don’t make enough money to pay any federal or state income taxes, you are still going to pay 6.2% of your salary in Social Security taxes, and an additional 1.45% in Medicare taxes. (Your employer pays another 6.2% for your Social Security, and 1.45% of your Medicare.)
When he gets his paycheck, it’ll be attached to a “check stub” that lists those deductions. Part of respecting your money is knowing what those deductions are for and how much they are costing you.
Let’s assume Bob is working 20 hours a week, paid weekly, and let’s assume he lives in my home state of California. If Bob is expecting a check for $160.00, he’s in for a big surprise when he gets his first check for $141.92!
Where did the extra money go? If Bob looks closely at his check stub, he’ll see his “gross pay” before anything was deducted or taken out was indeed $160.00. But his employer withheld $4.45 for federal income tax, $9.92 for Social Security, $2.32 for Medicare, and $1.28 for California’s mandatory state disability insurance.[1] The only good news, from Bob’s point of view, is that he didn’t make enough money to have anything withheld for state income taxes!
Let’s do some math: If Bob got a net, or after tax, paycheck of $141.92 for 20 hours work, his “effective hourly wage” (after payroll deductions) isn’t $8.00 but $7.01!
And that’s just the beginning. In addition to the deductions taken by our
employers, most of us have a least some work-related expenses. Let’s suppose Bob is in the habit of grabbing
lunch at a fast food joint on the four days a week he works, at $5.00 a
pop. That’s a $20-a-week work-related
expense, which just brought his net weekly income down to $121.92, and his
effective hourly wage down to $6.01! And
let’s say he has to drive to work and uses a gallon of gas every week driving
to and from the gym. In my area, gas is
at least $3.00 a gallon. So now his
weekly net income is down to $118.92, and his effective hourly wage is now
under $6.00. What if Bob gets a $2.50
coffee from Starbuck’s on his way to work on those 4 work days? That’s $10 a week, making his net income
$108.92, and his effective hourly wage just $5.45. Ouch.
Like Bob, you may be trading your life energy for less cash in your pocket than you’d thought. That makes every penny more precious, and brings us to…
Part Two: Keeping Tabs on Your
Money
Now that you know how much money you’re making, the second part of respecting your money is to keep track of where it’s going. In Your Money or Your Life, Joe and Vicki urge us to “Keep track of every cent that comes into or goes out of your life.”
Why bother? Because keeping track of every cent will show you how you handle your money and what kind of money habits you’ve picked up. It’ll show you where you’re doing well and where you might need some help. And most of all, it will help you respect your money by being conscious about it, instead of letting it slip in and out of your life unconsciously.
I’ve been keeping track of every penny in and out of my life since January 1, 2000. (I do it using MS Money, but you can use a spreadsheet or word processing document or just plain pencil and paper.) When I see it all laid out it’s easy to see whether I’m using my money in ways that are consistent with my spiritual and material goals, and to then make adjustments as necessary. Plus, it’s fun to go back and see what I’ve spent on various things over the years!
I strongly encourage every one of you to take a stab at computing your real hourly income and keeping track of your money. It may seem like a lot of trouble, but I promise you it’ll be an eye-opener! Good luck!
[1] I used the “hourly paycheck calculator” at www.paycheckcity.com to calculate Bob’s net pay. Check it out for yourself: http://paycheckcity.com/netpayhratescalc/netpayhratescalculator.asp!
Wow...that was such an enlightening article. I feel encouraged to keep an account of my expenditures. Thank you.
Chetan
Posted by: Chetan Phadke | February 09, 2007 at 09:19 PM