Is $40,000 A Good Salary? And Can You Live Off It Today? (2023)

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Whether you are just starting your career or on the job hunt currently, it’s common to directly focus on the salary tied to the position.

After all, depending on your cost of living, if you have any debt, and your retirement planning — your salary matters a lot to your livelihood.

One common salary offer might be $40k per year.And a question you might ask yourself, is $40,000 a good salary?

When I was first making that much money a year, it was the most I ever made in my life up until then. I was certainly pumped! But quickly based on where I lived, my debt, and bills — $40,000 per year didn’t get me as far as I hoped.

Now that doesn’t mean it won’t be a good salary for you as it depends on various personal finance factors. So if you are looking to make $40k per year or were just offered that much, I dove in to help you see if this is a good salary today.

Table of Contents

How Much Is $40,000 A Year (Hourly, Weekly, Monthly)?

Before accepting a job that offers $40,000 a year, it’s essential to understand how your wage will breakdown. For most people, you’ll be paid weekly, bi-weekly, or even monthly.

But the easiest way to see how far your $40k wage can go is to break this annual salary down to help you plan your finances better.

Gross income of $40k per year equals:

  • Hourly: About $19+ per hour.
  • Weekly: About $769+ per week
  • Bi-weekly: $1,538+ every two weeks.
  • Monthly: About $3,333+ per month.

Remember, these above numbers are your gross income which means before things like taxes, insurances, or retirement are taken out of your paycheck.

Additionally, if your salary is set at $40k per year, but some weeks you work less than 40 hours, your hourly rate would show an increase. Say you worked 38 hours a week, your hourly rate becomes $20+ per hour.

Pay ScheduleIncome Amount
Weekly$769 per week
Bi-Weekly$1,538 bi-weekly
Monthly$3,333 per month

Is $40k a year middle class?

A $40,000 a year salary can put you in the middle class in America. However, depending on where you live, your expenses, average spending, and how much debt you have accrued — a $40k salary can also put you in the lower-end of the middle class in today’s world.

Defining the middle-class today can also be a bit confusing, as there are tons of data factors out there.

For example, your salary can be just one aspect as you may have saved quite a bit of money, own appreciating assets, or have built a nice retirement nest egg too.

Middle Class Data

According to Pew Research:

“A household in a metropolitan area with a higher-than-average cost of living or one with four or more people needs more than $48,500 to be included in the middle-income tier. Households in less expensive areas or with less than three people need less than $48,500 to be considered middle income.”

And in this U.S. News article, their numbers break down a bit differently.

In the article, Stephen Rose — a nonresident fellow at the Urban Institute and research professor at George Washington University — breaks down income levels based on a family of three in the image below.

Is $40,000 A Good Salary? And Can You Live Off It Today? (1)

Don’t get discouraged by the averages in the research, $40,000 per year can potentially be a great income for you. Let’s keep diving into the data further.

Can You Live Off $40k A Year?

With a $40k a year salary, you will be able to live off that amount. However, if you are a single-family income or live alone, you may feel that you are financially struggling a bit. But other factors of how comfortable you live on this salary include your location of where you reside, current expenses, and how you spend your money.

So as you begin exploring more if $40,000 is a good salary, you’ll want to calculate and understand if you can afford to live on this amount.

And as you may know, one of your biggest expenses will be where you live, meaning your current monthly rent or mortgage payment.

How much rent can I afford on a $40,000 salary?

If you make a $40k yearly salary, you can realistically afford about $1,111 in rent per month. This number follows the general rule that your gross income per month must be equal to or be 3x higher than the cost of your rent.

Remember, $40k a year equals about $3,333.33 per month. And when you divide that by the standard 3 for example, you’ll get $1,111.11 for rent.

Personally, I’m more conservative and I think plenty of people in the personal finance space are too.

If you are making $40k per year, I’d look at keeping your monthly income 4x the amount of your monthly rent. This would change the rent you can afford to around $833.33 per month.

This will help you not overextend yourself on rent, allow you to tackle any debt you have a bit more aggressively, or give you more cushion to save or invest still.

How much mortgage can I afford on a $40,000 salary?

If you make a $40k yearly salary, the maximum amount of house you could afford would be somewhere between $100k and $125k. This is only a rough estimate as the amount can change based on your interest rate, amount of your down payment, property taxes, and location.

There are tons of mortgage calculators that you can mess around with that can give you some pretty good estimations. I used this calculator from SmartAsset to get an estimate.

Now if you already have a home and mortgage payment, you want to ensure the maximum of your spending is 25%-28% of your monthly gross income.

While some financial experts will say you can go to 30%, a vast majority stick to the 28% number for mortgage payments. Similarly, I’m also conservative and think you should aim to go a bit lower if possible. But generally, 28% is a safe and affordable number to go by.

So with your $40k yearly salary and 28% for a mortgage payment, that means you can afford $933.33 each month. If you stretched it to 30%, you can basically afford $1,000 per month on a mortgage payment.

So Is $40,000 A Good Salary?

While a $40,000 a year salary might categorize you in the lower-middle class and below the median individual income in America, it’s still plenty of money for you to survive on. However, there are tons of factors that determine if you will struggle with $40k or live more comfortably than you expected.

How you manage your money and if you live within or below your means, will help ensure your $40k yearly salary doesn’t leave you struggling. Even if you have superb money management and are living frugal, it still doesn’t mean this salary will be good.

Many areas of the United States have a very high cost of living, where a $40,000 salary just won’t get you very far at all, unfortunately.

There are a few things you can do if you are in a high cost of living:

  • Look for a career in a more affordable area
  • Find a higher paying job to cover costs
  • Work remote for a better-paying company (if your career field allows you to be a remote employee)
  • Start a side hustle or find under the table jobs on the side
  • Work on your skills to be able to boost your salary

Many of the above options might not be ideal nor will it be easy, but it’s some of the best options to consider if a $40k salary won’t get you very far.

Is $40,000 a good salary out of college?

For the majority of recent college grads, a $40,000 a year salary is a solid start and will be a healthy salary to get started making some financial choices. However, the average starting salary of recent college graduates does hover around $51,000 per year.

Personally, I think a $40,000 salary out of college is great. Of course, the field of study and where someone gets a job can nab someone a salary much higher to start.

But most likely, $40,000 per year is the most money many in their early 20s will have seen up to that point. It’s also a great start for college grads to begin saving, thinking about getting an apartment, and puts them more in the financial driver’s seat.

Best U.S. Cities To Live Well On $40k A Year

As you recall from earlier in this article, one of the things I mentioned was that where you live plays a major role in deciding if $40,000 is a good salary.

AARP has done a few studies over the years about the best American cities where you can live quite comfortably on $40k a year or less. And besides housing costs, they also accounted for the weather, safety of neighborhoods, parks, and more.

10 best cities to consider with $40,000 a year salary:

  • San Marcos, Texas
  • Alton, Illinois
  • Canandaigua, New York
  • Duluth, Georgia
  • McMinnville, Oregon
  • Munhall, Pennsylvania
  • Gulfport, Florida
  • Guthrie, Oklahoma
  • Coralville, Iowa
  • Coeur d’Alene, Idaho

Worst U.S. Cities Where A $40K Salary Is Not Enough

As you have seen up to this point, $40,000 per year salary can let you live comfortably if you manage your spending, have a budget, and keep your cost of living healthy.

And as you saw, there are some great cities and states where $40,000 can go pretty far. That being said, there are also many expensive cities where that salary won’t get you much nor could you afford to live there without struggling.

10 cities to avoid with $40,000 a year salary:

  • New York, New York
  • San Francisco, California
  • Honolulu, Hawaii
  • Boston, Massachusetts
  • Washington, D.C.
  • Oakland, California
  • San Jose, California
  • San Diego, California
  • Los Angeles, California
  • Miami, Florida

How To Make The Most Of A $40,000 Salary

So how can you make the most of your $40,000 salary?

If you aren’t able to make more currently or that’s the highest offer right now you will get, don’t panic! We all want to make more money, but you can certainly maximize the potential of this amount.

People with much higher salaries can be in far worse financial shape if they have been living above their means and not properly managing their money. So you can certainly have a leg up on others who may even be making six-figures.

Follow these simple personal finance tips to help you keep more of the money you make and start making the most of your $40k a year salary.

1. Budget

Since $40,000 a year might be in the lower-middle class, you’ll need to focus some energy on creating a budget. Your salary can quickly disappear if you aren’t careful about your spending and expenses.

So the best way to stay on track is to get organized with a budget calendar and create a financial plan for your money.

Your goals should be to keep your expenses as low as possible, cut unnecessary spending, and see how to save as much money as possible. It doesn’t mean you need to become a cheap person, but you do want to live more intentionally and frugally as needed.

2. Remove Debt

Debt is always a killer when it comes to your income and accumulating wealth, which is no different when you have a $40,000 salary.

The quicker you can pay off your debt, the more your salary can go to work for you. So along with your budget, figure out a debt-payoff plan that works best for you. It might take you time, but put as much effort into removing debt as you can.

Additionally, you want to continue to stay out of debt. Credit card debt is a biggie, especially with how high-interest rates can be and can snowball out of control. If spending money is a vice of yours, you can try the 30-day rule to control impulse spending.

3. Live within your means

Living within your means is the simplest concept to managing money, yet so many people still struggle with this. You have to learn to be comfortable and grateful for what you have and content with your needs.

Often, your wants can take control, and you feel the need to keep up with what everyone has currently. It’s a great way to go broke or end up in way more debt.

You can always treat yourself from time to time but beware of the instant gratification dangers and how it can affect your finances. Stick with the budget and plan you create, don’t worry about others that are not you or your own family.

4. Invest what you can

I know $40,000 can disappear quickly after taxes and all your expenses, but you need to be investing what you can as well.

Every little bit helps and thanks to micro-investing apps, you can start investing with as low as $5 or spare change.

Two investing apps to consider:

  • Stash
  • Acorns

Start paying yourself first, that is save money and invest before taking on your bills or debt. That doesn’t mean you shouldn’t pay your responsibilities, but instead give yourself the financial boost first.

This helps you get in good money habits and you won’t be tempted to spend because you already saved or invested the money.

Let’s say you could only contribute $150 per month for the next 35 years. That would mean each year you are contributing $1,800. If you earn an average interest rate of 8%, compounded over time you would end up with over $590,000+ towards retirement!

Hopefully, you’ll end up investing more overtime or even get a company match in a 401k, which can elevate you further.

Final Thoughts

Is a $40,000 a good salary? Although it might be a bit less than the median income in America, you can survive well on this amount.

And how far that income goes generally depends on your location and how well you pay attention to your finances.

But if you can find a low cost of living, avoid debt and keep expenses low, you can make $40k a year go pretty far and even save and invest.

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Is $40,000 A Good Salary? And Can You Live Off It Today? ›

Yes, you can live comfortably with a $40,000 per year salary. Again, this depends on where you live and what your level of comfort is. Yet, if you are able to live below your means and keep your expenses low, you can live a suitable and comfortable lifestyle with $40,000 per year.

Is $40,000 enough to live off of? ›

It is possible to live individually on a $40,000 income. In fact, you may be able to afford the average monthly expenses for a single person and work on your saving and investing goals.

What salary allows you to live comfortably? ›

On average, you need $68,499 after taxes to live comfortably. The average after-tax income needed for a comfortable lifestyle across the 25 metro areas in our study increased roughly 20% from a year ago when it was just $57,013.

Where can I live comfortably on $40 000 a year? ›

Based on that data, here are five states where you can afford a home while making an annual salary of around $40,000:
  • West Virginia. Minimum annual income: $38,320. ...
  • Ohio. Minimum annual income: $38,400. ...
  • Michigan. Minimum annual income: $40,800. ...
  • Arkansas. Minimum annual income: $41,040. ...
  • Missouri. Minimum annual income: $42,200.
Apr 13, 2018

Can I own a house making 40k a year? ›

How much house can I afford with 40,000 a year? With a $40,000 annual salary, you should be able to afford a home that is between $100,000 and $160,000. The final amount that a bank is willing to offer will depend on your financial history and current credit score.

What does 40K a year look like? ›

But in general, you can expect your take-home pay to be around $18 per hour. If you work 40 hours per week for 50 weeks each year, a $40,000 annual salary would break down to $20 per hour before taxes. If you're still wondering, "40k a year is how much hourly?" you might need to consider your specific circumstances.

Is 40K a year good for a single person? ›

Is 40k a good salary for a Single Person? Simply put, yes. You can stretch your salary much further because you are only worried about your own expenses. A single person will spend much less than if you need to provide for someone else.

What salary is middle class? ›

The Pew Research Center defines the middle class as households that earn between two-thirds and double the median U.S. household income, which was $65,000 in 2021, according to the U.S. Census Bureau.21 Using Pew's yardstick, middle income is made up of people who make between $43,350 and $130,000.7 This is a ...

How much money do you need to live comfortably without working? ›

Using the 4% rule to estimate how much money you need to never work again involves knowing how much you plan on spending that first year or retirement. For example, if you want to spend $200,000, the math is $200,000/. 04 = $5,000,000. Another way to calculate this is that you would need 25x your annual spending rate.

How much does the average American make? ›

What Is the Average US Salary (2022) The national average salary is $60,575. That is the sum of all incomes divided by the number of workers. Where someone lives, their industry, education level, and current demand for that job all contribute to how much a worker earns per year.

Is 40k middle class? ›

For example, a person who makes $40,000 per year may be middle-class in a small, rural town. But that same income in a large coastal city would be well below the median income. Thus, a better way to think about the middle class is to consider how much people need to get by given all of these intersecting factors.

What is the best state to live in financially? ›

North Dakota

North Dakota takes the cake as the best state in the U.S. to save money in. With the third lowest debt-to-income ratio in the country for Q3 2022—and the second lowest percentage of income spent on housing costs and rent—North Dakotans are able to keep more money in their pockets.

Where is the cheapest place to live in the United States? ›

In its report, Niche also ranked the cheapest places to live in the U.S. At the top of the list this year is Brownsville, Texas. Brownsville has been steadily rising in Niche's Lowest Cost of Living ranking over the past few years, placing number six in 2021, number three in 2022 and finally, number one in 2023.

How much is 40k a year per hour? ›

So if an employee earns $40,000 annually working 40 hours a week, they make about $19.23 an hour (40,000 divided by 2,080).

Can I invest 40k in real estate? ›

While $40,000 can start you toward significant earnings, it likely won't be enough to purchase property outright. However, there are still several ways you can use it to start investing in real estate. For some, $40,000 can be a sizable portion of your down payment.

How much house can I afford if I make $36,000 a year? ›

For example, if you make $3,000 a month ($36,000 a year), you can afford a mortgage with a monthly payment no higher than $1,080 ($3,000 x 0.36). Your total household expense should not exceed $1,290 a month ($3,000 x 0.43). How much house can I afford with an FHA loan?

How much is $20 an hour annually? ›

$20 an hour is how much a year? If you make $20 an hour, your yearly salary would be $41,600.

How much is $15 an hour annually? ›

$15 an hour is how much a year? If you make $15 an hour, your yearly salary would be $31,200.

Is $20 an hour good for a single person? ›

The ability to survive on a wage of $20 per hour depends on your individual circumstances. A single person with no dependents may be able to live comfortably on this amount, but if you are married and have to pay rent, it could be challenging to make ends meet with $20 per hour.

What is the ideal income for single person? ›

What is a livable salary for a single person in California? A living wage for a single person in California with no children is $21.82 per hour or $45,385 per year, assuming a 40-hour workweek.

What is the annual income for $17 an hour? ›

$17 an hour is how much a year? If you make $17 an hour, your yearly salary would be $35,360.

How much is 21 dollars an hour annually? ›

$21 an hour is how much a year? If you make $21 an hour, your yearly salary would be $43,680.

What is low class income? ›

Lower-income households had incomes less than $48,500; Upper-income households had incomes greater than $145,500; Middle-income households fell into a range between those two numbers.

What is considered low class? ›

Based on Pew's analysis, a three-person household would be considered low-income if they're bringing in less than $52,200 a year. This group makes up a significant chunk of the U.S. population, with about 38% of households making less than $50,000 in 2021.

What is considered wealthy? ›

To feel wealthy, Americans say you need a net worth of at least $2.2 million on average, according to financial services company Charles Schwab's annual Modern Wealth Survey.

How much money do you need to live a really good life? ›

Globally, the study found that the ideal income point for an individual is $95,000 for life satisfaction and between $60,000 to $75,000 for emotional well-being. In North America, the individual income level for life satisfaction was found to be $105,000 per year.

What to do if you don't want to work anymore? ›

What should I do if I don't want to work anymore?
  1. Check in with your mental health. ...
  2. Reflect on the source of your feelings. ...
  3. Envision your ideal life. ...
  4. Make time for breaks. ...
  5. Adjust your daily habits. ...
  6. Explore different careers. ...
  7. Give yourself rewards. ...
  8. Save up to take time off.
Feb 3, 2023

How do people afford to live without working? ›

If you want to stop working, you'll need passive income to cover living expenses. This can be achieved by investing in stocks or other assets that produce steady payments over time. Living expenses can be exorbitant. That being the case, it's critical to have a plan in place before you strike out on your own.

What is the most common salary in us? ›

What is the average salary in the U.S.? The average salary in the United States was $58,260, with an average hourly wage of $28.01, according to the May 2021 National Occupational Employment and Wages Estimates from the BLS.

What does an average American make a month? ›

American Salary
Annual SalaryMonthly Pay
Top Earners$105,000$8,750
75th Percentile$68,500$5,708
25th Percentile$33,000$2,750

What does the average American make an hour? ›

US Average Hourly Earnings is at a current level of 33.58, up from 33.46 last month and up from 32.18 one year ago. This is a change of 0.36% from last month and 4.35% from one year ago. Average Hourly Earnings is the average dollars that a private employee makes per hour in the US.

What percentage of people make over 40k? ›

Percent by Household
Annual Household Income% of Americans Earning More
$35,000 to $39,99958.48%
$40,000 to $44,99953.74%
$45,000 to $49,99949.59%
$50,000 to $54,99945.30%
38 more rows
Oct 27, 2011

Is 40k hard? ›

Diving into the wide world of Warhammer 40k can be overwhelming. There is a lot to learn in this deep and complex game that can play for hours, it can get really expensive building up your army of warriors, and painting your fighters can be a fun and rewarding experience or a feel like a gut-wrenching second job.

How old do humans live in 40k? ›

Warp taint can extend this Eisenhorn I believe is probably around 350 atm, for instance. hard to put an exact figure on how long the warp can extend natural life. It's probably related to how tainted the person is. It's still unlikely you'd have regular humans living past 500–1000 years even with warp taint.

What is the 2 cheapest state to live in? ›

Cheapest Cost of Living in the US
#StateCost of Living Index
47 more rows

What state has cheapest cost of living? ›

Mississippi. Mississippi has the lowest cost of living in the United States. With a cost of living index of 83.3, expenses are nearly 17% less than the national average. Mississippi's housing costs are the lowest in the nation.

What is the cheapest and safest state to live in? ›

Here are some of the cheapest and safest places to live in the US!
  • Live in Boise, Idaho.
  • Affordable living in Des Moines, Iowa.
  • Winston Salem, North Carolina: among the cheapest cities in USA.
  • Live affordably in Naples, Florida.
  • Enjoy Lexington, Kentucky.

Where is the most beautiful place to live in the USA? ›

Charleston, South Carolina

Charleston is by far one of the most beautiful cities in the US. Pastel-painted houses line the cobblestone streets, while colossal oak trees with Spanish moss set the scene. One of the biggest allures of this city is that it's very compact and easy to explore on foot.

What is the #1 city to live in in America? ›

1 best U.S. city to live in is Cambridge, Massachusetts—see which other cities made the list. Niche released its list of the best U.S. cities to live in 2023.

Can you live comfortably on 40000 a year for retirement? ›

Although 40K per year may not seem like enough money to retire on, many retirees live on even less. According to a recent survey, the median annual household income among retirees is just 32K per year. So if you budget wisely, you can definitely make a retirement income of 40K work.

Is $30,000 a year enough to live off of? ›

No, $30,000 is not a great salary for a single person, but it can be livable depending on the person's location and expenses. The average personal income in the United States is $63,214 per year, which is more than double the $30k mark.

How much is 40K salary per hour? ›

So if an employee earns $40,000 annually working 40 hours a week, they make about $19.23 an hour (40,000 divided by 2,080).

How much car can I afford if I make 40K? ›

Follow the 35% rule

Whether you're paying cash, leasing, or financing a car, your upper spending limit really shouldn't be a penny more than 35% of your gross annual income. That means if you make $36,000 a year, the car price shouldn't exceed $12,600. Make $60,000, and the car price should fall below $21,000.

How much do most people retire with? ›

The national average for retirement savings varies depending on age, but according to the Economic Policy Institute, the median retirement savings for all working age households in the US is around $95,776. This figure includes both employer-sponsored retirement accounts and individual retirement accounts (IRAs).

How much does the average retired person live on per month? ›

Typical Spending in Retirement

Average annual expenses for people ages 65 and older totaled $52,141 in 2021. 48% of retirees surveyed reported spending less than $2,000 a month in 2022. 1 in 3 retirees reported spending between $2,000 and $3,999 per month. 18% reported spending more than $3,999 per month.

What is a good monthly income for a single person? ›

What is a good monthly income in California? A good monthly income in California is $3,886, based on what the Bureau of Economic Analysis estimates that Californians pay for their cost of living. A good monthly income for you will depend on what your expenses are and how much you typically spend per month.

How much money a year is livable? ›

Overall, Americans need an average post-tax income of $68,499 to live comfortably in the U.S., according to recent data from SmartAsset.

How much is $16 an hour annually? ›

If you make $16 an hour, your yearly salary would be $33,280.

Can you live off $1000 a month after bills? ›

Bottom Line. Living on $1,000 per month is a challenge. From the high costs of housing, transportation and food, plus trying to keep your bills to a minimum, it would be difficult for anyone living alone to make this work. But with some creativity, roommates and strategy, you might be able to pull it off.

Is $20 an hour $40000 a year? ›

For most full-time jobs, that's 40 hours per week for 52 weeks, or 2,080 hours per year, if you don't take any time off. That means $20 an hour is $41,600 a year.

How much is $22 an hour annually? ›

$22 an hour is how much a year? If you make $22 an hour, your yearly salary would be $45,760.

Is $500 a month too much for a car? ›

On average, drivers are spending over $700 and $500 each month for new and used vehicles, respectively, according to Experian's fourth-quarter automotive finance report. Insurance costs an average of $2,014 per year, according to Bankrate data.

What credit score do you need for a 60k car loan? ›

There's no set minimum credit score required to get an auto loan. It's possible to get approved for an auto loan with just about any credit score, but the better your credit history, the bigger your chances of getting approved with favorable terms.

What is considered an expensive car? ›

There is no minimum price for a vehicle to be defined as a luxury car, but all except a handful of current offerings from the widely recognized luxury brands start at more than $35,000. Once options are tacked on there won't be many vehicles that roll out of luxury-brand showrooms for less than $40,000.


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