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$40,000 A Year Is How Much An Hour? [2024 Guide]

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$40,000 A Year Is How Much An Hour? [2024 Guide]

Want to know if your new (or future) job making $40,000 a year is enough to live on? You’re also probably wondering, “40000 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.

How much is 40000 a year per hour, week, biweekly, and per month?

40000 a year is how much an hour

A salary of $40,000 per year (assuming a 40-hour full-time job @52 weeks per year) is:

  • $3,333.33 per month
  • $1,538.40 biweekly
  • $769.20 per week
  • $153.84 per day
  • $19.23 per hour

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:

  • $19.23 multiplied by 8 hours worked per day equals a daily rate of $153.84
  • You can then take your daily rate of $153.84 and multiply it by 5 (the number of workdays in a week) to determine your weekly pay of $769.20
  • From there multiply your weekly pay ($769.20) by 2 and you arrive at your biweekly pay of $1,538.40
  • Finally, calculate your monthly pay by either taking your salary of $40,000 per year and dividing it by 12 (the # of months in a year) $3,333.33 OR multiplying your daily wage of $153.84 by 21.67 (the average # of workdays in a month).

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!

40000 a year is how much after taxes

40000 a year is how much after taxes?

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.

Here’s a quick breakdown of how much tax you can expect to pay (on average) if you earn $40,000 per year in the US:

*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.

StateIncome Tax ($)Total Tax
(% of income)
Net pay
New Hampshire$6,20215.5%$33,798
New Jersey$6,88517.2%$33,116
New Mexico$7,37518.4%$32,625
New York$7,91519.8%$32,085
North Carolina$7,85219.6%$32,148
North Dakota$6,52816.3%$33,472
Rhode Island$7,22018.1%$32,780
South Carolina$7,77319.4%$32,228
South Dakota$6,20215.5%$33,798
West Virginia$7,68719.2%$32,313
(Source) Permission to share with attribution to Savvybudgetboss.com

Did you know, that there are (9) states that do not have an income tax?

They are:

  • Alaska
  • Florida
  • New Hampshire
  • Nevada
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

Note: New Hampshire and Tennessee do not charge income tax on earned wages. However, they do tax investment income.

Is $40,000 a year a good salary?

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.

Can you live comfortably on 40000 a year?

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.

Where to live on $40,000 a year

According to Go Banking Rates, the top 10 U.S. cities to live in if you make $40,000 a year (in 2020) are:

  • Cleveland, Ohio
  • Akron, Ohio
  • Toledo, Ohio
  • Brownsville, Texas
  • Birmingham, Alabama
  • Rochester, New York
  • Columbus, Georgia
  • Montgomery, Alabama
  • Shreveport, Louisiana
  • Memphis, Tennessee

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.

40 000 an hour is how much a year, can you buy a home on 40K? White toy house with quote bubble
Can you buy a house making 40K?

Can you buy a house on $40,000 a year?

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.

Can you retire on $40,000 a year?

According to The Motley Fool you can

If 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 Fool

Need 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.

Tips for living on $40,000 a year:

  1. Live below your meansadopt a frugal lifestyle and never spend more than you make.
  2. 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.
  3. Save money-whenever you receive a raise, monetary gifts, or an unexpected windfall of cash, bank it, don’t blow it.
  4. Pay off debt-living on $40,000 a year (or less) is SO much easier to do when you’re debt-free!

How to budget $40,000 a year

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):

  • Rent/Mortgage: $650.00
  • Utilities: $125.00
  • Car Payment: $150.00
  • Insurance Payments: $200.00
  • Groceries: $205.00
  • Gas: $80.00
  • Savings/Charitable Donations/Debt Repayments: $562.00
  • (Non-Essentials): $844.00

Jobs that earn $40K a year

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.

Here are the top 10 jobs expected to have the most openings over the next decade:

Job titleEducation requiredAverage annual payWhat they do
Administrative AssistantHigh school diploma$39,850Perform routine clerical and administrative office duties
Automotive Tech/MechanicHigh school diploma + certification$42,090Inspect, repair, and maintain cars and light trucks
BookkeeperAssociate’s Degree$41,230Produce and check financial records for organizations
Broadcast/Sound EngineerAssociate’s Degree$45,510Set up, operate, and maintain sound equipment for media programs
CarpenterHigh school diploma$48,330Construct, repair, and install building frameworks
Correctional OfficerHigh school diploma$45,300Oversee people who have been arrested and are awaiting trial or serving time in jail or prison
Maintenance WorkerHigh school diploma$39,080Fix and maintain machines, mechanical equipment, and buildings
Practical/Vocational NurseHigh school diploma + state-approved program$47,480Provide basic nursing care
Surgical TechAssociate’s degree$48,300Assist in surgical operations
Tractor-Trailer DriverHigh school diploma + professional driving school certificate$45,260Transport goods from one location to another
Jobs that pay $40,000 a year (source)

If $40,000 a year is not enough…increase your income

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:

  • Food delivery-through Uber Eats or Door Dash
  • People delivery-Uber and Lyft
  • Handyman
  • Sell your skills on Fiverr
  • Rent your home on Airbnb

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:

  • Start a website
  • Become a Virtual Assistant
  • Become a Proofreader
  • Teach English
  • Take surveys (Survey Junkie is my fav)
  • Get cashback when you shop (I {heart} Ibotta)

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.

$40,000 is how much an hour: Final Thoughts

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.

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