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$40,000 A Year Is How Much An Hour? [2023 Guide] • Savvy Budget Boss

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Skip to contentWant to know if your new (or future) job making $40,000 a year is enough to live on? You’re also probably wondering, “$40,000 a year is how much an hour” (after taxes)?Depending on where you live, and how many people are in your household, you can live quite comfortably on $40,000 a year.A salary of $40,000 per year (assuming a 40-hour full-time job @52 weeks per year) is:Here’s how we did the math: Take $40,000 and divide by 2,080 (40 hours a week multiplied by 52 weeks). The result is your hourly rate of $19.23.Then, calculate up from there to determine the amount you would earn per day, week, biweekly, and monthly. Like so:Of course, if your job offers paid vacation time, you will earn more per hour of actual work, which means all of these numbers will change.On the flip side, if you earn a $40,000 salary (not paid by the hour) you could end up working more than 40 hours a week, which means your actual hourly pay would decrease.Easy-peasy, right? But wait…there’s more!This is where things get a bit sticky.That’s because income taxes vary by state so…If you live in Hawaii (highest income taxes) you’ll take home less than you would if you lived in South Dakota.*Note: this table includes totals for State Income tax, Federal Income tax, Social Security, and Medicare contributions. It does not include property taxes, sales taxes, and other deductions/expenses.They are: Note: New Hampshire and Tennessee do not charge income tax on earned wages. However, they do tax investment income.Want to earn some extra cash fast? Give Survey Junkie a try!Complete quick &amp; easy surveys and make money in your spare time!The US Census Bureau estimates that the annual median personal income for 2019 was $35,977. Therefore, if you make $40,000 (or more) a year, as a single person, you can consider yourself above average (as far as earnings in America go).TIP: The key to living on $40,000 a year is to learn the importance of budgeting.As you can see from the table above, you’ll be able to stretch $40,000 further if you live in a state that doesn’t collect state income tax.Unfortunately, those states will often make up for lost revenue by increasing taxes in other areas such as property taxes, and sales taxes.That said, my husband and I were able to live for years on $40,000 while raising our (3) children. In Colorado…which can be a pretty expensive place to live.How did we do it? Frankly, it wasn’t always easy. Especially since it took me so long to learn how to live on a budget.Eventually, I was able to recognize my money mistakes, pay off thousands of dollars of debt, and lower our family’s living expenses.According to Go Banking Rates, the top 10 U.S. cities to live in if you make $40,000 a year (in 2020) are: Although, from personal experience, If I were you, I’d avoid living in any major city. When it comes to stretching your income, small towns are the way to go.You can absolutely buy a house if you make $40,000 a year! You’ll just want to make sure your total housing expenses (mortgage, taxes, and insurance) do not exceed 28% of your gross monthly income.Here’s an example: If you were to buy a home that costs $150,000 with $10,000 down and finance it at a rate of 3% your monthly mortgage would cost around $965 a month after allowing for real estate taxes and homeowner’s insurance.You could afford the house in this example. Here’s another example: If you were to buy a home that costs $300,000 with $10,000 down and finance it at a rate of 3%, your monthly mortgage would cost around $1,660 a month after real estate taxes and homeowner’s insurance.You could not afford this home. So, the answer to “Can I buy a home on $40,000 a year?” is ‘yes’ and ‘no’.Could you buy a home in New York on a $40,000 salary? No. Could you buy a home in Nebraska on a $40,000 salary? Yes.When we were raising our children (while living on one income), we were able to buy a comfortable 3-bedroom house in a small town in the midwest. Due to our income, we were able to qualify for a first-time homebuyer loan which required very little money down.According to The Motley Fool you canIf you consistently live below your means and maximize your retirement savings benefits, you can reach retirement age with about $4 million. It’s just a matter of time and compound interest. The Motley FoolNeed to find out how much money you’ll need to have socked away in order to live on $40,000 a year once you’re retired?According to the Smartasset retirement calculator, you’ll need at least $304,000 in savings and investment accounts if you plan to retire at the age of 66 on $40,000 a year.Live below your means–adopt a frugal lifestyle and never spend more than you make.Create a realistic budget-the number one reason why most budgets fail is due to people setting unachievable expectations. Don’t budget $200 for groceries when you usually spend $400. Instead, make small changes over time in order to reduce your budget.Save money-whenever you receive a raise, monetary gifts, or an unexpected windfall of cash, bank it, don’t blow it.Pay off debt-living on $40,000 a year (or less) is SO much easier to do when you’re debt-free!Here’s a budget example for someone who earns $2,816 per month after taxes using a 50/30/20 budget (50% of income spent on essentials, 30% spent on non-essentials, and 20% allocated for savings and debt repayment):According to the U.S. Bureau of Labor Statistics, you’ll need a high school diploma (at minimum) or an Associate’s degree if you’re looking to land a job making $40,000 (or more) per year.If you don’t think you can make it on $40,000 a year, you can always make more money! Here are some quick ways to increase your hourly wage.Ask for a raise. This is by far the easiest way to increase your income. I mean, really. Just ask. The worst your boss can do is say is ‘no’.Add a side hustle. Work a part time job on your days off and bank the cash.Join the gig economy. The gig economy consists of freelance or contract workers who work on-demand. Here are a few of the most popular gig economy jobs:Pet sit. These days people are willing to pay more for pet sitting than child care. And, you don’t have to jump through as many bureaucratic hoops to start a pet sitting service.Make money online. The opportunities to make extra money online in your spare time are endless. You can:Make and sell crafts. If you like to create in your spare time, why not profit from your creations? Here are the top 80 crafts to make and sell.To sum up, if you’re a single person with no debt, depending on where you live, you can do quite well on an annual salary of $40,000.On the other hand, supporting a family on an hourly wage of $19.23 will be a little more difficult to do (however, it is still doable).The most important thing to remember, no matter how much money you make, is that living on less than you make and budgeting your finances will help you stay out of debt which will result in more disposable income and more financial freedom!If you need help creating a budget, here are 21 free printable budget templates to get you started.

Skip to contentWant to know if your new (or future) job making $40,000 a year is enough to live on? You’re also probably wondering, “$40,000 a year is how much an hour” (after taxes)?Depending on where you live, and how many people are in your household, you can live quite comfortably on $40,000 a year.A salary of $40,000 per year (assuming a 40-hour full-time job @52 weeks per year) is:Here’s how we did the math: Take $40,000 and divide by 2,080 (40 hours a week multiplied by 52 weeks). The result is your hourly rate of $19.23.Then, calculate up from there to determine the amount you would...

$40,000 A Year Is How Much An Hour? [2023 Guide] • Savvy Budget Boss

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