Can you live on $40,000 a year? And $40000 a year is how much an hour?
Those are questions you might have if you’re:
- Looking for a job
- Negotiating your salary package for a first job
- Expecting a pay cut at your current job
- Hoping to start a money-making side hustle
But don’t worry, because this is your complete guide to making $40,000 a year (and living on it).
Today, I’m breaking down how much is 40,000 per year an hour, how to budget on a $40,000 salary and the best jobs that pay $40K a year.
$40000 a Year Is How Much an Hour?
First, here’s the simple answer:
$40,000 a year is $19.23 an hour
Now, how did we get that number?
Easy. First, we assume you’re working 40 hours a week, 52 weeks a year. That adds up to 2,080 hours.
If we divide 40,000 by 2,080 you end up with 19.23.
So if you’re wondering how much is $40,000 per year an hour the answer is $19.23.
This number assumes that you’re working 52 weeks a year. Taking time off for vacations or sick leave can change your hourly rate.
- If you take off 2 weeks for sick/vacation leave, $40000 a year ends up being $20 an hour
- If you take off 3 weeks for sick/vacation leave, $40000 a year becomes $20.41 an hour
- If you take off 4 weeks for sick/vacation leave, $40000 a year becomes $20.83 an hour
You could keep going but you get the idea. The fewer hours worked, the more $40000 a year is an hour.
And the higher your hourly rate, the higher your annual pay.
For instance, what is $20 an hour annually?
If you multiply $20 an hour by 40 hours a week, you get $800. Multiply that by 52 weeks and you get $41,600.
Say you work 50 hours a week, though. That adds up to 2,600 hours a year.
If you’re working that number of hours consistently, then your $19.23 an hour rate drops to $15.38.
This doesn’t include overtime earnings. But it can give you an idea of what your time is worth, based on how many hours you work when you make $40,000 a year.
$40,000 a year is how much a day?
If you’re making $40000 a year and you know what that works out to be hourly, then it’s pretty easy to figure out your daily rate.
Say you work 8 hours a day. At $19.23 an hour, you’d earn $153.84 a day.
Considering that the average minimum wage worker makes $58 a day or $7.25 an hour, that’s not too bad at all.
What is $40K a year weekly?
Wondering how much is $40,000 an hour when you get paid weekly?
Multiply $19.23 (your hourly rate) by 40 (number of hours worked) and you get $769.20.
Again, that’s not bad compared to the $290 a week a minimum wage worker earns.
$40,000 a year is how much biweekly?
Some people get paid biweekly instead of weekly. To find out how much is $40,000 a year biweekly, use this formula:
$19.23 (hourly rate) x 80 (hours worked) = $1,538.40.
$40,000 a Year Is How Much a Month?
If you base your budget on what you make for the entire month, then you’d simply divide $40,000 by 12 to figure out how much is $40,000 a year monthly.
$40,000 a year divided by 12 months = $3,333.33 per month
$40,000 a year budget example
Making a budget matters for staying on top of your money, whether you’re making $40,000 a year or something else.
If you’re interested in what a $40K year monthly budget looks like, here’s an example using Dave Ramsey budget percentages:
- Giving — $333 (10%)
- Saving — $333 (10%)
- Food — $333 to $500 (10% to 15%)
- Utilities — $166 to $333 (5% to 10%)
- Housing costs — $833 (25%)
- Transportation — $333 (10%)
- Health — $166 to $333 (5% to 10%)
- Insurance — $333 to $833 (10% to 25%)
- Recreation — $166 to $333 (5% to 10%)
- Personal spending — $166 to $333 (5% to 10%)
- Miscellaneous — $166 to $333 (5% to 10%)
Now, is this realistic?
It can be, depending on your situation.
For example, when I first became a single mom back in 2014 I was making around $2,500 a month and my budget actually looked a lot like this.
I didn’t spend that much on health or recreation because we only did free things to save money. But I probably spend the equivalent amount for those two categories on repaying debt.
So can you live on $40,000 a year?
Absolutely, but it does take some planning and effort to make it work.
$40,000 a year is how much a month after taxes?
So far, we’ve looked at how much is $40,000 per year an hour without factoring in taxes.
And unfortunately, that’s not something you can skip out on.
So here’s how much $40,000 a year works out to after taxes, assuming you file single:
- Daily: $121
- Weekly: $603
- Biweekly: $1206
- Monthly: $2614
And here’s what $40,000 a year ends up being after taxes if you’re married and file a joint return:
- Daily: $125
- Weekly: $626
- Biweekly: $1251
- Monthly: $2711
As you can see, taxes can take a decent-sized bite out of a $40,000 a year salary. And being married can save a little on taxes.
Also, keep in mind that these numbers don’t include:
- Employer-reimbursed expenses
- Retirement plan contributions deducted from your pay
- Insurance premiums deducted from your pay
- Tax credits you claim
- Tax deductions you claim
So your actual take-home pay on a $40,000 a year salary could look different. Using an online paycheck calculator can help with running the numbers.
Is $40,000 a Good Salary?
Making $40,000 a year is great if you’re able to live on that amount.
I remember when I was in my 20s I had a job managing a restaurant that paid $40K a year and I thought I was rich. But I lived really cheaply at the time and didn’t have kids or a mortgage.
In terms of how $40,000 a year compares to median household income, it’s about half what the typical American family brings in.
According to the Department of Housing and Urban Development (HUD), the median household income is $79,900. But this is the median, which means some households earn more and others earn less.
Making $40K a year puts you at the lower end for income. But $40,000 can still be a solid living wage.
And a $40,000 a year salary would put you well above the federal poverty guidelines.
How can I save money making $40K a year?
Saving money, regardless of how little or how much you make, is all about commitment.
If you can commit to saving even $10 a month, that’s $10 you weren’t saving before.
So yes, it’s possible to save money if you’re making a $40,000 a year salary. You just have to find the money to do it.
Can I invest making $40,000 a year?
Saving money and investing it aren’t the same thing.
When you save money, that usually means putting it in a savings account. So you might use a high yield savings account to hold your emergency fund, for example.
When you invest, you’re putting money into the stock market.
Investing is riskier than saving but your money has more potential to grow. And you can invest even if you’re only making $40K a year.
With Acorns, for example, you can invest your spare change.
Acorns links to your bank account, rounds up transactions and invests the difference. It’s a simple way to grow wealth in small amounts.
And if you have at least $100 to invest, you can open an account with M1 Finance.
M1 Finance offers low-cost investing for beginners so you can start building wealth now.
What kind of house can I afford making $40K a year?
You might be dreaming of buying a home versus renting. And aside from credit scores, income is one of the things mortgage lenders look at.
So how much house can you afford on a $40,000 a year salary?
Let’s assume you make $40,000 a year. You have no debt and you have a 700 credit score. You’re able to save $10,000 towards a down payment.
Based on those numbers, you’d be able to afford a $220,000 home. That assumes you qualify for a 2.6% mortgage rate and get a 30-year loan.
But that’s not too bad. In fact, that’s more than I paid for my first home a few years ago.
Sure, this might be a more modest home versus a mansion. But it’s reassuring to know that you can buy a home on a $40K a year salary.
Jobs That Pay $40K a Year
Wondering what kind of jobs pay $40,000 a year? And is it possible to make $40,000 a year without a degree or experience?
According to the Bureau of Labor Statistics, these are some of the top $40,000 a year jobs:
- Ophthalmic medical technicians – $40,010
- Correspondence clerks – $40,070
- Fence erectors – $40,120
- Printing press operators – $40,200
- Pest control workers – $40,350
- EMTs and paramedics – $40,370
- Secretaries and administrative assistants – $40,420
- Bill and account collectors – $40,630
- Animal control workers – $40,680
- Mixing and blending machine setters – $40,960
There’s an interesting mix of jobs here. And while some might require a bachelor’s degree, others might only need an associate’s degree or high school diploma.
So if you’re interested in a career change, you might give some of these $40,000 a year jobs a look.
Can you make $40,000 a year without a job?
Yes! Actually, it’s very possible to make $40,000 a year without getting a regular job.
The answer is starting one or more profitable side hustles.
For example, when I first started freelancing I was making around $2500 a month. That’s $30,000 a year.
But as I kept working on my business, I eventually started making $40,000 a year, then $50,000. Now I make over $200K a year writing online.
So yes, it’s possible to make $40K a year (or much more) without a job or without leaving the house even.
If you’re looking for some money-making ideas to earn $40,000 a year, give these a try:
- Start a blog. I made around $15K last year working on my blog part-time. But I know there are full-time bloggers making $10,000 a month! Check out my detailed guide to starting a blog that makes money.
- Make money writing. Freelance writing is flexible and it’s a great way to make money while you’re growing a blog. Here’s a detailed guide on how to be a freelance writer.
- Become a virtual assistant. Before I started writing, I worked as a virtual assistant. VAs get paid to help business owners run their businesses. If you want to learn more about it, check out this mini-course that covers the basics of how to start a virtual assistant business.
- Get paid to proofread. Proofreading means correcting errors so it can be a great way to make $40,000 a year or more if you’ve got an eye for detail. Sign up for this FREE course to learn more about how to become an online proofreader.
- Take surveys. Taking surveys might not make you rich but it can put some extra cash in your pocket. I like Survey Junkie for making quick cash from surveys!
- Earn cash back. Cashback apps can put money in your pocket with zero effort. You download the apps, shop and earn back some of what you spend. With Ibotta, for example, you can get up to $20 in bonuses when you sign up. And Rakuten offers a $10 bonus on your first purchase!
Related post: 30+ Legit Ways to Make an Extra $1000 a Month
Final thoughts on making $40,000 a year
Making $40,000 a year can seem like a lot of money or a little, depending on what you do with it.
Some of the secrets to living well on $40,000 a year include:
- Making a budget (and sticking to it)
- Paying yourself first with automatic savings
- Tracking your spending
- Getting rid of debt
I’ve lived on $40,000 a year before as a single person and as a single mom. And those four things helped me tremendously when it came to stretching my dollars and cents.
So if I can do it, I believe you can too.
Do you have a tip to share for how to live on $40,000 a year? Head to the comments and tell me about it.
Don’t forget to pin and share this post. And if you need a little help with budgeting, be sure to grab your FREE monthly budget template!