20 an hour is how much a year? Is it enough to live on in 2023?

$20 an hour is how much a year?

If you make $20 an hour, your gross yearly base salary would be $41,600.

This number is based on a 40 hour work week, for 52 weeks a year:

$20/hour x 40 hours/week x 52 weeks/year = $41,600

Are you thinking of taking a job that pays $20 an hour? Maybe you want to increase your current income or just make more than minimum wage.

If so, you might have a few questions about this hourly pay, like:

• $20 an hour is how much a year?
• $20 an hour is how much a month? A week? A day?
• Is 20 an hour good pay?
• Can I live on $20 an hour?
• What is a 20 an hour income after taxes?
• What jobs pay 20 an hour?
• How do I budget $20 an hour?
• What if I work part-time? Overtime?
• What about unpaid time off?

These are great questions to ask, because the answers can help you plan your finances, create a workable budget, and inform your financial goals.

In this post, I will tell you exactly what you can expect from making $20 an hour, and how you can get the most out of this hourly wage. I will answer all of these questions and much more, so keep reading to learn everything about making $20 an hour.

First, let’s talk about what $20 an hour would be per month.

What is $20 an hour per month?

Using the same assumptions as above, we can divide $41,600 by 12 months to get a monthly salary.

41,600 ÷ 12 = $3,466.67 per month before taxes

This is an average income over 12 months, and assumes you are working full-time.

If you want to calculate a more exact number, you can add up the number of working days in a specific month, and multiply $20 by the number of average hours you would work each day.

Calculating a $20 an hour monthly wage is important for creating a monthly budget. Later, I’ll give you a budget breakdown for a $20 per hour salary.

Next, let’s look at how much $20 an hour is per week.

What is $20 an hour per week?

With a full-time job, you would make $800 a week before taxes with a $20 per hour wage.

40 hours x $20 = $800 per week pretax

This number is easy to adjust if you work less than 40 hours a week. Just multiply the exact number of hours you actually worked and multiply by 20 dollars per hour.

Working over 40 hours would get you overtime pay, which I’ll go over a little later.

If you prefer a weekly budget, this number will help you create a spending plan that fits your income.

Now let’s talk about the twice-a-month- paycheck schedule. This is usually referred to as biweekly or bimonthly.

How much is $20 an hour biweekly? Bimonthly? (What’s the difference?)

Many people get paid twice a month by their employer. However, there are two different paycheck schedules with this frequency and each will give you a different amount.

First, a biweekly paycheck is paid every two weeks. So if you get paid every other Friday (or any day that ends in “y”) then you get paid biweekly.

Second, a bimonthly paycheck is paid twice a month. My husband gets paid on the 15th and 30th of every month, so he gets paid bimonthly.

This means there are 26 total biweekly checks in a year, but only 24 bimonthly paychecks. This would make the biweekly check a little less than the bimonthly check, if both people make the same yearly income.

Here is what $20 an hour would be for both the biweekly and bimonthly employee.

Gross annual income for $20 per hour = $41,600
Biweekly pay:  $41,600 ÷ 26 weeks = $1,600 every 2 weeks pretax
Bimonthly pay: $41,600 ÷ 24 paychecks = $1,733.33 twice a month pretax

Finally, let’s figure out how much you would make in a day with a $20 per hour wage.

How much is $20 an hour per day?

To figure out the daily income for $20 an hour before taxes, simply multiply the number of hours you work in a day by 20.

Most people who are employed full-time work 8 hours a day, so your daily pay would be:

$20/hour x 8 hours = $160 a day pretax

Those who work “four 10s” will put in a 10-hour shift, four times a week. In this case, you would multiply $20 an hour times 10 hours:

$20/hour x 10 hours = $200 a day pretax

Another scenario is if you are an hourly employee and don’t get paid for a 30-minute break. Then, your daily pay would be:

$20/hour x 7.5 hours = $150 a day income pretax

Later, we’ll go over how to calculate $20 a day after taxes.

Hourly to Salary Calculator

Want to plug in your own numbers? Use this hourly wage to annual salary calculator for a fast pretax calculation.

What is a $20 an hour yearly salary with no paid time off?

The reality is that the average person won’t put in a full 40 hours for 52 weeks straight. Occasionally you’ll need to take a sick day, or take a week or two off for vacation.

If you work on an hourly basis, your employer likely doesn’t pay you for days you don’t work. So, you might be wondering, what is $20 an hour with no paid time off?

Let’s look at a few different scenarios.

Scenario #1:  Two weeks unpaid vacation 

Taking two weeks of vacation would mean you only work 50 weeks a year. Let’s plug in this number to the equation from before and get the gross income.

$20 an hour x 40 hours a week x 50 weeks a year = $40,000 before taxes

Scenario #2:  One week unpaid vacation 

Taking one week of vacation would mean you only work 51 weeks a year. Let’s see what we get:

$20 an hour x 40 hours a week x 51 weeks a year = $40,800 before taxes

Scenario #3:  One day of sick leave every 3 months

If your sick days are unpaid, this will also decrease your paycheck. It’s good to know how much income you would lose if you have to call in sick, so you can adjust your budget accordingly.

For this example, let’s assume you take a sick day once every 3 months. This would mean you’d lose 4 paid days in a year.

We know that $20 an hour is $160 for an 8-hour day. So, we can just subtract four 8-hour days from the annual wage:

$41,600 – ($160 x 4) = $40,960 pretax

If you work a 10-hour shift, your pay would decrease by $200 for each sick day.

$41,600 – ($200 x 4) = $40,800 pretax

Scenario #4:  Two weeks unpaid vacation & 4 sick days

What if you take two weeks of vacation and four sick days a year?

$20 an hour x 40 hours a week x 2 = $1,600 annual pretax income you would lose for vacation

$20 an hour x 8 hours a day x 4 = $640 annual pretax income you would lose for sick days

$41,600 gross income – $1,600 unpaid vacation – $640 unpaid sick days = $39,360 annual pretax annual income

Taking unpaid time off would decrease your monthly, weekly, and daily average income.

Of course, if your employer *does* pay for vacation time and days off, then you wouldn’t lose this income and you would still make the total of $41,600 in the year.

What is a $20 an hour annual salary if I work part-time?

So far, we’ve only considered being a full-time worker. But, what if you work less than 40 hours a week?

This is easy to figure out!

Just take your number of hours per week multiplied by $20/hour. The total is your weekly pay.

Then, multiply your weekly pay by the number of weeks you work in a year.

For example, let’s say you work an average of 30 hours a week, for 52 weeks out of the year.

$20/hour x 30 hours x 52 weeks = $31,200 before tax

Or, maybe you work only 20 hours a week:

$20/hour x 20 hours x 52 weeks = $20,800

Or, you work 35 hours a week but take 2 weeks of unpaid time off over the year:

$20/hour x 35 hours x 50 weeks = $35,000

What is a $20 an hour annual income if I get overtime pay?

As an hourly employee, you might have the opportunity to work more than 40 hours a week and get overtime pay. (Most states will pay 1.5x the hourly wage after 40 hours in a week. Only Alaska, California, Colorado and Nevada have daily overtime laws.)

If you’re eligible for overtime pay, you would make $30 for every hour you work over 40 hours in a week:

$20 per hour x 1.5 = $30/hour overtime rate

So, if you have a 45 hour week, you would make an additional $150:

$30 overtime rate x 5 hours = $150 pretax income

Here is a table using various overtime hours to give you an idea what you would make annually with $20 an hour overtime pay:

One additional note: some employers will pay double time if you work certain holidays (like Christmas or New Year’s). If this option isn’t too inconvenient for you, take advantage of these opportunities when you can! You’ll make twice the money for probably less work!

How many working days and hours are in a year?

We all know there are 365 days in a year (except for leap years, with 366). But, exactly how many of these days are actually working days?

Knowing the number of working days in the current year will help you get a more accurate estimate of your annual wage. (By “working” days I mean weekdays.) You could then add up the number of hours per month and per week that you would work.

If you get paid by the hour, just multiply your daily hours per day by the number of working days to get your personal income for the year.

For 2023, the total number of working days is 260. 

But, unless your employer is open every day of the year, you’ll need to subtract unpaid holidays.

Simply add up the number of unpaid holidays your employer is closed, and subtract those from 260 working days. So, if you don’t get paid for 6 holidays out of the year, your total working days would reduce to 254.

Now we can calculate the number of working annual hours by multiplying the number of your daily hours by the number of working days.

For example, if you work 8 hours a day (and you get paid for all 8 hours), the number of hours you would work in a year (including the 6 unpaid vacation days) would be:

8 hours x 254 working days = 2,032 hours annually

20 an hour is how much a year after taxes?

Federal income taxes will vary based on a number of individual circumstances, such as your filing status, exemptions, deductions, credits, etc. 

But, we can get a general idea how they would affect your $20 per hour salary by making a few assumptions:

• You file as a single individual
• You claim 0 dependents
• You are not self-employed
• You take the standard deduction
• Your gross annual income is $41,600

For 2023, a gross income of $41,600 would put you in the 12% federal income tax bracket (see current tax table).

The 2023 standard deduction for a single person (or married filing separately) is $13,850. This would make your taxable income $27,750.

Plugging this information into the IRS Tax Withholding Estimator, we get an estimated total of $3,113 in Federal income taxes.

FICA taxes are 7.65% of the gross income, which would be an additional $3,182 in taxes.

Subtracting both amounts from the annual salary of $41,600, we would get:

41,600 – 3,113 – 3,182 = $35,305 annual net income

Using the standard deduction, and applying Federal and FICA taxes, you will be left with a net annual salary of $35,305. 

This breaks down into an after-tax income of:

• $2,942 average per month
• $679 average per week (52 weeks)
• $136 average per day (260 work days)
• $16.97 per hour after taxes (8 hours)

However, this doesn’t consider state income taxes.

Of course, the rate of this additional income tax will depend on the state you live in.

As of 2023, state income tax rates range from 1.10% in North Dakota to 7.9% in Hawaii for a $41,600 yearly salary.

If you don’t want to pay state income tax, you could move to one of the nine states that don’t have it: Alaska, Florida, South Dakota, Texas, Washington, Wyoming, Tennessee, Nevada, and New Hampshire.

Check out these 2023 State Income Tax Rates to find your state’s rate.

Once you deduct Federal, FICA, and State income taxes, you’ll have a good idea what your annual net income will be. However, this won’t necessarily equate to what you see in your paycheck.

Other deductions such as 401(k) and HSA contributions, and health insurance premiums, will lower your pre-tax income even more, but save you some on your tax liability. Also, if you itemize your deductions, you may be able to further reduce your taxable income.

For a more accurate calculation of taxes for your unique financial circumstances, use this tax calculator.

$20 per hour detailed comparison chart

Can I live on a $20 an hour salary?

If you’re wondering if $20 an hour is a livable wage, you first must answer the question: what kind of life do I want to live?

If you want to live on your own in a high rise condo in the middle of a metropolitan city, you’ll probably have to make a higher wage. However, if this is the lifestyle you want, you can always get roommates and go without a car and other conveniences. You would also have to be very careful with your spending. Supporting a family under these circumstances would be difficult.

If you prefer to live in a smaller town or a rural area, a $20 per hour income could afford you a place of your own, a vehicle to drive, and money left after paying the bills.

With a $20 an hour income, you would need to practice smart money habits, no matter where you live.  You can make it work, but it will be harder if you have debt to pay off or want to focus on building a healthy savings fund.

For frugal people who are single, have little debt, and are careful with spending, $20 an hour is probably enough to live on.

Later, I’ll go over how to budget $20 an hour, and tips to help you make the most of this hourly wage. Next, we’ll consider if $20 is good money, and how it compares to other salaries in the U.S.

Is $20 an hour good money?

The answer to this question depends on a couple of things (for starters).

There are two factors to consider:

1. How does $20 an hour compare to what other people are making?
2. What is the cost of living where I live or want to live?

According to Statista.com, the median hourly earnings of all U.S. wage and salary employees in 2020 was $16.36. This makes $20 per hour 22% higher than the country’s median income. This sounds good!

However, this includes workers from all states, where the hourly wages and cost of living index can differ greatly.

For example, the 2020 median hourly wage in New York City was $34.16, and the cost of living index is 87% higher than the national average (NYC is one of the most expensive cities to live in!).

In contrast, the average hourly pay in Biloxi, Mississippi is $15.07, and the cost of living index is 15.9% lower than the national average.

So, as you can see, making $20 an hour in New York City would not be good money, when you consider average earnings and cost of living.

But, in Biloxi, Mississippi, a 20 dollar per hour job would make you considerably more than the average worker, while stretching farther with a lower cost of living.

In the end, $20 is good money if you make at least the average of others in your area, and your cost of living could be supported comfortably by this hourly wage. Typically, these two factors are directly related (when cost of living is higher, the average hourly wage will be also).

Here are the top 10 cities with the highest and lowest cost of living in the U.S. (100 = national average). If you make a $20 per hour salary, you’ll probably want to avoid those areas on the left side of the table:

A few other factors that would help you determine if $20 an hour is good money:

• Are you single or married?
• Do you have any children you’re supporting?
• How much debt do you have?
• What is your occupation?
• How old are you?

Your answer to each of these questions will affect whether or not $20 is good money under your circumstances.

Can I buy a house making $20 per hour?

Again, this depends largely on where you live. Small cities or towns in the Midwest or the South could have several options for you to be a homeowner.

In Kansas you’ll find many houses for sale under $200,000. In this case, $20 an hour could probably afford you a modest home.

But, if you want to live in Southern California, where the median price of a home is around $850,000, then $20 an hour won’t be enough to make you a homeowner.

Other factors that will determine your ability to buy a house are your credit score, down payment, and debt-to-income ratio.

Example of a $20 an hour budget

Creating a $20 per hour budget will help you determine if it’s enough to cover your monthly expenses. You can see exactly how much you’ll have to spend on things like rent, groceries, utilities, and discretionary costs.

Either use the net income of $41,600 that we calculated above, or use an online calculator to figure out what your paycheck will look like. Don’t use gross income, because you’ll be highly overestimating your take-home pay.

Here is a sample budget of someone who makes $2,942 a month after taxes using the zero-sum method. I’ve also applied Dave Ramsey’s recommended budget percentages.

As you can see, each category does not stretch very far once the entire income is spread out over all of the basic expenses.

This might be a good wake up call to realize that this hourly rate is limited in its saving potential, especially if you live on your own or have a family to support.

But, there are still tactics you can use to maximize your income, which we’ll go over next.

5 tips to live on $20 an hour 

Depending on your financial circumstances, you might find it challenging to live on $20 an hour. Getting out of debt, saving for retirement, and achieving financial freedom could be difficult.

Here are the 5 best tips for making your income stretch farther. If you put these smart money habits into practice, you could still achieve your financial goals making $20 per hour.

1. Live within your means

This basically comes down to spending less money than you bring in every month. If you can stay within the financial boundaries of your income, you’ll avoid debt.

This will require some very intentional spending choices, but following a workable budget will keep you on track.

2. Cut basic living expenses

Find a way to cut costs so you can save more money and pay off debt faster. Besides limiting your spending in areas like entertainment and hobbies, get creative with reducing your biggest expenses like housing costs and food.  Renting out a room, or refinancing your mortgage to a lower rate can save you hundreds every month. Keep your grocery shopping bill low by following meal plans and keeping your pantry stocked.

3. Save money

One of the most important principles of building wealth is paying yourself first. Learn to make savings a priority so you can create some financial security. Add a long/short-term savings category into your budget and pay it like any other bill. Do a money challenge to achieve financial goals and make saving more fun.

4. Get out of debt

Even a little bit of debt can eat up your $20 salary quickly. If you have a student loan or high-interest credit cards, you’ll probably want to pay off these balances first. Make debt repayment a priority so you can put that money in savings instead.

5. Make more money

Bringing in some additional income could look as simple as picking up extra hours or overtime when the opportunity arises. You could even get a second part-time job on the weekends. Adding a little extra to your income will give you some financial cushion, and help cover unexpected expenses when they pop up.

Money tools to help you live on $20 an hour

We could all use a little personal finance help sometimes, and these awesome money resources will make money management easier for you.

Trim

This handy phone app will review your bank transactions to find recurring expenses. Then, it will notify you of each subscription you’re currently paying for, so you can choose to cancel or not.

Acorns

Make saving money easier with this automating app.

Acorns will save the difference between each purchase you make and the next highest dollar, and then invest that money into the investment vehicle of your choice.

Could it get any easier?

Mint

This budgeting app will help you track your spending and keep control of your money.

Through this money tool, you can connect to all of your bank accounts to have a complete picture of your financial situation.

Use it to track your budget, review monthly reports, and set up financial goals.

Prism

Prism will help you to never miss a bill payment again. This mobile app tracks your bills and will send reminders for due dates. You can even pay all of your bills in one place! How convenient.

Your bank’s mobile app

Most banks now have their own mobile apps, so you can check your accounts on the go. I use my bank’s app to transfer funds, check my daily balance, and review transactions. Having this capability on my phone keeps me on top of my finances.

Jobs that pay $20 an hour

If $20 an hour sounds like a good salary to you, then you might be wondering how you can make this kind of money.

The good news is, there are plenty of jobs that will pay you this hourly rate – and many don’t require a higher education.

Here are 20 jobs that have an average pay of around $20 an hour.  

If you don’t want to take the traditional employment route, you could consider making money from home with an online job.

Here are ten jobs you can do online that have the potential to make $20 per hour:

1. Virtual assistant
2. Blogger
3. Vlogger on YouTube
4. Podcaster
5. Freelancer
6. Teaching English
7. Transcription
8. Web design
9. Sell printables on Etsy
10. Sell stock photos

Most of these opportunities will take considerable time, commitment and patience to make a consistent income. But, if you treat your work like a business, each one has the potential to generate a full-time income!

How to increase your hourly wage

Are you currently making less than $20 an hour? Follow these 5 smart tips to make more money.

1. Ask for a raise

The easiest way to increase your income is to start where you’re at. If you’ve been proving your worth at the office, take the leap and ask for more money. Your boss might just say yes.

2. Get a promotion

Do you like your employer? Maybe they offer other opportunities to create a higher salary. Find out what training you need to move up the ladder. Then, get it done. 

When you’ve completed the requirements, apply for that promotion. Just make sure the offering salary is worth the new responsibilities.

3. Apply for a better job

Maybe there’s no room for growth where you’re at. Don’t let that keep you from making a better wage and improving your personal finance situation.

Start doing your own job search. Find out what’s out there, and the requirements for getting hired. Use the experience you’ve already gained to get the interview.

You might even want to brush up on your interviewing skills so you’re in top shape.

4. Start a side hustle

Want to keep your job but make extra cash? Start a side hustle. 

Find something you enjoy doing, then start making some freelancing income. Here are a few ideas for inspiration:

• Walk your neighbors’ dogs
• Take pictures at birthday parties
• Bake cakes for weddings
• Tutor kids at the library
• Give piano lessons
• Teach adults a foreign language

Any of these on the list can get you over $20 an hour.

5.  Generate passive income

Passive income is money earned with little to no effort. Sounds good, right? 

There are a few different ways you can create this type of income. Once you set up the income source, you can enjoy this extra money with minimal input.

Here are ten different ways you can start creating passive income streams for yourself:

• Build an affiliate marketing website or blog
• Sell an online course
• Write e-books
• Create and sell mobile apps
• Make videos for YouTube
• Sell digital artwork
• Sell printables
• Advertise on your car
• Rent a room in your house
• Rent out your car

Earning money passively allows you to work the same number of hours per week but still make more money in your spare time.

Setting up a successful passive income stream source takes time, so be patient. If you stick with it, eventually you’ll be making money in your sleep.

In conclusion

Now that you know the answer to the question, 20 an hour is how much a year, do you think you could live off this hourly wage?

If you’re still not sure, use the sample budget template outlined above. This one important task will give you a good idea if you can live within your means.

Even if the budget looks tight, consider how you could cut basic expenses. Are there costs you’re paying for right now that you could eliminate? Could you reduce expenses like auto insurance or rent or food?

In the end, you might want to take the $20 an hour job but still need to make a little more to cover your bills. This is when you take on a part-time side gig or start creating a passive income stream.

Remember, it all comes down to the lifestyle you want to have. Making $20 an hour will limit your options, but it’s definitely an income you could live on.

Other posts you may enjoy:

• 21 Powerful Benefits of the Quality Over Quantity Mindset
• How To Save 3000 In 3 Months (+ Free Trackers)
• 18 Dollars An Hour Is How Much A Year? (Budget, Taxes, Jobs, & More)
• $40,000 A Year Is How Much An Hour
• How Much Is 6 Figures In Dollars? (7, 8, 9, & 10 Figures Too!)
• How To Take The 100 Envelope Challenge And Save $5,050
• The Cheapest Way To Live: Best Tips For 2023
• How To Get Rich With A Normal Job
• I Need Money Desperately! 35+ Ideas For Fast Cash
• Money Values:  How To Align Your Priorities With Your Spending
• 9 Powerful Benefits of Setting Financial Goals
• Financially Sound: What It Means & How To Get There

20 an hour is how much a year? Is it enough to live on in 2023?