Is $55k a Year A Good Salary? How Much is it Per 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 $55,000 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 $55,000 per year a good salary? 

Should she be picking up the check for your dinner out now that she’s making $55000 a year?  

Is 55,000 dollars per year a livable wage in 2023?  What can you really afford if you make 55k per year?

Let’s break down how much $55,000 a year really is: 

55,000 per year = 26.44 per hour (40 hours per week)

55,000 per year = 211.54 per day (8 hours per day)

55,000 per year = 1,057.69 per week (52 weeks per year)

55,000 per year = 4,583.33 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 paycheck.  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 $55,000 per year after taxes:

Per Hour:  26.44 x 25% taxes = 6.61 for taxes.  26.44-6.61 = $19.83 Net Per Hour after taxes.

Per Day:  211.54 x 25% taxes = 52.89 for taxes.  211.54-52.89  = $158.65 Net Per Day.

Per Week:  1,057.69  x 25% taxes = 264.42 for taxes.  1,057.69-264.42 = $793.27 Net Per Week.

Per Year:  4,583.33  x 25% taxes = 1,145.83 for taxes. 4,583.33-1,145.83=  $3,437.50 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 don’t currently tax wages are: Alaska (actually, you can even get paid to relocate to Alaska), Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire, and Tennessee.

If you are considering moving to Tennessee, then you should check these pros and cons of living in Tennessee.

Is 55,000 A Good Salary?

According to the Bureau of Labor Statistics (BLS), the median wage for workers in the United States in the 4th quarter of 2022 was $1,084 per week or $56,368 per year (assuming 52 weeks of work per year). Wages were 7% higher than a year earlier in 2021.

For your particular situation, it’s hard to say if 55,000 per year is a good salary because it’s all relative.  And it largely depends on what your accustomed to earning.  If you’re used to making 40K a year, a salary of 55,000 is probably fantastic for you. 

If however, you’re used to making 70,000 per year, getting used to a salary of 55,000 per year will probably take some adjustments. 

The good news is that we can show you how to budget to make 55,000 per year work for you and your family. 

You’ll notice that the first line of our budget is always savings.  This is because we strongly believe in paying yourself first. 

The only way to get ahead financially is to save, save, and save some more!  In fact, we believe in saving at least 15% of your income, and 20% is even better.

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

Net Monthly Income:  $3,437

Monthly Budget For A Couple

  • Savings:  $800
  • Housing:  $1,000
  • Car Payment:  $350
  • Utilities:  $200
  • Insurance:  $200
  • Phone:  $50
  • Food:  $350
  • Personal: $250
  • Entertainment:  $225

Here is the same $3,437, this time budgeted for a family of 4:

  • Savings:  $562
  • Housing:  $1,000
  • Car Payment:  $300
  • Utilities $250
  • Insurance:  $200
  • Phone:  $50
  • Food:  $600
  • Personal:  $250
  • Entertainment:  $225

So you can see that $55,000 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.  Check out our simple budget templates.

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 troubles 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 $1,000.00.

Check out how to save $1000 fast.

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, or drastically cut your expenses but it will definitely pay off.

Try a Side Hustle 

Right now I’m working a couple of side gigs that 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. 

If you’re not sure what kind of side hustle is right for you, use these lists to get the ball rolling:

Wrap Up

Now that you know how much $55,000 per year really is, you can decide whether that is a good salary for you and your family.  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 $55,000 per year will go further for you and your family

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