Is a $40K Per Year Salary Good?

The Bureau of Labour Statistics states that the median salary for workers in the US is around $1,041 weekly, which equates to $54,132 annually. 

But what if you’re not being offered that much? Should you still take a job that pays less than the industry average? What if you’re being offered almost 14k lower than the average? Is a $40K salary good or enough to live on?

If these questions are constantly on your mind, then don’t worry! This article was written with people like you in mind.

In this post, I’ll break down the answer to “Is a $40k salary good?” and provide tips on how to make the most out of a $40k annual income.

Let’s dive in. 

Is a $40K Salary Good? 

Generally speaking, a $40K is considered below average in the US and will probably leave you strapped for cash. However, depending on your marital status, location, industry, and monthly rent or mortgage situation, $40,000 can be enough.

Casio calculator on a white table next to a stack of $50 bills while a person writes on a small notepad

For example, if you are a single adult living alone, $40K would be enough to feed yourself and bear all monthly expenses. Plus, if you aren’t living in an expensive US city, you might actually even do well within the given salary.

But, people with a family living in a high-cost area would struggle to make both ends meet. And if you’re someone with considerable experience in your industry, $40k annually is not a good income because it’s typically the starting income for most entry-level positions.

How Much Rent Can I Afford On A $40,000 Salary?

You can afford to pay $690-$710 monthly rent when making $40K monthly.  

  • If you don’t have your own place, the biggest chunk of your salary will go towards rent payments. 
  • It’s essential to determine how much rent you’re going to be paying monthly first to determine whether or not a $40k salary is enough for you to survive on.
  • As a general rule of thumb, your monthly income must be higher than or equal to 3 times the rental costs. 

Therefore, if you make $40K yearly, you can afford to pay around $1,111 monthly. Depending on where you’re currently living, that might not actually sound too bad. 

However, you need to keep in mind that if you’re going to pay that figure monthly, depending on the rest of your spending habits, you might not have much left to pay your other debts and bills or save for the future. 

So, if you’re someone who likes having a bit of extra savings in the account, it’s best to keep your rent to less than or equal to 25% of your monthly salary.

A person holding a gold pen is calculating money using a blue calculator that is placed on top of a brown wooden table

For instance, if you make $2,775 minus the taxes from $40K annually, your rent should be around $690. 

Yes, the figure is low, but you’ll have to find a place that fits that bill if you want to have a bit more financial freedom and build wealth in the long run.

Best American Cities To Live Well on a $40K Salary

I’ve just calculated that you need to keep your monthly rent budget capped at $690 to live well when making $40K yearly. 

And while finding a rental area with the exact figure might be challenging, a few cities offer a figure close to the calculated amount.

Some of the best US cities to survive well while making $40K include. 

  • Wichita, Kansas. People residing in Wichita pay around $598 on average monthly for rent. 
  • Springfield, Missouri. You can expect to pay around $701 for monthly rent in Springfield. 
  • Ames, Iowa. Living in Iowa will cost you around $710 in 2022. A few areas, however, may have higher rent. So make sure you do your research. 
  • Lubbock, Texas. The cheapest rent in Lubbock is around $751. 
  • Montgomery, Alabama. The rental cost in Montgomery was around $690 in 2021, which surged in 2022. However, with a bit of luck and persistence, you should still be able to find a decent rental place between $690-$710. 

US Cities Where A $40K Salary Is Not Enough

Ensure you avoid a few American cities at all costs if you’re making $40K annually. Although the following cities offer a better standard of living, they’ll definitely hurt your bank balance. 

  • Jersey City, New Jersey. The average rental costs in Jersey City have skyrocketed in 2022, hitting $5,500 monthly. 
  • Boston stands second on the list of cities with high rental costs, with $4,878 monthly rent. 
  • New York. The average rental costs in New York hit a record high, peaking at $3,875 monthly for a single-bed apartment in October 2022. 
  • California. Expect to pay somewhere between $1,583-$3,578 monthly while residing in some city in California.
A person pressing the black scientific calculator near money and a small notebook, and a silver pen on top of a white table

How Much Of A Mortgage Can I Afford On A $40K Salary?

You can afford to pay between a $100K-$120K mortgage with a $40K gross income yearly. 

However, this is a rough estimate; the precise costs depend on your current financial situation. You must consider the maintenance and tax expenses to determine how much you can pay. 

A few financial experts advise spending 28% (more on this below) of your monthly gross earnings on the mortgage. This way, you’ll end up spending $933 monthly with a $40,000 annual salary.

$40K A Year Salary Is How Much An Hour After Taxes?

A $40,000 a year salary is roughly $19.23 an hour before taxes. 

To understand your hourly pay after taxes, you must first figure out $40K as an hourly age. 

To do this, divide $40K by 40 hours and 52 weeks. So, if you work 40 hours a week full-time, earning $40K annually would give you $19.23 hourly. 

But this is where things can get a bit confusing because taxes vary from state to state. So if you’re working in Hawaii (one of the highest taxing states), you’ll earn much more hourly than you would if you had a job in South Dakota.

Check out for more information about individual state income tax rates and brackets.

Tell Me The 28/36 Rule And How I Can Use It On A $40K Salary 

  • The 28/36 rule helps assess how much debt a family can safely take depending on their lifestyle, earnings, and other debts. 
  • The rule highlights that a household should spend a maximum of 28% of its monthly earnings on household expenses. 
  • They must also not spend more than 36% on debt services like car loans, credit cards, and other related debts. 
A person sitting on a blue couch wearing a black shirt and black pants is handing money to a person wearing a gold bracelet near a brown wooden table

Not only does it help consumers plan their budgets and improve savings, but it also helps lenders determine whether to lend credit to borrowers. 

You can apply the 28/36 on your $40K salary by spending no more than $933 on housing expenses and around $297 monthly on debts.

Frequently Asked Questions

Can I Live Comfortably Making $40K a Year? 

You can live comfortably, making $40K yearly as a single person living in the US. However, you must be smart with budgeting and choosing your residence location.

Ideally, choose a city with low rental costs, plan your budget monthly you can use the 50/30/20 rule for budgeting, and stick to it. Proper budgeting will provide you with a roadmap, helping you see how much money comes in and goes. It also helps track the yearly progress to make sure you meet your long-term financial goals. 

How Can I Make the Most of a $40,000 Salary?

You can make the most of a $40K salary by tracking your spending, cutting down expenses, and building your savings. 

You’ll easily overspend if you don’t learn to budget. Plan how you’ll spend each dollar earned to minimize extra spending. Cutting down expenses certainly helps. Return to effort matrix can help you budget your money smarter.

For instance, if you spend $3 at a coffee shop regularly to purchase a cup of coffee, consider making a cup at home instead. In fact, my research has found that cutting out your daily takeaway coffee can save you between $240 and $1,200 a year

Other valuable tips to make the most of your $40,000 salary: 
Take a good, long look at your monthly subscriptions. They all add up.

If you’re a smoker, consider quitting. You could save yourself a hefty $2,292 a year Likewise, eat out less, purchase bulk items at grocery stores, and use coupons to make the most of your earnings. 

The Takeaway: Is A $40k Salary Good?

Well, to be honest, a $40K salary isn’t bad, but it isn’t the best salary you’re being offered in the US. 

The salary is below average for experienced professionals and those residing in expensive US cities. So, you’ll probably struggle to get by if you have a family to feed alongside a mortgage and debt to pay. 

However, single individuals with a knack for budgeting or families that live in an affordable city in America can survive well while making $40,000 yearly. 

Still, it isn’t the perfect pay for a large household, and you should definitely try a counteroffer for a bigger salary if possible.

Jason is a contributor at PFGeeks and has been figuring out ways to make money since the age of 12 when he organised a Connect 4 tournament in his school class. From the age of 15, he set up and ran a successful mobile Disco company that focused on everything from local parties to (eventually) corporate events for brands like Google and Hilton. Fast forward to 2020 and Jason went from part time writing to going all in on the content industry - it was a pandemic pivot that so far is reaping him rewards. For many years he was also a Radio producer and researcher, and it's this "leave no stone uncovered" methodology that Jason now brings to all his writing - believing that deep analysis is key to a strong article. When he's not brushing up on the latest Finance news or feeding his entrepreneurial side, Jason loves to solo travel, geek out on SEO trends and get some exercise in with long walks.

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