Freedomeer logo

40000 a Year is How Much an Hour: Is it a Good Starting Salary?

Many new recruiters post jobs online where they mention yearly salaries. Sometimes, you may come across a job listing that says $40,000 a year. It may seem like a considerable number. However, is $40,000 a year a good salary to earn?

When I look at it, I find it to be a lot of money, enough for a comfortable lifestyle. However, I’ve been thinking $40k a year is how much an hour. Like me, you’ll also be amazed when you hear that the $40,000 a year calculated in hours is between $18-$20. I will discuss whether $40,000 a year is good enough for you in this article.

Earning 40,000 dollars per year will give you an average of 19.20 dollars per hour in a full time position, assuming you are working 40 hours per week. A part-time worker with an average 25 hours per week would come to 30.70 dollars hourly salary. The effective salary will be impacted by taxes, depends on where you live.

40,000 a Year is How Much an Hour?

The answer to the question “$40000 a year is how much an hour” may not be the same for everyone. As many of us work a different number of hours per week, to get an accurate answer to this question, you need to know how many hours you work yearly and then divide 40,000 by that number.

Doing so will help you understand the hourly rate of 40,000 a year. However, let’s assume that you work 40hrs per week. There are a total of 52 weeks in a year. 52 weeks multiplied by 40 hours, gives us 2080 hours per year.

So, a worker in a full-time position with an average 40 hours per week, would earn 19.23 dollars per hour. This is simple math where we divide 40,000 dollars by 2080 hours worked per year.

As always, this rate is before we consider taxes, so let’s have a look at the taxed amount.

40,000 Annual Salary After Taxes

When earning, 40000 a year, the main concern is the total income after paying off my taxes. To answer such a question, the main thing that matters is where you live.

For example, in the U.S. there are some states like Florida where you don’t have to pay the state income tax. If you’re living in Kentucky, you have to pay around 5% more than in Florida because of state income taxes.

This might look like a small number, but 5% from your 40,000 dollars yearly salary makes 2000 dollars.

Other areas in the U.S. have both, state income tax and federal income tax – collected by the federal government.

In the following table, you can find some examples of yearly, monthly and hourly taxes based on from different locations in the U.S.:

StateAverage Tax RateYearly TaxMonthly TaxHourly Tax
New Jersey17.7%$7,082$590$3.63
New York20.1%$8,030$669$4.12

Is 40k a Year a Good Starting Salary?

According to, median earnings of all workers in the U.S. aged over 15 in 2020 was $41,535 per year. Also, according to the Bureau of Labor Statistics, in the second quarter of 2022, a person living in America earned $1,041 per week, 54’132 per year. So, 40k a year is less than the average amount.

But to answer if 40k a year is a good starting salary, you need to consider where you live and your lifestyle. As discussed in the table above, some states have high taxes, whereas others have lower taxes.

If I talk about the states mentioned above in the tax table, you will have to pay less tax if you were living in Florida or Washington. Whereas, living in Illinois and New York, you would have to pay higher taxes.

Still, as the American average monthly households’ expenses are around $5100, I might say that 40k a year is sufficient for a family of two or three. Of course, if there are 2 persons bringing this amount home.

However, you may have to get a reasonable budgeting plan to make a living out of a 40000 annual salary. Otherwise, you may end up having tough times.

Additionally, you can consider boosting your income with other strategies. Starting a side hustle have never been easier before. If you have some time from your daily schedule left, I would definitely recommend you have a look at some options like freelancing or drop-shipping.

These side businesses don’t require much or any capital to start and also are easy to jump in.

How To Manage Your Budget With 40000 a Year

A good plan and discipline are the two main ingredients to get the most of your 40k salary. Cultivating your self-discipline helps you not to spend on things you don’t really need.

And following the right plan will not only help you improve your spending habits, but also helps you to control where your money is flows to. Managing your budget will help you get the most out of your 40k a year.

A well known 50/30/20 method is the one I would recommend you to follow with your 40k salary. In this method, you give 50% of your salary to needs, 30% of your salary to investments, and 20% salary towards wants.

The following table shows you how much should you allocate to each category, assuming you are paying 18.3% taxes in average.

Salary percentageYearly Expenses Monthly Expenses
Needs50%16,340 dollars1,361 dollars
Investments30%9,804 dollars817 dollars
Wants20%6,536 dollars545 dollars


The half of your salary should cover your needs. Assuming you are earning, You should allocate 16,340 dollars per year to cover your essential needs like housing, food and health insurance.

So your monthly spend on needs while earning 40,000 dollars per year should be around 1,361 dollars.

Despite its apparent simplicity, many people still have trouble sticking to a budget and living within their capabilities. You need to train yourself to take pleasure in your current situation, be thankful for your resources, and meet your basic wants with minimal desire.

It’s easy to let your desires run amok and start feeling pressured constantly to have the latest and greatest. It’s a surefire route to financial ruin and even more debt.

You should reward yourself now and again, but be aware of the potential financial consequences of giving in to constant urges for rapid gratification.

Don’t let anyone or anything outside yourself and your immediate family deter you from sticking to your budget and strategy.

There are many things present in the markets nowadays that take our interest. If you go off and keep spending unnecessarily, you will end up having lots of trouble with money.

Only spend on what you need and cut off any unnecessary expenses. If you take my advice, I would suggest you stop following lavish product pages that take your interest in targeting ads directly at you.


9,804 dollars per year or 817 dollars monthly should flow in to your investment.

Generating wealth off 40k a year may seem impossible. But what if I tell you that you can make a healthy amount of money just by investing?

Let’s have a look on your return with investing the amount in S&P 500 with average yearly return of 11.88%.

If you invested the monthly amount in the S&P 500, for example through an ETF, you would end up after 20 years of investing with an amount of $690,231.

 YearStart balanceInterest with 11.80 %
return rate
End balance

Of course, you will have some expenses while investing in ETF (0.05 – 0.5%) but still, this table show you how beneficial can investing be if you invest regularly and stick to your strategy.

Investing is about time, so the sooner you start to invest, the better result you’ll have.

One important thing you need to consider is the availability of micro-investing apps. These apps help you invest in increments starting from only $1 in Individual stocks and index Funds.

Another booming industries you can invest in are Real Estate or Crypto. Slowly, keep on investing, and you will get a healthy income from your investments.


The last and smallest part from the budget allocation is wants. 6,536 dollars yearly, or 545 per month, should be spent on things you want, but don’t need.

Your wants are the most important thing you need to control to manage your budget efficiently. Wants may include traveling, cars, houses, a lavish lifestyle, etc.

Let me make it simple. If you get two options to buy a car, the first is budget friendly and will help you manage 40k a year, and the other is a fantastic car that is expensive and stylish. The stylish one can come in the “want” category.

The 50-30-20 budget is the best method to make your living possible on a 40000 salary per year. However, there is no one absolute rule that fits all. However, sticking to a plan and managing always comes out helpful.

Frequently Asked Question

Is 40k a year good for a single person?

Is 40 000 a year good for a single person? 40k a year is a sufficient salary for a single person if he lives in an area with lower taxes and expenses.

However, due to rising costs globally, I think, 40000 a year may not be sufficient for a person in the times to come. Currently, 40k is a good salary for a single person, and it can also come in use to support a family.

Can you live comfortably on 40000 a year?

With a salary of 40,000 a year, I might say it is sufficient to live a comfortable life given that you budget it properly. If you fail to make a budget plan according to your salary, then 40,000 a year may get you in hot waters.

How much is a paycheck on a 40000 salary?

If I were to calculate my 40,000 salary at a bi-weekly paycheck, I would have to calculate how much money I would have in hand every two weeks.

Suppose I work on a full-time job with 40 hours per week, then I would earn, 40000/26= $1,538.46 (biweekly paycheck.)


A salary of 40000 yearly is less than the average amount people earn in the US. However, it may be sufficient for a single person, a couple, or a couple with a single child. With a proper budgeting plan, such a salary will help you live a comfortable life without worrying about bankruptcy.

So, I suggest you think and develop a plan to help you live a healthy life on a salary of 40000 yearly. You’ll be surprised by how far a salary of 40000 a year will take if you correctly utilize the 50/30/20 plan. 

Featured image with headline: $40000 a year and bullet points: Hourly Salary Breakdown, Taxes, How to budget

Recent Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

We love transparency! Some links might be affiliate links. When you purchase via links on our site, we may earn a commission. All recommendations are objective and based on our personal experience. Read more

Ubblu Ad
Note taking app promo.
Take notes
you don't need to remember.
AI powered note taking experience.
Capture every idea without the pressure to remember.