Course Content
Introduction
0/4
Importance of Personal Finance
Setting Financial Goals
Assessing Your Current Financial Situation
Thirty Days of Receipts
Income
Learn how income works and how to determine net vs. gross income.
0/5
Understanding Gross vs. Net Income
Hourly vs. Salary
Benefits and Deductions
Additional Income Streams
Assets vs. Liabilities
Budgeting
0/5
Creating a Budget
Tracking Expenses
Savings Goals
Managing Debt
Credit Cards
Strategies for Saving Money
Learn how to save money.
0/6
Basic Principals
Food and Groceries
Utilities
Clothing
Vehicles
Entertainment
Personal Finance
About Lesson

Most people enter the workforce as hourly employees. This means you are compensated (paid) for the hours you work. If you work more than you were scheduled in a given pay period, your employer may pay out an overtime rate. Sometimes this is 1.5 to 2 times your regular hourly rate.

A salaried employee is paid a fixed amount each week based upon a year of employment. While the salary rate can be broken down into an hourly rate for administrative reasons, it is often advertised in whole in a job listing.

Pros and Cons

In general, these are the pros and cons of both models of compensation

Hourly Pros

  • Overtime can boost your weekly pay when offered.

  • Weekend or evening hours may come with a differential.

  • Overtime is not always expected because of the additional cost to the employer.

Hourly Cons

  • Taking short amounts of time out of work for appointments means a loss in wages unless paid time off (PTO) is used.

  • An employee generally cannot work beyond scheduled hours to get work done without approval.

  • Hourly employees are generally subject to more micro-management.

Salary Pros

  • You are paid regardless of the hours you worked in a given week. However, you may need to use the earned time to make up the difference.

  • Short amounts of time off for appointments are often not an issue and do not require PTO to be charged.

  • Salaried roles tend to be managerial or senior roles and therefore are generally subject to less micro-management.

Salary Cons

  • If work needs to be done outside of normal working hours, there is no paid overtime option.

  • You are expected to complete the work, regardless of how long it takes. There is not a shift to hand off to.

  • This can lead to burnout due to longer working hours in some companies.

Typically salaried positions have a managerial component or project management component. It is important to consider the whole picture when deciding between a salaried or hourly compensated position. Your lifestyle and family should be major factors in your decision. Salary positions may also offer bonuses.

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