Limiting, constraining, uncomfortable. It’s unbelievable how one can manage to make ends meet on $40,000 a year, considering the high cost of living in the United States. Nevertheless, some people manage to live a comfortable life with this amount of income.
How does a life on $40,000 a year really look like? Let’s do a bit of math and analysis to find out how much the income can afford you.
$40,000 a Year Is How Much an Hour?
If you’re earning $40,000 a year, this means you’re making $20/hour, assuming that you’re putting in 40 hours a week of work. This is not such a horrible figure, especially when many people are earning below-average income.
But hold on. Take out tax, and the figure goes down to $32,000/year. Then deduct utility bills, rent, transportation, food, health insurance, basic personal needs, and student loans. How much are you left with after all these deductions?
Is $40,000 a Small Salary in the USA?
$40,000 is not little, but it isn’t enough either. However, whether the figure is enough mainly depends on where you live. For example, in states such as New York and California, you’d be homeless with a $40k annual salary. You can’t solely rely on this amount, especially if you are supporting a family.
On the other hand, cities in the Midwest and the South are more affordable. There, you can get by comfortably when living single or with a family with a $40,000 a year salary. Sure, you’ll sometimes spend down, and you probably won’t buy luxurious items. However, you’ll get to live pretty well.
Is $40K an Attractive Salary?
$40K is an attractive salary, especially if you manage to cut back on unnecessary expenses. You can live in a good home, afford to buy a car, and cater to your personal needs. On top of that, you’ll have some spare cash to put towards your retirement savings, emergency fund, and even to take your family out for the occasional trip.
Ultimately, it all depends on how you budget and prioritize your income. If you’re poor at managing money, life will be a struggle, even when you are earning more than $40k/year.