So you’re having a nice dinner with your friends and catching up.
Out of the blue, one of your friends just got a new job and says he makes $55,000 a year.
Of course, starting a new job is a big event in life, so she’s very excited.
After she fills you in on all the details of the new role, you’re left wondering.
Should she take your check for dinner now that her annual income is $55,000?
Is $55,000 a year a living wage in 2023?
Let’s analyze 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 are not your true take home amount. We have to take into account taxes that are deducted from every paycheck. What remains after deducting taxes is your true take home or “net” payment.
I estimate that 25% of our gross salary goes to taxes. This amount is an approximation and your tax liability may be higher or lower, but 25% is a good starting point.
So, after deducting 25% tax, the amount you can clear for $55,000 a year after tax is:
Per hour: 26.44 x 25% tax = 6.61 tax. 26.44-6.61 = $19.83 net per hour after tax.
Per day: 211.54 x 25% tax = 52.89 tax. 211.54-52.89 = $158.65 net per day.
Per week: 1,057.69 x 25% tax = 264.42 tax. 1,057.69-264.42 = $793.27 net per week.
Annual: 4,583.33 x 25% tax = 1,145.83 tax. 4,583.33-1,145.83= $3,437.50 per month
The bad news is that you always have to pay taxes. Fortunately, some states do not impose a tax on wages, so if you live in one of these states, you may not have to pay state wage tax.
Here are the states that currently don’t tax wages: Alaska (actually get paid to move to Alaska), Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire, Tennessee.
Check these out if you’re considering moving to Tennessee. Pros and Cons of Living in Tennessee.
Is 55,000 a good salary?
According to the Bureau of Labor Statistics (BLS), average wage In the fourth quarter of 2022, a U.S. worker was making $1,084 per week or $56,368 per year (assuming 52 weeks of work per year). Wages for 2021 are 7% higher than the previous year.
It’s hard to tell if an annual income of 55,000 is appropriate for your particular situation. Because this is all relative.And it depends a lot on what you’re used to earning. make 40K a yeara salary of 55,000 is probably great for you.
However, if you’re used to earning 70,000 a year, getting used to earning 55,000 a year will require some adjustments.
The good news is we can show you how to budget to make $55,000 a year work for you and your family.
The first line of any budget is always savings. This is because we strongly believe in paying ourselves first.
The only way to be financially successful is to save, save, and save more! In fact, we think you’ll save at least 15% of your income, and 20% is even better.
This budget shows how you can save 15% and still pay for your daily life.
Net Monthly Income: $3,437
monthly budget for couples
- Savings: $800
- Housing: $1,000
- Car payment: $350
- Utility bill: $200
- Insurance: $200
- Phone: $50
- Hood: $350
- Individual: $250
- Entertainment: $225
That’s the same $3,437, this time budget for a family of four.
- Savings: $562
- Housing: $1,000
- Car payment: $300
- Utilities $250
- Insurance: $200
- Phone: $50
- Meal: $600
- Individual: $250
- Entertainment: $225
So $55,000 a year can prove to be a liveable wage for couples and families, but it takes some effort to make it work. First, set a budget so you know where your money is going.
Why should I budget?
People hate the word budget. not the other way around. With a monthly budget, you can manage your money.
A simple budget is very easy to create.check us out simple budget template.
Many people think that having a budget limits what they can do with their money. In my experience it’s the exact opposite. Budget free!
What exactly is a budget?
Simply write down your monthly income and subtract your monthly expenses.
Pay yourself first and remember to list your savings as the first item in your budget. The advantage of budgets is that you are in control and can change your budget at any time.
For example, if you had a car loan and you just paid it off, how would you feel? Now decide what to do with the money that was used to pay for the car.
I always recommend putting money you no longer need into savings for bills.
What if I can’t afford to save money?
You can’t help but save money.
If you don’t save money, you have no money. Do you really want to live paycheck to paycheck? no way!
You are too smart for that. Even if you weren’t able to save money in the past, you can train yourself to do so now.
start small
The first step to saving is establishing an emergency fund.
This is an emergency fund so you don’t have to borrow money or use credit cards. We all know that financial problems will always arise, so you need to be prepared.
Open a separate savings account for emergency use only. Aim to build up to at least $1,000.00.
check out How to save $1000 fast.
How do you increase your savings?
Once you’ve learned how to stick to your monthly budget and save money each month, you’ll probably want to increase your savings rate.
There are many ways to increase your monthly savings.you may need to get creative, or Significantly reduce expenses But it definitely pays off.
try side hustle
Right now, I’m working some side jobs to help cover my trip to Florida this spring. I decided I didn’t want to use my paycheck from my full-time job and this spring he ventured into making enough money on the side to pay for the condo he stayed in for a month.
I’ve been working 15-20 hours a week on side gigs since mid-September. I’m doing well and it’s not too difficult! Some of the side jobs I’ve covered are seasonal and temporary. Others are permanent part-time gigs.
If you’re not sure what kind of side hustle is right for you, use the following list to get the ball rolling.
wrap up
Now that you know what $55,000 a year really is, you can decide if it’s a good salary for you and your family. If you think you need to earn more to achieve the lifestyle you want, you can always start a side business.
Another option to consider is moving to a city or state with a lower cost of living. This makes $55,000 a year more useful for you and your family.
