Real world: Real life money puzzles
About this video
In this comedy game-show sketch, Brant compares a $50,000 salary with a $25-an-hour job and wrongly assumes four weeks per month, getting $48,000. The host shows that using 52 weeks per year gives $52,000, so the hourly job pays more. Lisette then works out that biweekly pay means 26 paychecks a year while semimonthly means 24.
You'll be able to
- convert an hourly wage to a yearly amount using 52 weeks per year.
- explain why 'four weeks per month' gives the wrong answer.
- tell the difference between biweekly and semimonthly pay schedules.
Key words
- Salary
- Pay stated as a fixed amount per year, like $50,000.
- Hourly pay
- Pay stated as an amount for each hour worked, like $25 an hour.
- Biweekly
- Paid every other week, which gives 26 paychecks a year.
- Semimonthly
- Paid twice a month, which gives 24 paychecks a year.
- Paid time off
- Days off when you still get paid, which can change how jobs compare.
Transcript
- [Announcer] We join this episode of "Real Life Money Puzzles" already in progress.
- Hey, Lisette. - Yeah, Brant. - [Brant] So I'm trying to work out these two offer letters.
- [Lisette] I know, baby. I'm so proud of you. Everybody wants to work with my boyfriend.
- [Brant] Hey. No, but seriously. What should I choose? This job pays $50,000 a year, and this one pays $25 an hour.
- How are the benefits? - About the same for each. Same amount of paid time off, similar health insurance coverage. I like the people at each one about the same too.
- [Lisette] So it's down to the pay? - [Brant] Yeah. Work this out with me. 25 an hour times 40 hours per week equals $1,000 per week.
- [Lisette] Mm-hmm. - [Brant] Four weeks in a month. So that's $4,000 per month. - Right.
- [Brant] Multiply that by 12 months in a year and you get $48,000.
- [Lisette] So you should take the $50,000 job, right?
- Wrong! - [Lisette and Brant] Ah! - [Kevin] Brant and Lisette, you've just committed one of the classic money blunders.
- [Lisette] Kevin Szyzmanski? - [Brant] From "Real Life Money Puzzles"?
- [Kevin] You got it. - [Lisette] What are you doing in our apartment?
- [Kevin] Hosting a show? - [Brant] Are we on television right now?
- [Kevin] You sure are. - [Lisette] We didn't sign a release.
- [Kevin] Audience, let's run that back again, shall we? Pause the video for a second and compare Brant's two job offers, $25 an hour versus $50,000 per year. Which one pays more? We'll be right here as this soothing music plays. (soothing music)
- [Lisette] I don't hear any music. - [Kevin] It goes in during post-production. (soothing music continues) Okay, audience, got your answers in mind? Brant, back to you. How many weeks are there in a year?
- [Brant] 52. - [Kevin] When you were doing your initial calculation, you said there were four weeks in a month, but it's actually closer to 4.3 weeks in a month on average. Only February is exactly 28 days, or four weeks long, and even then you've got leap years to consider.
But most months have 30 or 31 days, so four weeks plus a bit.
- [Brant] So you're saying-- - [Kevin] I'm saying take another run of those numbers, kid.
- [Brant] All right, so it's $25 per hour times 40 hours per week times 52 weeks per year. - There it is.
- [Brant] And that comes to $52,000, which is $2,000 more than the other job.
- Nicely done, Brant. - Cool. Now how did you get into our apartment?
- [Kevin] Lisette, let's turn to you. - [Lisette] I'm not looking for a job though.
- [Kevin] There's another difference between the jobs. One job pays Brant biweekly, the other one pays him semimonthly. What's the difference? Is there a difference?
- [Lisette] Okay, like you said, there are 52 weeks in a year. So biweekly, every other Friday, is 52 divided by two. That means you get 26 paychecks per year. Wait a minute, that means there might be some months where you get three paychecks. - [Kevin] Doing great so far.
- [Lisette] And there's 12 months in a year, so semimonthly would be twice a month. So that's 12 times two. Therefore, a semimonthly payment schedule means you get 24 paychecks per year.
- [Kevin] Excellent work, Lisette, let's take a look at the scores. - What?
- [Kevin] At the end of our first round, we've got Brant with five points. He got half credit for figuring out the pay conversion. Remember that there's 52 weeks in a year when you're comparing salaries to hourly pay. When those hourly jobs come with paid time off, that could make a heap of difference.
But Lisette is in the lead with a commanding 10, because she sussed out the difference between biweekly and semimonthly pay schedules. Still it could be anyone's game.
- [Lisette] Is this just our life now? - [Kevin] When we come back from the break, it's time for the mortgage round.
- [Brant] But we're renters though. - [Kevin] All that and more right after this lesson. (gentle bright music)
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