Home Personal Finance $40,000 A Year Is How Much An Hour: Job Hunting Basics
40000 a year is how much an hour

$40,000 A Year Is How Much An Hour: Job Hunting Basics

by Gloria Louden

When searching for a job, everyone has their own goals and expectations. Most of the time, salary is the biggest deciding factor before accepting a job offer. Financially literate or not, people are often confused about what is considered a good paycheck. And when the contract states a yearly instead of an hourly salary, you can’t help but wonder — $40,000 a year is how much an hour?

Is $40,000 a Lot?

Before going any further, you need to understand that you won’t get one single paycheck of $40,000 per year. The amount of money you get will depend on the contract, but jobs are usually paid on an hourly, weekly, or monthly basis.

Salary Breakdown

While googling $40,000 a year is how much an hour could give a basic $19.23 answer, that’s not all there is to it. Before you accept or decline a job, you should know that a salary of $40,000 per year approximately amounts to:

• Monthly: $3,333
• Weekly: $769 — or $1,538 every two weeks

Those figures might sound like a lot, but the US weekly median salary for the third quarter in 2020 was $994. Extrapolate that to a year, and you get $51,688. As you may have figured out, a $40,000 yearly salary is much lower than the national average.

Keep in mind that the calculations made above are based on a normal 40 hours per week work schedule. The paycheck you will get might depend on how many hours you work or other contractual specifics.


Knowing the answer to $40,000 a year is how much an hour is not enough. You need to think about taxes too because the paycheck you get depends on them. Those, in turn, depend on the region you live in. There are some online tools that can help you figure out taxes without a hassle.

Take New York for example — where the tax rate is usually around 19.69%. Earning $40,000 a year means that you would pay almost $7,874 in taxes. As a result, you are left with $32,126 to pay your rent, food, and any debt or loan you might have. While that amount could provide decent living for some, for others it can barely cover basic necessities.

What Can You Afford?

Now that you know the answer to $40,000 a year is how much an hour, you should ask yourself if it’s enough to cover living expenses. While they vary depending on the region, the overall living costs will be similar all over the US. It’s important to break down your expenses before jumping on a pricey rent or unaffordable mortgage.


Most people agree that your monthly income should be greater than or equal to three times the cost of rent. Taking the $40,000 a year example, you should consider spending up to $1,111 on rent. It’s worth mentioning that most apartment owners use the same rule as a requirement for anyone applying to rent.

The downside of using a third of your income on rent is that any unforeseen expenses could render you unable to pay. As a result, some people take the 25% approach. In other words, with a $40,000 yearly salary, you get $833 for rent. Taking taxes into account, you are left with $667 to spend on rent. That’s almost impossible with today’s rent prices.


As with rent, buying a home is a bit difficult to manage. Most experts use the 28% rule to determine how much you should spend on your mortgage. Keeping the $40,000 example used before, it’s recommended that you spend up to $933 monthly on a mortgage.

Taking into account property tax, upkeep, and maintenance will lead to a pricier mortgage. You can make it work with a $40,000 salary, but it’s not going to be easy. You should consider renting instead of buying a home.

The 28/36 Rule

As mentioned above, the 28% rule can be used to determine how much money you should spend on housing. The most common version of that is named the 28/36 rule and it includes debt expenses. Overall, homeowners shouldn’t spend more than 28% of their income on housing and no more than 36% total on debt.

Banks and creditors use this rule to determine if you qualify for a loan. You should keep that in mind before applying for one. Also, just because the rule says “36%,” doesn’t mean that you need to spend that much money on debt. It’s always better to spend less and save as much money as possible.

Living With $40,000 a Year

Does the answer to the question $40,000 a year is how much an hour really matter? You can make thousands of dollars an hour but still end up broke if you are not careful. Check out the tips below, and you will learn to get by on almost any amount of money.

Banish Debt

While you can’t avoid all debt, like student loans, for example, you should try and minimize any unnecessary debt. The more money you spend on loans, the less money you save. If you are already in debt, you should start paying it off as soon as possible. Left unchecked, even a small loan could eat up your monthly income.

Know Your Finances

Keeping track of your money, doing your taxes, and checking every bill should all be weekly activities. It’s important to know how much money you spend each week so you can change your habits. Knowing your finances is the top priority of any money-saving enthusiast.

Avoid Optional Expenses

You don’t need to replace your laptop every year, and you definitely don’t need that new phone right now. Although it may feel nice to keep up with what’s new, it’s usually best to avoid optional expenses.

Not only that but you can also look for cheaper alternatives to expensive products. Why buy a $1,000 phone when you can get a $400 one that has the same features? It may not be the most famous brand, but does that really matter when you are on a budget? Almost every new high-end piece of tech has a cheaper, lesser-known alternative that works the same. While it may make you feel bad being left out, the amount of money you can save over time will definitely be worth it.

Get a Roommate

As you already know, rent and mortgage can deal a huge blow to your budget. To avoid financial stress, you should consider getting a roommate (or two). Living alone is great, and everybody loves privacy, but sometimes saving money is more important.

If that’s not enough to save you money, consider moving in back with your parents for a while. That way, you don’t need to worry about rent or bills while also preparing to get your own place.


Once you save up even a small amount, you can consider investing a bit of that money. While some might consider investments a waste of time, no one can deny that they’re effective. You can always start small with a safe, local investment and then move on to the big leagues.

For example, you can start with an investment of $600 dollars for a period of 20 years. With an annual interest rate of 9%, you could end up earning almost $2 million. Most banks, like J.P.Morgan, offer insight and help to new investors. Keep in mind that even if it’s hard to invest with a $40,000 yearly income, it’s not impossible.


So, what’s the answer to $40,000 a year is how much an hour? While some might say not enough, others might go with more than enough. If you lack financial literacy, no amount of money will be enough. However, with plenty of patience and research, you can make a living with any amount of money.

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