• It might sound like a weird question but seldom do people think how much they actually make when they earn a dollar and the amount of taxes generated from a single dollar bill. There’s some speculation on the numbers I use here and of course not all spending and earning of money is always reported. However, taking that into consideration and excluding those exchanges of funds, the figures used lean on the conservative side and will make you think the next time you spend money. I only say this because that’s the affect it had on me. The following outline provides an easy-to-follow format of the basic calculations used.

    1. Approximately 45% of all bills in the US are one dollar bills.
    2. The average life expectancy is approximately 24 months. That’s because it’s the most widely exchanged bill in the US. The wear and tear alone causes the US mint to have to take them out of circulation and replace them that often.
    3. The average one dollar bill changes hands approximately 1,225 times during its life.
    4. On average people have to pay 25% in state and government taxes for every dollar they make.
    5. On average people have to pay between 7%-10% in sales tax for every dollar they spend.

    We don’t always realize how much money we have to earn to pay for the cost of an item. The reason is simple, “out of sight out of mind.”

    By themselves, the numbers above don’t seem all that impressive. But let me put them into perspective so you can see where I’m going with this. First add the taxes (25% + 8% = 33%) together and times it by a dollar to reveal that conservatively .33 cents of every dollar goes toward taxes. Now take the number of times a dollar bill change hands (1,225) and times it by these .33 cents, which goes toward taxes. This comes out to roughly $400 generated in taxes for every dollar bill printed by the US Mint. Not a bad return on their investment, I would say.

    While these figures are somewhat impressive, the main focus of this article is to alert you to the fact that most of us don’t think about purchasing in terms of post-tax dollars. Meaning, we don’t always realize how much money we have to earn to pay for the cost of an item. The reason is simple, “out of sight out of mind.” We’re not paying the 25% or more in state and government taxes during our purchase, so we might not think about it. You have to earn at least 25% more than the item costs in order to afford it then on top of that you’re going to pay the additional 7%-10% in sales taxes on the spot. That means for every one dollar you make, you only get to keep and spend .67 cents of it. You have to earn approximately $1.50 to pay for something that costs $1.00 ($1.50 X .67 = $1.00).  Now that one dollar item doesn’t seem so cheap anymore. This alone should at least make you stop and think before you throw away a dollar on something frivolous, which you may not really need. I’ve heard it and even said myself before, “It’s only a dollar.” The reality is it’s not! It’s more than that.