Shomer Shekalim

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a nickel ain’t worth a dime anymore

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legal warning: The information here should not be understood legally as financial advice. If you believe anything on this site is in error, please contact me. I am always open to corrections, new ideas, and new opinions...

Generally speaking, more money is good money.  But we don’t just earn money; we pay for it with time, effort, sometimes even peace of mind.  As we all struggle to earn money, the most important decision we make is if the money earned is worth what we give up for it.

But if one does not know the value of money earned, one cannot deduce if it is worth his or her time.  It is precisely this reason that the marginal shekel must be evaluated.  The marginal shekel refers to how much of the next shekel you make you’ll actually receive.  In order to deduce this, taxes and insurance are taken out in order to see how much one actually receives out of his next shekel. 

The following chart shows  the marginal shekel rate at the various intervals where it changes.

marginal dollar*unless written otherwise, it is assumed that the worker is paying taxes.

Consider the following cases:

Case one: taking time off of work.  Many workers are scared of missing any work out of the fear that he or she cannot afford it.  But one must remember that the money that will be deducted is the money that is taxed the most.  Suppose someone makes 10,000 a month and is deciding if he or she should take off an extra day for a vacation.  As it turns out, the true value of that day is really only 65% of what one might think it is.  In this case the extra day would really only cost ₪ 256, not ₪ 465 (assuming there were 22 work days in the month.)

Case two: overtime payment.  In Israel, overtime is 125% and then 150%.  But remember, this money will be taxed at your highest rate.  If one is making over ₪ 12,250, then every extra hour of work is not really earning 125% and 150%; rather 72.5% and 87% respectively.

Case three:  How much money should each spouse in the marriage strive to bring in?  This is a very difficult and extremely complicated question with so many factors.  With God’s help, I plan to tackle this question next week.

Shabbat Shalom.

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