# How Much an Hour is 40000 a Year and What is 40000 Salary Hourly

Sometimes I get a question how much an hour is 40000 a year?

I will tell you shortly how to find out your pay per hour

Is it enough or not? “It all depends on where you live”

First, when looking for a new job opportunity, it is a huge mistake to take the net salary before taxes and divide it by 2000

Bear with me, I will tell you where the 2000 came from?

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In this post, I will discuss how to calculate 40000 salary hourly in the right way

## How much is 40000 salary hourly?

Before we start, it is common to assume and generalize working hours as 40 hours per week with 2 days as weekend

This is 8 hours a day excluding half an hour or an hour break times 5 days a week

So, 8 x 5 is 40 hours, multiply it by 52 weeks per year, we get 40 x 52 = 2080 hours

The 2000 mentioned above came from rounding 2080 to make it easy to do the division process

Plus the fact that all companies give 2 weeks vacations so it is not rounding issue

It is in fact 50 weeks of work during the year

For example, if I divide 40,000 over 2,000 you can come up with the result without using calculator

You remove the 3 leading zero, so it becomes 40 / 2 = \$20 an hour

In fact, even if I do 40,000 / 2080 = \$19.23, this is not the correct amount, why?

Because we ignored the taxes and it varies vastly from a state or province to another

In Canada, it can be an average of 19.5% so you earn \$40,000 annual salary but there is \$7,792 cut from source

It end up that your take \$32,208 in your hand – deposited into your bank account

## Is 40000 a good salary?

It depends where you live, I live in Canada in the GTA (Great Toronto Area)

It is very minimum and it barely hard to live with but why?

Simply because it all depends on the cost of the basic shelter needs like rent/mortgage, food and transportation

The latter represented in car insurance if you own a car and car loan payment if any

\$32,208 in Ontario, particularly in GTA means you get 26 biweekly payment each is equal to \$1,238.76

It is hard to find a cheap rent like \$800 unless it is a basement

Realistically expect to pay around \$1,400 in rent so this means you have to deduct \$700 from each paycheck

Leaving you with around \$538.76 and if you drive a used car, you need around \$250-\$300 as a car insurance

That's another \$125 from each paycheck leaving you with \$413.76 for the food and gas in your car – I know I neglected the entertainment and miscellaneous expenses

On the other side, in Montreal, a different province you can earn the \$40,000 but still pay way less in rent like \$500 and like \$50 for car insurance

So, if I deduct \$275 from every paycheck \$1,238.76, you still have 963.76

I cannot believe it, you save \$550 in every paycheck – that's really unfair

## How to budget \$40,000 on monthly basis?

Again, it is hard to budget generically as I proved above that location matters

Since I don't know where you live, I will assume your rent/mortgage is \$1200 which is almost 40% of your monthly income \$2,477.52

Keep in mind, I stretched your rent to the maximum of 40%

Savings of 10% = \$247
Rent/ Mortgage= \$1,000 (40% of income)
Utilities= \$180 – I deducted it \$20 dollars to adjust the total
Car Payment= \$200
Car Insurance= \$100
Health Insurance= \$200
– no health insurance in Canada so this number goes to Car insurance in province like Ontario
Cellphone= \$50
Internet= \$50
Gas= \$100
Groceries= \$250
Personal & Misc= \$50
Entertainment= \$50

Total = \$2,477

It took me a hard time to tweak all amounts to fit in the \$2,477

Good news, you will get 2 extra payments during the year because you get paid biweekly, usually on Friday so you got 26 weeks

If you deduct 10% automatically from every paycheck, what we call it pay yourself first

In my opinion, even \$40,000 in a city like Montreal looks like you have enough room for other things like increasing your savings but it is still minimum wage

Everybody deserves to live better life, it is OK if it is your starting job

Definitely go for \$40,000 as a start up to gain experience but don't stay on that level for too long

Actually the 70000 a year is way better in budgeting

## How to live with \$40,000 salary a year?

It is not a matter of how much an hour is 40000 a year, what really matters is how are you going to live with \$40,000 salary a year

You can live with \$40,000 only if you apply the below methods one by one – these are mandatory not optional to guarantee that you stay out debt

1. First create a budget and stick to it – no kidding here
2. Force yourself to save money and live frugally
3. Do your best to lower your bills and reduce expenses
4. Start building your emergency fund
5. If you follow step 1 to 4 and still not able to cope with your salary, then you must follow the cash envelope method

Finally, if you like this post then you may like this post about 28 dollar an hour and how much per year?

##### Michael Dinich

Michael launched Wealth of Geeks to make personal finance fun. He has worked in personal finance for over 20 years, helping families reduce taxes, increase their income, and save for retirement. Michael is passionate about personal finance, side hustles, and all things geeky.