So, you’re out with associates having a pleasant dinner and catching up.
Out of the blue, one among your pals tells you that she simply acquired a brand new job and she or he’s making $55,000 per 12 months.
She’s tremendous excited, in fact as a result of beginning a brand new job is a serious life occasion.
After she fills you in on all the main points of her new function, you begin questioning, is $55,000 per 12 months a superb wage?
Ought to she be choosing up the examine to your dinner out now that she’s making $55000 a 12 months?
Is 55,000 {dollars} per 12 months a livable wage in 2023? What can you actually afford in the event you make 55k per 12 months?
Let’s break down how a lot $55,000 a 12 months actually is:
55,000 per 12 months = 26.44 per hour (40 hours per week)
55,000 per 12 months = 211.54 per day (8 hours per day)
55,000 per 12 months = 1,057.69 per week (52 weeks per 12 months)
55,000 per 12 months = 4,583.33 monthly (12 months per 12 months)
Sadly, the numbers above aren’t your true take residence pay. We nonetheless need to issue within the taxes that will likely be taken out of every paycheck. As soon as you are taking out taxes, what you will have left is your true take residence or “web” pay.
I estimate that 25% of our gross paycheck goes in the direction of taxes. This quantity is an estimate and the quantity you pay for taxes could possibly be larger or decrease, however 25% is an efficient place to begin.
So after taking out 25% for taxes, right here’s what you’ll clear on $55,000 per 12 months after taxes:
Per Hour: 26.44 x 25% taxes = 6.61 for taxes. 26.44-6.61 = $19.83 Internet Per Hour after taxes.
Per Day: 211.54 x 25% taxes = 52.89 for taxes. 211.54-52.89 = $158.65 Internet Per Day.
Per Week: 1,057.69 x 25% taxes = 264.42 for taxes. 1,057.69-264.42 = $793.27 Internet Per Week.
Per Yr: 4,583.33 x 25% taxes = 1,145.83 for taxes. 4,583.33-1,145.83= $3,437.50 Internet Per Month
The unhealthy information is that you simply’ll all the time need to pay taxes. The excellent news is that some states don’t have a tax on wages, so you might keep away from paying the state wage tax in the event you reside in one among these states.
The states that don’t at present tax wages are: Alaska (truly, you’ll be able to even receives a commission to relocate to Alaska), Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire, and Tennessee.
In case you are contemplating transferring to Tennessee, then it’s best to examine these execs and cons of residing in Tennessee.
Is 55,000 A Good Wage?
In line with the Bureau of Labor Statistics (BLS), the median wage for employees in the US within the 4th quarter of 2022 was $1,084 per week or $56,368 per 12 months (assuming 52 weeks of labor per 12 months). Wages have been 7% larger than a 12 months earlier in 2021.
In your specific state of affairs, it’s exhausting to say if 55,000 per 12 months is an efficient wage as a result of it’s all relative. And it largely is determined by what your accustomed to incomes. When you’re used to making 40K a 12 months, a wage of 55,000 might be unbelievable for you.
If nonetheless, you’re used to creating 70,000 per 12 months, getting used to a wage of 55,000 per 12 months will in all probability take some changes.
The excellent news is that we will present you the right way to finances to make 55,000 per 12 months be just right for you and your loved ones.
You’ll discover that the primary line of our finances is all the time financial savings. It is because we strongly imagine in paying your self first.
The one solution to get forward financially is to save lots of, save, and avoid wasting extra! Actually, we imagine in saving not less than 15% of your revenue, and 20% is even higher.
This finances exhibits the right way to save 15% and nonetheless be capable to pay for day-to-day life:
Internet Month-to-month Earnings: $3,437
Month-to-month Funds For A Couple
- Financial savings: $800
- Housing: $1,000
- Automotive Fee: $350
- Utilities: $200
- Insurance coverage: $200
- Cellphone: $50
- Meals: $350
- Private: $250
- Leisure: $225
Right here is identical $3,437, this time budgeted for a household of 4:
- Financial savings: $562
- Housing: $1,000
- Automotive Fee: $300
- Utilities $250
- Insurance coverage: $200
- Cellphone: $50
- Meals: $600
- Private: $250
- Leisure: $225
So you’ll be able to see that $55,000 per 12 months is a livable wage for {couples} or households however you’ll need to put forth some effort to make it work. First, you’ll need to arrange a finances so the place your cash goes.
Why Ought to I Have A Funds?
Folks hate the phrase finances, however with a finances you might be telling your cash what to do; not the opposite approach round. When you’ve got a month-to-month finances, you will have energy over your cash.
A easy finances could be very simple to create. Take a look at our easy finances templates.
Lots of people suppose making a finances limits them to what they will do with their cash. In my expertise, it’s simply the other. A finances is liberating!
What Precisely Is A Funds?
Merely write down your month-to-month revenue and subtract your month-to-month bills.
Don’t neglect to pay your self first and checklist your financial savings as the primary merchandise in your finances. That is your finances. The great thing about a finances is that you simply’re in management and you’ll swap up your finances at any time.
As an illustration, in the event you had a automotive mortgage and simply paid it off, guess what? Now you resolve what you need to do with that cash that was going in the direction of your automotive cost.
I’d all the time recommend placing any cash you now not want for payments straight into financial savings. Even in the event you don’t suppose it’s a lot cash, imagine me, it would add up over time!
What If I Can’t Afford To Save Cash?
You may’t afford NOT to save cash.
When you don’t lower your expenses, you’ll by no means have cash. Do you actually need to reside paycheck to paycheck? No approach!
You’re too sensible for that. So even in the event you’ve by no means been in a position to save cash up to now, beginning now, you’ll be able to practice your self to save cash.
Begin Small
Step one to saving is to determine an emergency fund.
This can be a fund to pay for any emergency so that you don’t need to borrow cash or use a bank card. Everyone knows that monetary troubles pop up on a regular basis so it’s essential to be ready.
Open a separate financial savings account that’s ONLY for use for emergencies. Purpose to construct up the fund so you will have not less than $1,000.00.
Take a look at the right way to save $1000 quick.
How Do You Improve Financial savings?
When you get the cling of sticking to your month-to-month finances and saving cash each month, you’ll in all probability need to improve your financial savings price.
There are many alternative ways you’ll be able to improve the sum of money you save every month. You might have to get artistic, or drastically minimize your bills however it would undoubtedly repay.
Attempt a Facet Hustle
Proper now I’m working a few aspect gigs that to assist pay for my journey to Florida this spring. I made a decision I didn’t need to use my pay from my full-time job and challenged myself to earn sufficient cash with a aspect gig to pay for the rental we’ll be staying at for a month this spring.
I’ve been working about 15-20 hours per week at my aspect gig since mid-September. I’m properly on my approach and it hasn’t been that tough! A few of the aspect gigs I’ve picked up are seasonal and solely short-term; others are everlasting part-time gigs.
When you’re unsure what sort of aspect hustle is best for you, use these lists to get the ball rolling:
Wrap Up
Now that you understand how a lot $55,000 per 12 months actually is, you’ll be able to resolve whether or not that may be a good wage for you and your loved ones. When you suppose it’s essential to earn extra to have the approach to life you want, you’ll be able to all the time decide up a aspect gig.
Another choice to think about is transferring to a metropolis and state the place the price of residing is decrease in order that the $55,000 per 12 months will go additional for you and your loved ones