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The "Portfolio Career"
More people are working multiple jobs (the "polyworker"). You might earn $25/hour at your day job and $50/hour consulting in the evenings. How do you answer "What is your annual salary?"
The Weighted Average Fallacy
Don't just average $25 and $50 to get $37.50. You exert different effort and hours for each.
The Layer Cake Method
Calculate the annual income for EACH job separately, then stack them like layers of a cake.
| Job Source | Rate | Hours/Year | Total Income |
|---|---|---|---|
| Job A (Day Job) | $25 | 2,000 | $50,000 |
| Job B (Consulting) | $50 | 200 | $10,000 |
| Job C (Weekend) | $18 | 500 | $9,000 |
| TOTAL | 2,700 | $69,000 |
Your Effective Hourly Rate
Divide Total Income ($69,000) by Total Hours (2,700) = $25.55/hour.
This number tells you what your time is actually worth on average across all your activities.
Tax Brackets Warning
Earning $69,000 puts you in a different tax bracket than $50,000. Ensure you are setting aside enough taxes for Job B and Job C, as they likely don't withhold taxes for you.
Conclusion
Multiple income streams are excellent for security. By calculating each "layer" separately, you get a clear picture of your total financial health.