$20 an Hour Is How Much a Year? Is $20 an Hour Really Good?

Sharing is caring!

Last Updated on June 9, 2022 by Rebecca Lake

$20 an Hour Is How Much a Year

Making $20 an hour might sound good, considering that the federal minimum wage in the United States is still just $7.25 an hour.

But $20 an hour is how much a year? And is it a good amount of money to live on?

How much 20 dollars an hour works out to in yearly salary can depend on the number of hours you work.

But even if you’re not a math nerd, it’s pretty simple to work out your annual income based on a $20 hourly pay. You could also calculate how much is $20 an hour in monthly pay, weekly salary or daily earnings.

But is $20 an hour a good yearly income?

Today, I’m sharing a complete guide to how much a $20 hourly salary works out to yearly and whether that’s a livable wage.

Related post: $15 an Hour Is How Much a Year? (And Is It Good?)

LIKE FREE MONEY?

Here are some of my go-to apps for earning extra cash!

Survey Junkie. Earn up to $50 per survey just for sharing your opinions.

Swagbucks. Make money by playing games and watching videos. Join for free and get a $10 bonus when you sign up!

InboxDollars. Take surveys and get paid, no special skills or experience required!

Rakuten. Earn up to 40% cash back at hundreds of retailers, online or in stores. And get $30 for each person you refer, along with a $10 sign up bonus!

CashApp. Need a simple app for sending and receiving money? Get $5 free when you use code ‘VZXRXZN’ to join CashApp.

$20 an Hour Is How Much a Year?

Assuming you earn a $20 hourly rate and work a 40 hour work week, $20 an hour works out to $41,600 per year.

This is your annual pay if you work a full-time job 52 weeks of the year.

$20 an hour x 40 hours a week x 52 weeks = $41,600

This is gross income or the amount of money you earn before federal tax deductions, Social Security taxes, state income tax, health insurance and retirement contributions are taken out. The amount left over is your net income.

Net income is your take-home pay or after-tax pay. It’s the amount of money that’s deposited into your bank account each pay period.

This amount also doesn’t include things like:

• Overtime pay or double time pay
• Vacation time
• Money your employer reimburses to you for eligible expenses
• Employer pay for federal holidays (or other holidays)

If you’re a salaried employee, then $41,600 may be the stated wage you’re guaranteed to receive. This is also referred to as base salary.

Related post: Do Teachers Get Paid in the Summer?

$20 an hour is how much a year if you work part-time? 

An annual salary of $41,600 is what you could expect to earn for 40 hours of work each week, assuming you make $20 an hour. But what if you work fewer workdays or hours?

Say, for example, that you work 30 hours a week instead. If you assume the same number of weeks in the year (52), then $20 an hour works out to $31,200.

$20 an hour wage x 30 weekly hours x 52 weeks per year = $31,200 annual salary

Based on these numbers, a full-time employee would earn $10,400 more per year based on a 40-hour workweek. Again, this is gross income before insurance, federal taxes, state taxes, money paid to retirement plans and other deductions are taken out.

$20 an hour is how much a year in monthly salary?

If your total income yearly is $41,600 based on a $20 hourly rate and a 40-hour workweek, then your monthly average salary comes out to $3,467.

$41,600 in annual salary/12 months in the year = $3,467

This is the average monthly income you could earn if you’re making $20 an hour and working 40 total hours per week. It’s important to remember that you might earn more or less in different months, depending on the number of pay periods.

If you’re paid biweekly or every other week, there are some months where you’ll receive three paychecks instead of two. In those three-paycheck months, your total monthly income will be higher.

But overall, you’re still making $41,600 per year, assuming you’re a full time employee.

$20 an hour is how much a year biweekly?

If you’re paid on a biweekly basis, $20 an hour is $1,600.

$41,600 in yearly income/26 pay periods = $1,600

This is pre-tax income. How much you get to keep of this can depend on what you deduct for retirement contributions, insurance and your income tax rate.

$20 an hour is how much a year in weekly income?

$20 an hour works out to $800 in weekly income if you’re working 52 weeks of the year and clocking 40 hours a week.

This only assumes you work a 40-hour workweek. It doesn’t necessarily depend on the number of days you work, just the amount of hours.

So you might earn $800 in weekly income if you work four 10-hour shifts earning $20 an hour. Or you might earn $800 in weekly pay working five 8-hour shifts.

And if you’re curious how much is $20 an hour in daily salary, it depends on the number of days you work.

If you assume a five-day workweek at full-time hours, then $20 an hour is $160 in daily salary. But if you divide $41,600 by 365, the number of days in the year, then $20 an hour is $114 a day.

$20 an hour is how much a year during leap years?

An extra day in the year can adjust the calendar slightly, resulting in an extra pay period.

If a leap year adds a pay period, then you’ll collect 53 paychecks if you’re paid weekly or 27 if you’re paid biweekly.

But a leap year won’t affect your pay if you’re paid semimonthly or monthly. And it doesn’t mean you get a bigger paycheck either.

Most employers calculate leap year wages based on annual pay. But instead of dividing by 52 or 26 weeks, they use 53 or 27 weeks as the periodic term instead.

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

Federal taxes and state taxes can take a large bite out of your paychecks. So it’s important to know how taxes can affect your hourly wage and what it means for your overall financial situation.

Every single individual faces a different tax situation. But here’s a simple example of how much $20 an hour might work out to in annual pay when taxes are factored in.

Let’s assume you have a 12% federal tax rate and a 4% state tax rate. Social Security taxes and FICA (Medicare) taxes take another 7.65% of your earnings.

So here’s what you’d have left in take-home pay after taxes, based on a gross annual income of $41,600:

• Federal taxes: $4,992
• State taxes: $1,664
• Social Security and FICA: $3,182

$20 an hour after taxes is $31,762 in yearly pay

Again, this assumes a 40-hour workweek. So if you’re wondering how much that is per hour after taxes, it comes out to $15.27 per hour.

Using a salary calculator or wage conversion calculator is one of the best ways to figure out what your after-tax income works out to, based on the exact number of hours you work per week, your typical number of work weeks and what you make per hour.

Related post: Old Money vs New Money: What’s the Difference?

Is $20 an Hour Good Pay?

Whether $20 an hour is a good salary can depend on several things, including the cost of living in your area and your family size. For example, housing tends to be one of the biggest expenses for most people.

A single person might be able to live very well on $3,467 if they live in a fairly cheap area. But a family of four living in a more expensive state, on the other hand, may have a harder time doing so.

Take San Francisco and New York, for example. These are two of the most expensive cities to live in with average monthly rent for a 1-bedroom apartment average $2,800 and $3,250 respectively. (The national average rent for a 1-bedroom apartment is $1,680.)

Someone making $20 an hour in either of those cities might struggle to find affordable housing, especially if a large initial deposit amount is required.

But that same person could rent a 1-bedroom apartment in Wichita, Kansas for just $600 a month. A $20 an hour yearly salary would likely be a living wage for them.

To put things in perspective, let’s consider the median household income.

According to the U.S. Bureau of Labor Statistics, the median income for full time workers was $1,001 as of the fourth quarter of 2021.

That number was 0.7% higher than weekly income year-over-year. But inflation was up 5.3% over the same period, so even a median hourly wage of $20 might not go as far.

Related post: 50000 a Year Is How Much an Hour? Is It Really a Good Salary?

$20 an hour is how much a year example budget

Having a sample budget to follow can make it easier to figure out how far $20 an hour will go.

So let’s break down a monthly budget for a single person who earns $20 an hour and works 40 hours a week. We’ll use the $3,467 average monthly income to run numbers.

Here’s what a $20 an hour budget might look like if we use Dave Ramsey budget percentages as a guide:

Now, $20 an hour is how much a year if you’re using the 50/30/20 budgeting method? Here’s what that looks like inside.

As you can see, it would be possible to live off of $20 an hour each month. But it does mean planning your monthly budget carefully.

And again, where you live and the cost of living in your area can make a big difference in how well you’re able to live on $20 an hour.

Related post: How to Get Rich From Nothing

Jobs That Pay $20 an Hour

There are quite a few jobs that pay $20 an hour.

Some $20 an hour jobs require a college degree and others don’t. If you’re interested in jobs that pay $20 an hour or more, here are some of the top options you might consider, according to the BLS.

Related post: $40,000 a Year Is How Much an Hour?

$20 an Hour Is How Much a Year? How to Live on $20 an Hour

Earning $20 an hour puts you well beyond the federal minimum wage. But it’s still important to manage your annual income wisely.

If you have a $20 an hour job, here are some tips for stretching your income as far as possible.

1. Spend less than you make

Making a $20 an hour budget work starts with learning how to spend less than you make each month.

Your total expenses for the month–including what you spend on essentials and what you spend on “fun”–have to be less than your income.

And again, that means net income, not gross income. So your first goal for living well on a $20 an hour annual salary is to not spend everything you have coming in each month.

2. Learn to live below your means

Living below your means is one of the most important personal finance rules.

When you live below your means, you’re intentionally choosing to prioritize the way you spend and save money.

Instead of going out and buying a $500 phone, for example, you’re happy using an inexpensive prepaid model.

Rather than dropping $200 on dinner and drinks out with friends, you invite them over to your place for an outdoor potluck.

Living below your means is not quite the same as spending less than you make because there’s a different mindset behind it. When you live below your means you’re choosing to be frugal and save rather than indulge in wasteful spending.

Related post: 160+ Best Frugal Living Tips to Save Money

3. Pay yourself first

Paying yourself first is one of the best ways to get into the habit of saving money.

When you pay yourself first, you’re making sure that money goes directly to savings. This way, it doesn’t have a chance to get spent.

You can pay yourself first by:

• Setting up automatic transfers from your checking account to your savings account each payday
• Having some of your paycheck added to savings via direct deposit
• Using an automatic savings app like Acorns or Digit to automatically save your spare change

If you have a 401k at work, you can also set aside a little each payday for retirement plan contributions. The goal should be to save at least enough to get the full employer match if your company offers one. 

4. Make budgeting part of your money routine

Budgeting can help you get on the right track financially. But it’s not something you do just one time.

Doing a monthly budget review can help you make the most of your $20 hourly pay.

If you work overtime or get vacation pay for one month, for example, you might have some extra money in your budget. You can use your budget review to decide whether to save it toward one of your financial goals, add it to one or more sinking funds, pay down debt or just treat yourself a little.

You can go over your budget once a month, biweekly or weekly, depending on how often you get paid.

Related post: 60+ Sinking Funds Categories to Build a Better Budget 

5. Set financial goals

Setting financial goals can help you give your $20 an hour annual pay a purpose.

Say you want to save $5,000 for an emergency fund. You could set a goal to save that amount in 12 months.

To reach your goal, you’d need to save $417 each month. You could then go back to your budget to see if that’s realistic, based on your $20 hourly rate.

If it’s not, then you can either adjust the goal or brainstorm ways to make more money so you can reach it. 

6. Get rid of debt

Debt can be a burden to your $20 an hour budget so it pays to get rid of it sooner rather than later.

If you have debt, consider making a plan for paying it off.

For example, you could use the debt snowball method that Dave Ramsey advocates. Or you could try a low-interest rate personal loan to consolidate your debts and save money on interest charges.

The faster you can pay off your debt, the more breathing room you’ll have if you’re making $20 an hour.

7. Make more money

Finding ways to make more money can help you push your income past the $20 an hour mark. When you make more money, you have more income to save or use to pay off debt.

You could make more money by:

• Negotiating a pay raise at your current job
• Taking a second job
• Getting a part-time job
• Leveraging your money making skills to start a side hustle or business in your spare time
• Earning passive income
• Selling things you don’t need

Starting a side hustle and/or finding ways to make passive income could add a lot of money to your annual salary.

For example, I run a six-figure freelance writing business but I started out writing as a side hustle in my free time.

If you’re looking for some ideas on how to make money on the side or earn passive income, here are a few you can try:

• Freelance writing (try this free email course to get started)
• Online proofreading jobs (this free course explains how to make money with an editing side hustle)
• Online transcription jobs (this free webinar offers ideas for how to get paid to type)
• Becoming a virtual assistant (this mini-course offers an intro to the basics of making money as a VA)
• Teaching kids online (Outschool is great for would-be teachers!)
• Taking surveys in your spare time (Survey Junkie is one of the top survey sites)
• Investing in stocks and ETFs with M1 Finance (perfect for passive income seekers)

Those are just a few ways to make more money so you can pass the $20 an hour mark.

Need more options? Here are 140+ ideas for legitimate side hustles to earn extra income.

Looking for a remote gig or work-from-home job? Virtual Vocations features remote jobs and at-home jobs in over 50 categories so you can find a role that fits your skills. Create a Virtual Vocations account and start browsing listings to find your next remote job!

Final thoughts on $20 an hour is how much a year

Understanding what your real income works out to is important if you’re trying to get better at personal finance.

Calculating how much is 20 dollars an hour in yearly pay can give you perspective on what your time and skills are worth to your employer. Seeing the numbers in black and can be a motivator to look for a new job that pays better, get a second job or start a side hustle if making more money is one of your financial goals.

Working out a $20 an hour budget is also helpful to keep spending under control. When you know the exact number you have coming in, it’s easier to allocate money toward your expenses while still sparing a few dollars for your savings accounts.

Want some simple ideas for ways to save money and make money? Check out my favorite Smart Money Tools!

And here’s a list of 35 ways to make an extra $1,000 a month online (or off)!

$20 an Hour Is How Much a Year?

Sharing is caring!