The formula
annual salary = amount for the period × how many times that period fits into a year
Where it comes from
Converting a salary between periods looks like a trivial division and is not, because the month is not a clean unit: it is neither four weeks nor thirty working days. Everything resolves by going up to the year first, which is the only stable period, and then coming down to whichever unit you need.
How to work it out by hand
- Work out which period your salary is quoted in
- Scale it up to a year by however many times that period fits
- For the month divide the annual figure by 12, and for the instalment by the number of payments
- For the day and the hour, divide by the days and hours you work in a year
What is worth knowing
The distinction between an instalment and a month is what confuses most people. On fourteen payments the payslip shows one figure twelve times a year and two extra payments arrive on top, but your average monthly income is the annual figure divided by twelve, which is higher than the payslip. When comparing offers, compare annual figures and never “what the payslip says”: two offers with the same monthly number can be 17 % apart if one pays twelve instalments and the other fourteen.