20 an Hour is How Much a Year? Is it Good Enough in 2023?

Whether you're considering applying to a job that pays $20 hourly or currently get paid this amount, it's helpful to know how much this converts to annually for budgeting purposes.

20 an hour is how much a year? That's the question we'll answer. Even more importantly, we'll cover easy budgeting tips that will help you stretch every dollar if you make a $20 hourly rate.

With 2023 on the horizon and the cost of living, buying groceries, and everyday expenses still high, it's detrimental to save and budget more than ever. Whether you make $20 an hour or are a six-figure earner, this is true.

20 an Hour Is How Much a Year?

Employees who make $20 an hour at work earn an annual salary of $41,600.

This yearly salary is gross income, meaning taxes must still be removed.

In addition, to make this annual income, the person would receive pay for 40 hours a week for all 52 weeks of the year.

This amount does not include any overtime pay or bonuses.

One important thing to remember is just because you make $20 an hour doesn't mean you'll earn $41,600.

If you didn't get paid 40 hours a week all 52 weeks of the year, whether it be hours worked, paid vacation, holiday pay, or sick pay, then your annual income will differ.

For example, an employee who is compensated $20 an hour but whose work week consists of 30 hours for only 50 weeks out of the year will make a lot less than someone with a work schedule of 40 hours per week.

Here's how to quickly figure out a yearly salary for employees making $20 an hour. This method will work whether you fit into the perfect example above or if the number of hours worked per year differs.

Step 1

You must know the total number of hours worked for the year. This also includes any paid sick time and vacation time.

To calculate this, multiply 40 hours worked per week by 52 weeks, which equals 2,080 working hours.

Step 2

Now that you know the total yearly hours worked multiply that amount by $20.

So, 2,080 multiplied by $20 is equal to $41,600.

Other $20 Hourly Breakdowns

If you have a job with a pay rate of $20 an hour, knowing the annual salary and other pay breakdowns is helpful.

• Gross monthly wage: $3,466.67

How to calculate: Divide $41,600 by 12 months.

• Gross biweekly pay (every two weeks): $1,600

How to calculate: Multiply $20 by 80 hours.

• Gross weekly pay: $800 

How to calculate: Multiply $20 by 40 hours.

• Gross pay per day: $160

How to calculate: Multiply $20 by eight hours.

The shortcut To Calculating 20 Dollars an Hour is How Much a Year

This wage calculator is helpful if you'd rather not do any math.

The salary calculator will list your gross annual wage and other breakdowns such as daily wage, weekly wage, monthly salary, quarterly earnings, and more.

Remember that the paycheck calculator only gives you gross pay, not a net wage.

$20 an Hour is How Much a Year After Taxes?

So far, we've covered that an hourly compensation of $20 equals a yearly gross income of $41,600, but what about after taxes?

To determine the take-home pay, you must establish how much federal and state income tax, if applicable, is taken out of your paycheck.

Once you've figured out an estimate of your state and income taxes, you'll need to deduct it from your gross wages.

Federal Income Taxes

Looking at the 2023 federal income tax brackets will give a rough estimate of how much your income will be after taxes.

Because everyone's tax situation is different depending on their deductions and other factors, your salary calculation will likely be an estimate, not an exact figure.

Your filing status and income determine the rate at which you'll be taxed. Below are the breakdowns based on filing status.

Single and Married Filing Separately

• The first $11,000 is taxed at 10%.
• The remaining income, $30,600, is taxed at 12%.
• Taxes Due: $4,772
• After-tax income: $36,828

Married Filing Jointly

• The first $22,000 is taxed at 10%. 
• The remaining income, $19,600, is taxed at 12%. 
• Taxes Due: $4,552
• After-tax income: $37,048

Head of Household 

• The first $15,700 is taxed at 10%. 
• The remaining income, $25,900, is taxed at 12%.
• Taxes Due: $4,678
• After-Tax Income: $36,922

State Income Taxes

If you live in a state with no income tax, you only need to determine the federal income tax.

These states do not have income tax:

• Alaska
• Florida
• Nevada
• New Hampshire
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

If you live outside the states mentioned, you must determine how much state tax is taken from your paycheck.

Another way to determine how much you are taxed is to look at your paychecks from the most recent pay period and see the amount of taxes taken out of each paycheck.

Occupations With an Hourly Salary of $20 per Hour

Here are some occupations with average hourly earnings of $20 per hour.

The U.S. Bureau of Labor Statistics lists even more jobs that make $20 per hour and the average salaries, employment statistics, and other salary information for different careers.

Occupation and Average Hourly Wages

Rock Splitters, Quarry – $20.02

Skincare Specialists – $20.05

Correspondence Clerks – $20.06

Tutors – $20.09

Order Clerks – $20.11

Dental Assistants – $20.44

Preschool and Kindergarten Teachers – $20.70

Financial Clerks – $20.84

Word Processors and Typists – $20.85

Office and Administrative Support Occupations – $20.88

Occupations With an Average Salary of $20 Hourly, U.S. Bureau of Labor Statistics

Saving and Budgeting Tips if You Make $20 an Hour

Establish the best budgeting style for you.

People often need to improve at budgeting because they will use a system that doesn't make sense.

Feel free to experiment with different ways to budget.

The first budget system you try may be the winner. If not, it just comes down to trial and error. But, pretty soon, you'll find the optimal way to keep track of your spending.

Below are a few different ways to keep track of your budget if you make $20 an hour.

• Budgeting apps are easy and convenient, especially if you need help figuring out where to start.
• Excel spreadsheets are excellent for analytical-minded people who need structure regarding budgeting.
• The cash envelope system works well for visual learners who like to physically see their money in each category versus looking at a budgeting app.
• Creating a budget binder is best suited for people who do better at writing everything out with a pen and paper.

Having an emergency fund is necessary when making $20 an hour.

Whether you make $70,000 annually or a $20 hourly wage, having an emergency fund is always a good idea.

But it's even more critical for someone making $20 an hour because if you're already stretching your budget, an unforeseen expense can put you in a rough financial spot.

To make establishing an emergency fund less overwhelming, try taking a $1000 money-saving challenge.

By the end of the challenge, you'll have a $1000 emergency fund, and after that, you can keep adding funds to it every month.

Build up residual income, and don't just rely on your $20 an hour job. 

Depending on where you live and your expenses, you may need more than $20 an hour, especially if you live in a single-income household.

Building some residual income will help you go from just getting by financially to having extra money in the bank.

Residual income is the money made after your initial investment, whether time or money.

Some residual income ideas include:

• Investing in real estate and stocks
• Selling digital products on Etsy or other platforms
• Starting a blog

Building residual income is not an option, so you should inquire about a wage increase if you're employed.

Minimum Wage Comparison

How does a $20 hourly wage stack up to the current minimum wage rates?

Federal minimum wage rate: $7.25 per hour

According to the Department of Labor, the federal minimum hourly pay rate is in the Fair Labor Standards Act.

State minimum wage rate: Varies state to state

State minimum wage laws widely vary. Some states like Tennessee and Louisiana don't have state minimum wage, so they use the federal minimum wage rate.

Although not a state but a district, Washington, D.C., has the highest minimum wage at $16.10. California has the highest state minimum wage at $15.50.

While making $20 an hour is better than state or national minimum wage, it doesn't necessarily mean that either is a livable wage.

Is $20 an Hour Enough in 2023?

While you need to know “20 an hour is how much a year?”, it's also valuable to understand if this salary is enough money to live on.

For most Americans, high inflation directly translates to a higher cost of living. Living costs include basic expenses such as housing, medical care, groceries, paying taxes, etc.

As you might have guessed, the cost of living is a huge factor in determining if making $20 hourly is a good salary.

For example, if you live in Utah, Nevada, or Florida, the cost of living for these states is relatively cheap compared to California, Hawaii, and New York.

So, depending on your location, $20 an hour or a yearly wage of $41,600 may be a good salary. Still, if you live in an expensive part of the country, you may need more money than this to cover basic necessities.

However, the savings and budgeting tips above will help you stretch your $20 hourly wage.

Lastly, making some side money by becoming a freelancer or starting your own business can help you balance the impact of high inflation on your everyday living expenses in 2023 and beyond.

This article was produced and syndicated by Wealth of Geeks.