Is $45,000 a Year a Good Salary?

TL;DR: If you just came for the short answer to $45,000 dollars an year is how much a hour? Short Answer: $21,63 before taxes.

$45,000 a Year is How Much an Hour

So, you’re out with friends having a nice dinner and catching up. 

Out of the blue, one of your friends tells you that she just got a new job and she’s making $45,000 per year. 

She’s super excited, of course because starting a new job is a major life event. 

After she fills you in on all the details of her new role, you start wondering, is $45,000 per year a good salary? 

Should she be picking up the check for your dinner out now that she’s making $45,000 a year?  

Is 45,000 dollars per year a livable wage?  What can you really afford if you make 45k per year?

$45,000 a year Is How Much an hour: 

Hourly: $45,000 per year = $21.63 per hour (40 hours per week)

Daily: $45,000 per year = $173.08 per day (8 hours per day)

Weekly: $45,000 per year = $865.38 per week (52 weeks per year)

Monthly: $45,000 per year = $3,750.00 per month (12 months per year)

Unfortunately, the numbers above aren’t your true take home pay.  We still have to factor in the taxes that will be taken out of each and every pay check. 

Once you take out taxes, what you have left is your true take home or “net” pay. 

I estimate that 25% of our gross paycheck goes towards taxes.  This amount is an estimate and the amount you pay for taxes could be higher or lower, but 25% is a good starting point. 

So after taking out 25% for taxes, here’s what you’ll clear on $45,000 per year:

Per Hour:  21.63 x 25% taxes = 5.41 for taxes.  21.63-5.41 = $16.22 Net Per Hour.

Per Day:  173.08 x 25% taxes = 43.27 for taxes.  173.08-43.27  = $129.81 Net Per Day.

Per Week:  865.38  x 25% taxes = 216.35 for taxes.  961.53-240.38 = $649.04 Net Per Week.

Per Month:  3750.00  x 25% taxes = 937.50 for taxes. 3750.00-1041.50=  $2812.50 Net Per Month.

The bad news is that you’ll always have to pay taxes. The good news is that some states don’t have a tax on wages, so you may avoid paying the state wage tax if you live in one of these states. 

The states that currently don’t tax wages are: Alaska, where residents even get paid for living thanks to the state’s Permanent Fund Dividend; Florida; Nevada; South Dakota; Texas, an exciting place to live with its vast landscapes and cities; Washington; Wyoming; New Hampshire; and Tennessee, known as a wonderful place to raise a family.

Read: $40,000 a year is how much an hour

Can You Live on $45,000 a Year?

According to the Bureau of Labor Statistics (BLS), the median wage for workers in the United States in the second quarter of 2023 was $1,100 per week or $57,200 per year (assuming 52 weeks of work per year), which is 5.7% higher than a year earlier.

Consequently, an annual income of $45,000 is below the national median.

But, the real question is: Can this amount sustain a comfortable lifestyle?

The answer isn’t straightforward. For your particular situation, it’s hard to say if $45,000 per year is a good salary because it’s all relative.

For instance, if you’re accustomed to earning $30,000 annually, jumping to $45,000 might feel like a significant upgrade.

You’d have more financial wiggle room, the potential for better savings, and maybe even some left over for leisure or luxury.

Conversely, if your previous salary was closer to $50,000, downshifting to $45,000 could demand tighter budgeting and financial adjustments.

However, whether you see this amount as an upgrade or a step down, managing finances wisely is key.

We’re here to guide you on stretching that $45,000 to its maximum potential.

It’s heartening to know that with prudent budgeting and financial discipline, you can not only manage but thrive on this income.

One of the paramount budgeting principles we uphold is the “pay yourself first” method.

Always prioritize savings. Before diving into spending, set aside a portion of your income.

We recommend saving at least 15% of your total earnings. If you can push that to 20%, even better!

This budget shows how to save 15% and still be able to pay for day to day life:

Net Monthly Income:  $2,812

Monthly Budget For A Couple

Here is the same $2,812.00, this time budgeted for a family of 4:

  • Savings: $420
  • Housing: $800
  • Car Payment: $300
  • Utilities: $250
  • Insurance: $200
  • Phone: $40
  • Food: $400 (Get this Cheapest Groceries List)
  • Personal: $200
  • Entertainment: $200

So you can see that $45,000 per year is a livable wage for couples or families but you’ll have to put forth some effort to make it work.

First, you’ll want to set up a budget so you know where your money is going.

Why Should I Have A Budget?

People hate the word budget, but with a budget you are telling your money what to do; not the other way around. 

If you have a monthly budget, you have power over your money.  A simple budget is very easy to create.  

A lot of people think creating a budget limits them to what they can do with their money.  In my experience, it’s just the opposite.  A budget is freeing!

What Exactly Is A Budget?

Simply write down your monthly income and subtract your monthly expenses. 

Don’t forget to pay yourself first and list your savings as the first item on your budget. This is your budget. The beauty of a budget is that you’re in control and you can switch up your budget at any time. 

For instance, if you had a car loan and just paid it off, guess what?  Now you decide what you want to do with that money that was going towards your car payment. 

I’d always suggest putting any money you no longer need for bills straight into savings.  

Even if you don’t think it’s much money, believe me, it will add up over time!

What If I Can’t Afford To Save Money? 

You can’t afford NOT to save money. 

If you don’t save money, you will never have money. Do you really want to live paycheck to paycheck? No way! 

You’re too smart for that.  So even if you’ve never been able to save money in the past, starting now, you can train yourself to save money. 

Start Small

The first step to saving is to establish an emergency fund. 

This is a fund to pay for any emergency so you don’t have to borrow money or use a credit card. 

We all know that financial emergencies pop up all the time so you need to be prepared. 

Open a separate savings account that is ONLY to be used for emergencies.  Aim to build up the fund so you have at least $1000.00.

How Do You Increase Savings?

Once you get the hang of sticking to your monthly budget and saving money every month, you’ll probably want to increase your savings rate. 

There are lots of different ways you can increase the amount of money you save each month. 

You may have to get creative by trying a penny challenge but it will definitely pay off.

Related: How to save $5k in 6 months

Try a Side Hustle

Right now I’m working a couple of side gigs to help pay for my trip to Florida this spring. 

I decided I didn’t want to use my pay from my full-time job and challenged myself to earn enough money with a side gig to pay for the condo we’ll be staying at for a month this spring. 

I’ve been working about 15-20 hours per week at my side gig since mid-September.  I’m well on my way and it hasn’t been that hard!

Some of the side gigs I’ve picked up are seasonal and only temporary; others are permanent part time gigs. 

Wrap Up

While $45,000 might be below the median national wage, with the right strategies and mindset, it’s more than possible to live comfortably and secure your financial future.

If you think you need to earn more to have the lifestyle you desire, you can always pick up a side gig. 

Another option to consider is moving to a city and state where the cost of living is lower so that the $45,000 per year will go further for you and your family. 

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