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20 Dollars An Hour Is How Much A Year: Can You Live Off It In 2023?

20 Dollars An Hour Is How Much A Year: Can You Live Off It In 2023?

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Earning 20 dollars an hour puts you above the federal minimum wage. The US department of labor announced that as of January 2022, the minimum wage for federal contractors would be $15 an hour. And thus, the question becomes, “How much is $20 an hour, and can someone live on it?”

The topic is somewhat subjective, and many job seekers want to know if $20 per hour is a decent wage. It’s best to do the math and find out if living off is possible. This guide will show you how much $20 per hour is in a year and what jobs you may do for this hourly pay.

Can You Get Paid 20 Dollars an Hour?

woman on the computer

Both remote and retail jobs pay $20 per hour. Even without a degree, it’s possible to earn an hourly rate of $20 or more. Some jobs require a high school diploma and some experience. Nevertheless, entry-level jobs like proofreading and data entry do not require any prior experience. Professional certification will help you gain job-ready skills and boost your resume.

20 Dollars an Hour Is How Much a Year?

We have 52 weeks in a year, and the average number of hours in most professions stands at 40 hours per week. Therefore, this translates to an average of 2,080 work hours per year

The rundown: 

  • 52( weeks) X 40 (hrs) = 2,080 hrs
  • 2080(hrs) X $20(hourly rate)= $41,600

If you work 2,080 hours per year, $20 per hour equates to $41,600 before taxes. 

Here is the breakdown for $20 per hour, which is equivalent to an annual wage of $41,600 before taxes: 

  • Daily: $160 ($20 X 8hrs)
  • Weekly: $800 ($41,600 ÷ 52)
  • Biweekly: $1,600 ($41,600 ÷26)
  • Monthly: $3,200 ($31,200 ÷12)

How Much Is $20 An Hr After Taxes?

The total amount deductible from your hourly income depends on your state. Your annual income could drop to anywhere between $34,600 and $36,000

Here’s an example. Suppose you live in a state where the tax rate is 13.3% of your annual income. If you make $20 per hour ($41,600 per year) before taxes, you will pay an estimated 13.3% in taxes, bringing home an average of $36,067.20 after taxes

Here is the breakdown: 

13.3% of $41,600 = $5,532.8

$41,600 – $5,532.8 = $36,067.20

Hence, after taxes, you’d earn around $36,067.20 per year.

Because these figures are just for illustration purposes, you should inquire more about the exact tax rate in your state

To see how much you will pay in taxes in your state, visit the Smart Asset Paycheck & Taxes Calculator by clicking here. It’s crucial to note that state income taxes are on state-earned income. It’s similar to the federal income tax because it pays state budgets.

However, eight states have no income tax. They include: 

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

While residing in a state with no income tax may appeal to you, some of these states may have higher sales and property taxes.

How Much Is $20 An Hour Per Day?

20 Dollars an Hour

If you work five days a week at $20 per hour, you will earn $160 each day before taxes. Take into account that the average is the sum of working 8 hours a day, five days a week.

Here is the breakdown: 

  • Daily: $160 ($20 X 8hrs)

How Much is 20 Dollars An Hour Per Week?

Earning $20 an hour each week translates to $800 before taxes. Here is the breakdown: 

The $41,600 yearly salary is divided by the number of weeks in a year. So it would appear as follows: Weekly: $800 ($41,600 ÷ 52).

How Much Is $20 An Hour Bi-Weekly?

If you’re getting paid every two weeks, an hourly rate of $20 will amount to $1,600 before taxes. Here is the breakdown: 

Divide your annual salary, which is $41,600, by bi-weekly intervals. It would be 26 weeks. 

Biweekly Income: $1600 ($41,600 ÷ 26). 

How Much is 20 Dollars An Hour Per Month?

Working a job that pays $20 an hour would translate to $3,200 a month before taxes. You’ll earn $3,200 a month if you work 8 hours a day, five days a week. 

Here is the breakdown: 

Divide the $41,600 yearly pay by the number of months in the year. Monthly salary: $3,200 ($41,600 ÷ 12).

Is 20 Dollars An Hour Good?

Woman on computer

Your spending and financial status will determine whether $20 an hour is a decent wage. $20 an hour is a decent salary if you don’t have heavy recurring bills. It will be a pretty good salary for college students or if you’re single.

Put into consideration the total cost of living in your state. Things like food, debt repayments, rent, and other monthly bills would help you know if earning $20 an hour is enough to cover all necessary costs. 

It’s easy to live off of $20 an hour if you can prioritize the most important bills and live below your means. You want to create a realistic budget, track your expenses, and consider saving for a rainy day. Using printable budget templates could help manage your costs. 

You can also make the most of budget planners to control your finances. Alternatively, there are many small side hustles you can do if $20 an hour doesn’t suit your current financial position.

Can You Buy a House if You Make $20 an Hour?

You certainly can! If you work 40 hours per week and earn $20 per hour, you will earn $3,200. To evaluate if you qualify for a mortgage, banks often consider your gross monthly income, which is your total salary before taxes. Your payout intervals determine how you compute your monthly revenue. For example, if you are paid hourly, multiply your hourly rate by the average number of hours you work each week. 

Lenders will also consider your other recurring expenses when determining whether you qualify for a mortgage. Any existing debts, such as credit card balances, car payments, or student loans, will affect how much you are eligible for. Most lenders apply the “28/36” rule when qualifying you for a mortgage. 

According to this criteria, “a mortgage applicant should spend no more than 28% of his or her gross monthly income on total housing expenses and 36% on total debt servicing, including other debts such as car loans or student loans.” While tracking such expenses can be difficult, qualifying for a mortgage heavily depends on your spending habits. 

Lenders might request your credit report from the major reporting agencies to assess your credit history. They’re curious about how you use your credit limit. Maintaining a credit utilization rate of 30% or less improves your credit score and shows that you handle your debt responsibly. In other words, if you make $20 an hour and are in good financial standing, you can qualify for a mortgage.

Can You Live Off $20 An Hour?

If you’re an entry-level skilled worker, you’re undoubtedly wondering if $20 an hour is enough to survive on. The answer is that it all depends on where you live and how many expenses you have. If we eliminate the most expensive cities in the United States, living on $20 an hour is feasible. 

All you have to do is set a realistic budget and cut out on luxuries. If you reside in a city like New York or San Francisco, where rents are outrageously costly, a $41,600 annual wage may seem unattainable. With rising rent and food prices, you may need to work two jobs in some states to make ends meet.

Is $20 an Hour Good for a Teenager?

Given that most teenagers earn minimum wage, $20 per hour should be enough. While ZipRecruiter reports hourly wages as high as $28.12 and as low as $6.97, the majority of teen wages in the United States now vary between $12.98 (25th percentile) to $18.99 (75th percentile). Assuming you live under your parents’ roof, you have a fair chance of keeping your monthly expenses low.

Tips To Live Off of $20 An Hour

1. Create a Budget

One of the best ways to create a budget is by categorizing expenses. List all your recurring expenses, like house rent, mortgage, and memberships. Next, jot down all your variable costs. These expenses, like shopping, fuel, and utility bills, vary from time to time. 

If you have some money left, you can set up a savings account to stash it. Deciding how much money to allocate to every category can be challenging, so it’s best to follow the 50/30/20 rule.

2. Pay Off Debt

Setting off your debt means you’ll have more spendable income every month. Borrowing is not a vice, as long as you have a clear strategy for repaying the money. You can pay more than the minimum amount. You’ll offset your debt in fewer months and at lower interest.

3. Pick Up an Additional Side Hustle if $20 an Hour Isn’t Enough

If your expenses exceed your income of $20 an hour, it’s time to take up a side job. You can take up a remote side hustle alongside your 9 to 5 position. There are many jobs with flexible hours which will suit your interest and skills. 

4. Cut Down on Unnecessary Expenses

Tracking your expenses lets you see how you’re spending your hard-earned money. This way, you can cut down on unnecessary living costs. You cannot do away with basic needs like food, clothing, or rent. Identify expendable items that take up much of your income and take them off your budget. For instance, you could ditch cable TV for cheaper streaming services like Hulu or Paramount. 

Where Can I Make at Least 20 Dollars an Hour?

Freelance platforms like Upwork or Fiverr have gigs that pay $20 an hour. All you need to do is have the right skills and demonstrate what you’re capable of to potential clients. Working as a delivery driver or sales representative is also a reliable way of making at least $20 an hour. Here are a few more jobs that pay this hourly rate: 

Jobs That Pay 20 Dollars an Hour

1. Proofreader

A proofreader double-checks written material for grammatical errors and format before publication. It is a suitable job for people who wish to work remotely and choose their schedule. 

Average pay: $26 per hour

2. Truck Driver

A truck driver moves freight across different states. They spend hours on the road and transport 72% of goods in America. To become a truck driver, you must have a commercial driver’s license (CDL).

Average pay: $27 per hour

3. Hotel Manager

A hotel manager oversees a hotel’s operations. They also supervise other staff in cleaning, catering, and ensuring guest satisfaction.

Average pay: $26 per hour

4. Freelance Writer

Freelance writers sell articles to blogs, newsletters, magazines, and other digital content creators. Most writers work on a contract basis and take up several projects simultaneously.

Average pay: $24 per hour

5. Medical Coder

A medical coder interprets medical files for each patient and creates codes for them. Health insurance companies use these codes for reimbursements. Most employers require applicants to have a high school diploma or Certified Professional Coder (CPC) credentials.

Average pay: $22 per hour

6. Paralegal

A paralegal works under an Attorney’s supervision to perform legal duties for a client. A paralegal’s responsibilities include preparing paperwork and legal documents for court sessions. Certified paralegals can specialize in finance law, corporate law, or the public sector.

Average pay: $23 per hour

7. Bookkeeper

A bookkeeper maintains a company’s ledger. They track all expenses and keep records in the company’s system. 

Average pay: $22 per hour


How to Budget When You Make 20 Dollars an Hour

The best way to create a budget is to break down all expenses and write them down. If you get paid weekly or bi-weekly, include all your paychecks in your budget. This way, you can divide your expenses for each paycheck. Here is a free printable budget planner to help you manage your earnings. 

Using the 50/30/20 rule, you can divide your take-home to your various expenses. 50% will go to essential expenses like house rent and utilities. House mortgage also falls in this category. 20% goes to savings and debt repayments, and 30% to varying expenses and entertainment.

Basic Expenses of 50%- $1502

Savings and debt repayment of 20%- $601

Giving/ tithe of 10%- $300

Entertainment of 20%- $601

You can change the amounts to suit your needs. If your house rent/mortgage is 40% of your income, you need to cut your utilities to 10%.

Final Thoughts On $20 an Hour Per Year

If you don’t have a lot of debt to repay, you can live on $20 an hour. The state you live in and its average tax rate are huge factors determining whether living off of $41,600 is enough. 

However, $20 an hour isn’t a livable wage in some cities. The most practical way to live a decent life when earning $20 an hour is to supplement the income with a side hustle that doesn’t disrupt your regular work schedule. 

You also want to set up a monthly budget to avoid overspending or taking on massive debt. It’s best to live within your means. With more than half of Americans living paycheck to paycheck, coming up with a monthly budget would help avoid incurring debts that can be challenging to repay. 


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