After 11 months working If you dont have any outstanding debts and share a place with either your partner or a friend, you might be in a very good position. You can afford up to $1,200 per month on rent. "@type": "Question", That means that to calculate how much 40k a year is per month you will need to divide 40k by 12. With a fairly easy to live with budget above, there was an excess of $2,833 - $2,580 = $253. WebUse this calculator to calculate how expensive of a home you can afford if you have $62k in annual income. "acceptedAnswer": { WebFor a $250,000 home, a down payment of 3% is $7,500 and a down payment of 20% is $50,000. Continue with Recommended Cookies. Mississippi, for instance, is the state with the cheapest cost of living in the U.S. with utilities costs up to 14% lower than the national average. If utilities are included and you have low transportation costs, you might be able to afford rent closer to 40% of your income, if thats of interest to you. "@type": "Question", "text": "On $100,000 a year, you're making $8,333 gross per month. Input your information into this rent calculator to review your personalized 50/30/20 budget estimates. Although the following cities offer a better standard of living, theyll definitely hurt your bank balance. I would say a great salary puts you in a position to invest or save 50% of your income without you having to penny pinch, only eat ramen noodles, or avoid enjoying your life. However, you need to keep in mind that if youre going to pay that figure monthly, depending on the rest of your spending habits, you might not have much left to pay your other debts and bills or save for the future. "acceptedAnswer": { "@type": "Answer", If we do some quick math and divide that by an average 40-hour workweek we get $983 / 40 = $24.60 an hour. Which means that an average salary is typical or good. That is currently higher than minimum wage. },{ With so many price points and options available in many places, it can be hard to know where to begin when, is a great place to start. That would be a mortgage amount of $241,291.87. The federal minimum wage since 2010 is $7.25 per hour, which represents a gross monthly income of $1,256 or around $15,000 a year. } ($40,000 - $6,000) / 52 = $683.54 ", This browser is no longer supported. If one of you has a significantly larger bedroom or better access to apartment features, such as an attached bathroom, it may make sense for that roommate to pay a slightly higher proportion. If you're buying an expensive home in a city like Sydney, stamp duty can run to $50,000 or more. WebTo calculate how much rent you can afford, we multiply your gross monthly income by 20%, 30% or 40%, based on how much you want to spend. This means that at $40,000, you're making more money than over half of Americans, which might suggest that $40,000 is plenty to live comfortably. If your partner is in debt, it can be very stressful. "acceptedAnswer": { Heres how to get an even more detailed answer to how much rent you can afford so you can decide which, Experts recommend renters spend no more than 25% to 30% of their monthly income on rent. The median home price hovers around $114,500, while, according to CNBC, the monthly cost of energy in the state is $143. Updated July 17, 2021 - First published on July 20, 2020. Plus there are strategies like house hacking that can help bring your housing expenses down, and some people can make a profit! },{ "}},{"@type":"Question","name":"Can a single person live on minimum wage? 1. "@type": "Question", Do this for each of your bills for electricity, gas, water, internet, cell phone and anything else you might have. To determine your monthly rent budget, estimate no more than 30 percent of your gross monthly income on rent, assume one months rent for a security deposit, add another $200 to cover utilities and then throw in additional necessary expenses and hidden costs such as pet fees, parking and laundry. Frugality is a behavioral alternative to consumerism with the purpose of improving peoples lifestyles. WebOn $40,000 annual salary you can afford ~$1,000/mo in rent Where is your money going? You should save as much as you possibly can. Then, get some pen and paper and put your detailed income on one side take-home pay, freelance income, investment yields and your expenses on the other rent, car, utilities, groceries, debt split by a line. Finance, and Business Insider. You can afford to pay $690-$710 monthly rent when making $40K monthly. You only pay this when your deposit is less than 20% of your property's value. If you can afford to put away $1,400 per month, you could potentially save your first $100k in just 5 years. $769.23/week 40 hours/week = $19.23/hour. "@context": "https://schema.org", Other valuable tips to make the most of your $40,000 salary:Take a good, long look at your monthly subscriptions. Its essential to keep your feet on the ground when choosing where to live if youre making $40,000 a year. WebToday, we're talking about, if you have a salary of $40,000 per year, Do You Make $40k/yr? 3 stars equals Good. to survive well while making $40K include. If you are asking what a great salary is, that is a completely different answer. If you feel too squeezed, you can always start a side hustle, get a new job, consolidate your student loans, etc. You shall do the math based on your net pay, which means that your take-home income per month should be $2,650. Look into all of your investing potential and do your due diligence. ($40,000 - $9,000) / 24 = $1,291.67. That would mean that you can afford $2,833 / 3 = $944. Do Not Share or Sell My Personal Information. } Now if that is good money for you, then you shouldnt worry about what others say. Experts recommend renters spend no more than 25% to 30% of their monthly income on rent. Yes! Based on your income, a rental at this price should fit comfortably within your budget. Let's say that you earn 62,000 per year. } Generally speaking, a $40K is considered below average in the US and will probably leave you strapped for cash. According to bls.gov, the median weekly income in the US is $983. "name": "How much should I spend on rent and how much rent is too much? ", To see how you can live on $40,000 a year, you must take into account the annual median personal income in the U.S., as well as other references to put your income All personal personal personal and financial factors should be considered before signing a lease. $40K A Year Salary Is How Much An Hour After Taxes? This is just a general rule of thumb but it is definitely a worthy guideline. You might think that sharing living expenses with a partner is a good thing, but you have to be careful as your financial decisions will be tied up to your emotional bond with this person. In the budget provided above, I showed a sample of saving 20% a month. Understanding Homeowners Insurance Premiums, Guide to Homeowners Insurance Deductibles, Best Pet Insurance for Pre-existing Conditions, What to Look for in a Pet Insurance Company, Marcus by Goldman Sachs Personal Loans Review, The Best Way to Get a Loan With Zero Credit. There are many places where $40k a year is a livable wage. WebMost home loans require a down payment of at least 3%. Ultimately, that is up to you. Heres how to get an even more detailed answer to how much rent you can afford so you can decide which apartment listings are best for you. To view the purposes they believe they have legitimate interest for, or to object to this data processing use the vendor list link below. 1 star equals Poor. Whatever you decide, the most important step is to discuss it before you move in together and document your decision in a roommate agreement that will prevent this from becoming a bigger issue down the line." However, there is no one-size-fits-all model, and the best way to decide is to write out exactly how much you earn each month, how much you spend on living expenses and how much you want to save. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023. Youll easily overspend if you dont learn to budget. Trying to move to a major city and plan to own a dog in the near future. By creating a budget, living frugally, and avoiding debt, youre more than halfway to living comfortably with $40k a year. If one of you has a significantly larger bedroom or better access to apartment features, such as an attached bathroom, it may make sense for that roommate to pay a slightly higher proportion. If you get paid weekly, you could get a check for $596 - $683, depending on your tax liabilities. However, depending on your marital status, location, industry, and monthly rent or mortgage situation, $40,000 can be enough. This is even more necessary if you live in a metropolitan area. Its a decent salary in lower cost of living areas, and is a more difficult salary in higher cost of living areas. Your dollars will stretch much further if you avoid most coastal areas of the United States (San Francisco, New York, etc) and larger metropolitan areas. Making 40k a year is within 20% of the national median household income in the US. There are dozens of countries where 40K US dollars a year would afford you an amazing lifestyle. Also, the countrys median household income is $63,179 a year, so you can consider $40,000 a good salary after all. Start with what you can -- even if that's only 10% -- and work your way up to 20% gradually. The median household income in the United States is $63,179 as of 2018, more than 50% higher than your income. Plus, if you arent living in an expensive US city, you might actually even do well within the given salary. ","acceptedAnswer":{"@type":"Answer","text":"The hourly rate hasn't caught up with the cost of living since the late 1960s. It is quite evident that making $40,000 a year is well above the minimum wage, and youd be surprised to know that its certainly above the U.S. median individual income of $35,000 a year according to the U.S. Census Bureau. \n\nIn this regard, other connecting aspects of housing become extremely relevant to succeed with $40k a year. Well, to be honest, a $40K salary isnt bad, but it isnt the best salary youre being offered in the US. While many states and some cities have minimum wage rates well above $7.25, those who earn the minimum wage still struggle to pay bills, find housing, and support a family. WebThis calculator shows rentals that fit your budget. WebI Make $40,000 a Year How Much Rent Can I Afford? ($40,000 - $9,000) / 52 = $596.15. "acceptedAnswer": { Best Homeowners Insurance for New Construction, How to Get Discounts on Homeowners Insurance. Youre also likely to face financial hardship if your rent costs more than that, so most experts would recommend it, even if it isnt an absolute requirement. \n\nNo state, county or city in the country allows a full-time minimum wage worker to pay for a two-bedroom home.\n\nA full-time minimum wage worker can only pay rent for a room in 7% of US counties - 218 counties out of a total of more than 3,000 nationwide.\n\nIn fact, the income of a minimum wage worker with a family of four is well below the poverty line. if you are making $40,000 a year you are making within 20% of the average salary in the US. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Everyone daydreams of making money in their sleep or creating a life where Dublin, Ireland, is a gorgeous city steeped in tradition and culture. How Much Rent Can I Afford On A $40,000 Salary? If you avoid bad debt, your dollars will stretch even further and be able to be put to work. Depending on your circumstances that could leave you with a lot of money to invest with, and continue to progress towards financial freedom! Still, it isnt the perfect pay for a large household, and you should definitely try a. Keep repeating that process until you find out what you need, and what you dont. However, single individuals with a knack for budgeting or families that live in an affordable city in America can survive well while making $40,000 yearly. No matter what your salary is, the most important thing you can be doing is saving and investing your money. Zillow, Inc. holds real estate brokerage licenses in multiple states. Compensation may impact the order of which offers appear on page, but our editorial opinions and ratings are not influenced by compensation. Read this article to learn more about percentages of income and rent. There's more than one way to decide how much rent you can afford. Do this for each of your bills for electricity, gas, water, internet, cell phone and anything else you might have. Subtract fixed costs like housing, transportation, groceries, and any other bills from your take-home pay along with the money you're putting into savings. That depends on how frequently you get paid, and how much taxes you are liable for. As a general rule, to find out how much house you can afford, multiply your annual gross income by a factor of 2.5 - 4. "name": "How much rent can I afford on a 100k salary? For example, if you like to go out often and shop till you drop, then consider setting your rent budget on the lower end so you can indulge in more of your interests. Your gross income is $3,333 per month, so housing should stay below $1,000 per month. But, people with a family living in a high-cost area would struggle to make both ends meet. Gross income is much easier to calculate, but because tax rates can vary by state, city, income level, family size and many other factors, your net income is a more accurate assessment of what you can afford." Rather than buying a new car, look for a more affordable transportation option. "name": "How much rent can I afford on a 50k salary? "@type": "Answer", For proper functioning of the page Cookies are needed. This article was written with people like you in mind. If you make $40,000 per year, you can afford a house anywhere from $100,000 to $160,000. Surprisingly, YES! "@type": "Question", If you do know, take out the appropriate amount from each paycheck. "name": "Should I use gross income or net income to calculate how much rent I can afford? If you want to have a lively nightlife, that helps narrow down your search as well. You will be amazed at how many options are out there to invest in. I was curious myself, so I started to dig into it a little deeper. Depending on where youre currently living, that might not actually sound too bad. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. You can afford to spend a ton on Amazon each month or have a cool car with a payment that goes along with it, but probably not both. That equates to a median salary of approximately $51,000 a year. 0000. Others look for 30% of your monthly income, but in reality, these two methods are just two You can afford to pay between a $100K-$120K mortgage with a $40K gross income yearly. With the average household income in the U.S., youd need to have a partner whose contribution takes the home income the closest to $63k a year to be on par with the countrys median. Recommended Reading: Overview of Real Estate Investing. If you live in Tennessee (no state income tax) with your parents, thats a different story entirely. On the other hand, Hawaii and California are the most expensive ones as stated by the World Population Review. "acceptedAnswer": { And if youre someone with considerable experience in your industry, $40k annually is not a good income because its typically the starting income for most entry-level positions. Personally, if your life circumstances allow it and you are comfortable with it I would look into buying over renting. Most experts and the federal government recommend that you shouldnt spend more than 30 percent of your gross monthly income on rent. Yes! Every job is different, and every employer is different, but the real question at hand is if earning 40k a year is good. Lets backtrack a little to find out how we got to this number. },{ Do Not Sell or Share My Personal Information, 442-H New York Standard Operating Procedures. Can I Live Comfortably Making $40K a Year? Get your free sharewise account now. On $100,000 a year, youre making $8,333 gross per month. Bad debt is an expense that a business incurs once the repayment of credit previously extended to a customer is estimated to be uncollectible and is thus recorded as a charge off..