So that you’re out with pals, have a pleasant dinner and chat.
Out of the blue, one in all your folks tells you that she simply received a brand new job and is making $55,000 a 12 months.
She is after all tremendous excited as a result of beginning a brand new job is a giant life occasion.
After she fills you in on all the main points of her new function, are you questioning if $55,000 a 12 months is an effective wage?
Now that she’s making $55,000 a 12 months, ought to she be choosing up the examine to your dinner?
Is $55,000 a 12 months a livable wage? What Can You Actually Afford When You Make $55,000 a 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 per thirty days (12 months per 12 months)
Sadly, the numbers above are usually not your true rewards. We nonetheless have to account for the taxes that can be deducted from every particular person paycheck. As soon as you’ve got deducted the taxes, you are left together with your true web revenue.
I estimate that 25% of our gross wage goes in direction of taxes. This quantity is an estimate and the quantity you pay in taxes might be kind of, however 25% is an effective place to begin.
So after subtracting 25% for taxes, this is what you get out of $55,000 per 12 months after taxes:
Per hour: 26.44 x 25% tax = 6.61 tax. 26.44-6.61 = $19.83 web per hour after tax.
Per day: 211.54 x 25% tax = 52.89 tax. 211.54-52.89 = $158.65 web per day.
Per week: 1,057.69 x 25% tax = 264.42 tax. 1,057.69-264.42 = $793.27 web per week.
Per 12 months: 4,583.33 x 25% taxes = 1,145.83 taxes. 4,583.33-1,145.83 = $3,437.50 web per thirty days
The dangerous information is that you simply at all times should pay taxes. The excellent news is that some states do not accumulate payroll taxes, so you possibly can keep away from paying state payroll taxes in the event you stay in a type of states.
The states that at present don’t tax wages are: Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire, and Tennessee.
Is 55,000 a very good wage?
In accordance with the Bureau of Labor Statistics (BLS), the median wage for employees in america within the first quarter of 2020 was $957 per week, or $49,764 per 12 months (assuming 52 weeks of labor per 12 months). Wages in 2019 have been 5.7% higher than within the earlier 12 months.
In your explicit scenario, it is exhausting to say if 55,000 a 12 months is an effective wage as a result of it is all relative. And it largely is determined by what you are used to incomes. When you’re used to creating 40,000 a 12 months, a wage of 55,000 might be incredible for you.
Nonetheless, in the event you’re used to creating 70,000 a 12 months, adjusting to a wage of 55,000 a 12 months will seemingly take some changes.
The excellent news is that we will present you methods to create a finances of 55,000 a 12 months for your self and your loved ones.
You will discover that the primary line of our finances is at all times financial savings. It’s because we firmly imagine that you have to pay your self first.
The one option to get forward financially is to save lots of, save and save extra! In truth, we imagine you need to save a minimum of 15% of your revenue, and 20% is even higher.
This finances exhibits how one can save 15% and nonetheless pay for on a regular basis life:
Month-to-month Web Revenue: $3,437
Month-to-month finances for a pair
- Saving: $800
- Residence: $1,000
- Automotive Cost: $350
- Utilities: $200
- Insurance coverage: $200
- Telephone: $50
- Meals: $350
- Private: $250
- Leisure: $225
This is the identical $3,437, this time budgeted for a household of 4:
- Financial savings: $562
- Residence: $1,000
- Automotive Cost: $300
- Utilities $250
- Insurance coverage: $200
- Telephone: $50
- Meals: $600
- Private: $250
- Leisure: $225
So you possibly can see that $55,000 a 12 months is a tolerable wage for {couples} or households, nevertheless it takes some effort to make it work. First, you need to set a finances so the place your cash goes.
Why ought to I’ve a finances?
Individuals hate the phrase finances, however with a finances you inform your cash what to do; not the opposite manner round. When you’ve got a month-to-month finances, you’re in command of your cash.
A easy finances may be very simple to create. Try ours easy finances templates.
Lots of people suppose that making a finances limits them to what they will do with their cash. In my expertise, it is precisely the alternative. A finances units you free!
What precisely is a finances?
Simply write down your month-to-month revenue and subtract your month-to-month bills.
Do not forget to pay your self first and put your financial savings first in your finances. That is your finances. The fantastic thing about a finances is that you’re in management and may change your finances at any time.
For instance, in the event you had a automotive mortgage and simply paid it off, guess what? Now you determine what to do with the cash used to pay to your automotive.
I might at all times recommend placing any cash you not want on payments straight right into a financial savings account. Even in the event you suppose it isn’t some huge cash, belief me, it is going to add up over time!
What if I can not afford to economize?
You’ll be able to’t afford NOT to economize.
When you do not lower your expenses, you’ll by no means have cash. Do you actually need to stay paycheck to paycheck? No manner!
You are too sensible for that. So even when you’ve got by no means been in a position to economize previously, you possibly can observe saving any more.
Begin small
Step one to saving is establishing an emergency fund.
It is a fund to pay for emergencies so you do not have to borrow cash or use a bank card. Everyone knows that financial emergencies crop up all of the time, so you want to be ready.
Open a separate financial savings account for use ONLY for emergencies. Attempt to construct the fund so that you’ve a minimum of $1000.00.
Watch methods to save $1000 quick.
The right way to improve financial savings?
When you get the cling of sticking to your month-to-month finances and saving cash every month, you may seemingly need to improve your financial savings fee.
There are numerous alternative ways you could improve the amount of cash you save every month. You might have to get inventive, proper drastically cut back your bills however it is going to undoubtedly repay.
Attempt a aspect hustle.
I am at present engaged on just a few aspect jobs to fund my journey to Florida this spring. Deciding I did not need to use my wage from my full-time job, I challenged myself to earn sufficient cash with a part-time job to pay for the apartment we’ll be staying in for a month this spring.
I have been working about 15-20 hours every week at my part-time job since mid-September. I am heading in the right direction and it wasn’t that tough! A few of the aspect gigs I’ve taken on are seasonal and momentary; others are everlasting part-time gigs.
Try: Aspect jobs to earn cash on the aspect
Wrap up
Now that you understand how a lot $55,000 a 12 months actually is, you may make an knowledgeable choice about whether or not that is a very good wage for you and your loved ones. When you really feel you want to earn extra to stay the approach to life you need, you possibly can at all times take a part-time job.
Another choice to contemplate is transferring to a metropolis and state the place the price of residing is decrease in order that the $55,000 a 12 months will stretch additional for you and your loved ones