How much is $40,000 a year per hour?

$40,000 a year is an excellent starting salary – but how much is $40,000 a year per hour, week, or month? To figure out your hourly pay rate at any salary, let’s start with the basics.

There are 52 weeks in a year and each is a 40 hour work week (on average). (Let’s not take any paid vacation time, holidays, or PTO into account since it can vary so widely from job to job.)

52 weeks x 40 hours = 2080 work hours a year

If we divide a $40,000 annual salary by 2080 (the number of hours in a year), we get $19.23 an hour. So it’s close to an hourly salary of $20 an hour, which annually is about $41,600.

The chart below shows how much is $40,000 a year per hour, day, week, biweekly, and monthly:

How much is $40,000 a year after taxes?

How much you take home can vary greatly, depending upon several factors. Many deductibles can come out of your check, including:

1. Federal taxes: With federal taxes, you’ll fall into a taxable income bracket based on how much you earn and how you file. Whether you file as a single person, married (filing jointly or separately), or head of household, you can expect to fall into the 12% tax bracket for 2023. Learn more about federal tax brackets here. At 12%, you’ll end up paying $4,800 a year or $92.31 a week in Federal taxes.
2. FICA: Don’t forget this one! FICA is social security and Medicare taxes, and the cost is split between you and your employer, with each paying 7.65%. You’ll end up paying $3,060 a year, or $58.84 a week in FICA taxes.
3. State & Local taxes: State income tax and local taxes vary wildly, so you’ll want to use a paycheck calculator to see how much will be taken out based on where you live.

Other Expenses that Might Come out of your Paycheck

Taxes aren’t the only thing coming out of your paycheck, unfortunately. Don’t forget about other optional pre-tax deductions, such as:

1. Health insurance premiums
2. Dental & vision
3. Retirement contributions 
4. Health savings accounts (HSA)
5. Dependent care savings accounts
6. Flex spending accounts (FSA)
7. Life insurance premiums
8. Death and dismemberment premiums
9. Short/Long term disability
10. Any other services your company offers, such as other insurance policies or benefits

Is $19.23 a good hourly rate? Is $40,000 a year good salary?

Whether a $40,000 yearly salary is a good salary depends on your financial needs. This includes your lifestyle, debt owed, how expensive your living area is, and if you’re supporting a family.

For comparison, the Federal minimum wage in the United States is $7.25 an hour and hasn’t changed since 2009. Working full time at minimum wage earns $15,080 a year. However, the minimum average hourly wage can does vary from state to state. Click here to learn more about how much minimum wage is in your state.

The median household income for 2019 was $68,703. Assuming that’s two working adults, that’s $34,351.50 per worker. Starting a job with a salary of $40,000 would put you above the median income for American households. 

Learn more about how much $26 an hour is a year here.

Can you live off of 40k a year?

$40,000 a year salary can be an excellent start, depending upon several factors:

• Whether your location is a high cost of living area (like New York City) or a low cost of living area (like rural Texas). Housing costs vary greatly throughout the US.
• How many people you need to support
• Your bills and debt situation
• If you have an emergency fund to cover any unexpected items
• Taxes and pre-tax deductions

Many factors go into figuring out if $40,000 a year is enough to live. If you have no debt, no family to take care of, spend wisely, and live in a cheaper state, then it should be more than enough. 

However, if you have student loans, a car payment, or credit card debt, kids, or live in an expensive area, you’ll need to learn how to stretch your income as much as possible. Keep reading for the best ways to make any amount of money coming in count.

How to Stretch a $40,000 Salary

If $40,000 doesn’t seem like much money to live off of, there are many ways to make your annual income stretch. Each of these are an important factor in making the most of your income:

Learn how to budget.

Creating a monthly budget is a big piece of the money puzzle. If you aren’t keeping an eye on your spending, you’ll have no idea where your money went at the end of the month. Without budgeting, it’s easy to get caught in a loop of debt repayment forever.

Budgeting might seem complicated, but it’s about finding the method that fits your personality and lifestyle. To get started, try one of these methods:

• How to use cash envelopes as a Budgeting System
• YNAB (You Need a Budget) vs. Mint: Which Budgeting App Wins?
• Which Personal Budget Categories You Actually Need
• 21 Simple Ways to Save Money on a Tight Budget

Trim expenses.

Once you’ve worked on your budget, it’s a good idea to see where you can trim extra expenses. 

It’s incredible how many things we think we need that we don’t. My family chose to drop cable, and while I thought my husband wasn’t going to cope well, we realized that it was often on as background noise anyway. We weren’t even watching anything worthwhile and were wasting 100+ every month.

Learn more about some easy expenses that you can cut to help lower your monthly spending:

• How to Start Living Below Your Means in 2023
• Grocery on a Budget: Easily Cut Your Bill in Half
• How to Watch TV without Cable or Satellite
• Grocery Budget Makeover Review: How Much Did I Save?
• 35 Frugal Living Tips with a Big Impact
• How to get Free Internet & Wi-Fi
• 75 Mostly Free, Fun, and Cheap Things to Do with Kids
• 50+ Fun and Cheap Date Ideas to Fit Your Budget
• 27 At Home Date Night Ideas that are Frugal & Fun
• The Best Cheap Grocery List Items (& Healthy Too!)
• Delicious Dirt Cheap Meals for When You’re Broke
• 60+ Frugal Living Tips from the Great Depression
• Truebill Review: Is it Legit?
• Trim Review: Easily Lower Bills with this App
• Is Ibotta Legit? My Review + $10 Welcome Bonus (2023)

Pay off debt.

Debt is like an extra weight around your neck when you’re trying to make it back to shore. The more you have, the harder it is to stay afloat. The most important thing to do is to pay off any debt as quickly as possible. 

By paying off your debt, you’re freeing up a lot of money to put towards your goals – whether it’s investing, real estate, retirement plans, 529s, or a vacation. 

Learn how to know out debt quickly with these articles:

• How to Fight and Conquer Discrepancies in Medical Bills
• Student Loan Debt: How to Get Rid of Them Quickly and Painlessly
• How to Pay off Credit Card Debt Quickly

Make more money.

If you’ve budgeted and trimmed expenses but still can’t seem to make ends meet, you’ll need to find the best way to make more money. 

The easiest way is to ask for a raise – but only if it makes sense. It would help if you had examples to back up your stellar work, as well as data to show how you’ve made positive changes for your team. 

Most of us struggle with asking for what we’re worth, so try these articles to help you adjust your thinking when it comes to raises:

• Why it’s Important to Know Your Worth Financially
• How to Change Your Money Mindset for Good

Pick up a side hustle.

If you’re not ready to try and find a new job, you can start by picking up a side hustle. No matter how busy you are or what you have on your plate, you can find a side hustle that fits your time constraints. 

From taking photos of your feet (seriously!) to joining focus groups, there’s a side hustle out there for everyone:

• 120+ Side Hustles for Women
• 50+ Legit Online Jobs that Pay in 2023
• How to Make an Extra $1000 a Month in 2023
• How to Make Money on eBay: The Ultimate Guide
• How to Sell Feet Pics Online for Easy Money
• Best Paid Focus Groups in 2023: Make $150+ an Hour
• How to be Successful on Rover as a Dog Sitter
• Introverts, Rejoice! 27 Jobs Where You Work Alone

Now that you know how much is $40,000 a year per hour, here’s an additional chart to show how weekly and gross monthly income will rise as you make even more: