$20 an Hour Is How Much a Year?

For many people, the idea of making $20 an hour sounds like starting salary perfection. Because the federal minimum wage is just $7.25 per hour, getting paid $20 an hour would be a great way to increase your yearly salary significantly. But how much is this actually?

In this article, we’ll explore what it means to earn 20 dollars an hour and how much money that would add up to over the course of a year. We’ll also look at some ways you can increase your earnings and take home even more cash. So read on if you want to learn more about how you can join the ranks of those who enjoy higher-than-average salaries.

$20 an Hour Is How Much a Year?

To figure out how much you would make annually if you earned $20 an hour, it is important to understand how many hours you will be working in a year. Usually, a full-time job is considered to be 40 hours per week and 52 weeks in a year. So, let’s calculate how much money we would make in this example:

Calculation Breakdown

Gross annual Income:($20/hour x 40 hours/week x 52 weeks)= $41,600

This means that if you worked for 40 hours a week and 52 weeks in a year, your gross income would be $41,600. The gross annual salary of $41,600 is below the middle-income worker’s desired salary of $60,000 and falls just under the $50,000 salary threshold.


The amount mentioned does not include deductions for taxes, insurance, 401k, or any other withholdings. The net income, the amount deposited into your bank account, will be lower after these deductions are made.

Part-Time Work Scenario

Now, let’s look at how this changes for those who are working part-time. For example, if you worked 20 hours a week and 52 weeks a year, your total working hours would be 1040. So, the gross income, in this case, would be:

Gross annual Income:($20/hour x 20 hours/week x 52 weeks)= $20,800

In this case, with a part-time job at 20 hours a week, you would make a gross annual salary of $20,800. Again, this amount is subject to taxes and other withholdings.

What Does $20 an Hour Translate to in Terms of Paycheck?

We will calculate the amount of money earned for one month, one week, two weeks, and one day.

Monthly Paycheck

To calculate your monthly income, divide your annual salary by 12. For example, if your annual salary is $41,600 based on working 2,080 hours per year, your monthly salary would be $3,466.67 ($41,600/12).

If you are paid every four weeks, your salary will be slightly different. To calculate your pay, multiply 40 hours per week by four and $20, which will give you a total of $3,200 every four weeks.

Weekly Paycheck

Your earnings for a week will vary depending on the number of hours you work. Assuming a full-time schedule of 40 hours per week and a pay rate of $20 per hour, your weekly earnings would amount to $800 ($20/hour x 40 hours).

If you work 20 hours per week part-time, you will earn $400 in wages for that week. it also depends on whether you are paid biweekly or weekly.

Bi-Weekly Paycheck

To calculate your biweekly salary based on a weekly wage of $800 for 40 hours, simply multiply by two. So if you work 80 hours in two weeks, you will earn $1,600. If you work only 20 hours a week, your biweekly salary will be $800, calculated by multiplying your weekly salary of $400 by two.

Daily Paycheck

Finally, if you worked for 8 hours a day and were paid $20 an hour, your daily earnings would be $160.

How Does $20 an Hour Compare?

If you earn $20 per hour, your annual income would be $41,600. Although this is lower than the national average income of $60,575 and the median income of $70,784, it is still higher than the minimum wage of $7.25 per hour. In addition, it is also higher than the average hourly wage for part-time workers, which was $14.48 in 2023.

Even without a college degree, a job that pays $20 per hour is a great salary. It also puts job seekers at an advantage over those who are new to job searching. With this wage, they can expect job offers with high pay and valuable career guidance.

Is $20 a Good Hourly Rate?

It is difficult to provide a clear answer to this question as it is influenced by factors such as your location’s cost of living and lifestyle. However, we can offer a rough estimate of how this hourly rate compares to the poverty level.

If you don’t have dependents, the federal poverty level for a single person in 2023 is $14,580. However, if you have dependents, the poverty level goes up. For instance, a family of four has a poverty level of $30,000.

Given these figures, we can deduce that making $20 per hour is enough to keep you and your family above the poverty line and maintain a modest standard of living.

Although $20 per hour is not a generous hourly rate, it is still feasible to maintain a comfortable lifestyle on this income through careful financial management and budgeting. With careful consideration of expenses, you can guarantee that your earnings are adequate to cover your necessities and facilitate a simple standard of living. With this hourly rate, you can even save up more money for the future.

Paid Time Off for Hourly Employees Earning $20 per Hour

Knowing if your employer provides paid time off is crucial for hourly salary employees as it can significantly affect their yearly income. To illustrate, we can consider two situations: one where they receive paid time off and one where they do not, assuming a 40-hour workweek throughout the year.

Case #1: Paid Time Off

If you are an hourly employee receiving two weeks of paid time off each year, your annual income would be $41,600. This is equivalent to the annual salary mentioned earlier.

Case #2: No Paid Time Off

Unfortunately, not all hourly employees receive paid time off from their employers. It’s crucial to prepare for a decrease in income, as there may be occasions when you need to take time off for sickness, urgent situations, or even a holiday.

For example, if you take a two-week unpaid break, your working year will be reduced from 52 weeks to 50 weeks. This means you will work for 2,000 hours (40 hours x 50 weeks) each year, earning an annual income of $40,000 (2,000 hours x $20 per hour). On the days you work, you will earn an average income of approximately $160, but you won’t earn any money on your days off.

By understanding the different aspects of hourly employment, such as monthly salary, unpaid vacation time, and median hourly wage, you can make an informed decision about your career path.

How Much Is $20 An Hour After Taxes?

Understanding your take-home salary after taxes is important, and budgeting can help with that. Taxes can take a big chunk out of your income, so it’s useful to calculate your actual paycheck as a salaried employee.

To better comprehend how taxes can affect your hourly wage, it’s crucial to consider that each individual’s tax circumstances vary. However, for this article, we will rely on the following fundamental presumptions:

  • Federal Tax Rate: 12%
  • State Tax Rate: 4%
  • Social Security and Medicare (FICA) Rate: 7.65%

Gross Annual salary: $41,600

Here is an estimation of your tax deductions based on these assumptions.

  • Federal Taxes: $4,992
  • State Income Taxes: $1,664
  • Social Security and Medicare: $3,182

Net Annual Salary: $31,762

Your annual salary after taxes and deductions is $31,762, which means you will be earning less than $40,000 per year.

To calculate your hourly wage, we’ll use the assumption that you work 2,080 hours in a year.

Net Hourly Wage: $15.2

So, the net hourly wage of an employee earning $20 before taxes is approximately $15.2 after all necessary deductions have been made.


Note that the calculations provided are only estimates, and your real tax rate and deductions may vary.

Note: There are certain states in the US where you don’t have to pay state taxes on your salary income. In such states, you will only need to pay your federal tax and FICA. A list of these states which are tax-free for salary income is given:

1. Alaska

2. Tennessee

3. Texas

4. Nevada

5. Florida

6. Wyoming

7. South Dakota

8. Washington

9. New Hampshire

Based on the tax-free states provided, here is a breakdown of your salary after tax deductions.

  • Federal Taxes: $4,992

Net Annual Salary: $33,426

Net Hourly Wage: $16.04

By understanding your taxes and deductions, you can better plan for the future, save up more money, and receive higher hourly good pay. Taking the time to budget your monthly salary can help you identify areas where you can make cuts or invest more. You can even use a salary calculator to understand your net income and taxes better, so you can make the most of your pay.

Tips for Budgeting With a 20/Hour Salary to Maximize Savings

Identify Your Expenses

Creating a budget should be the first step when you receive your paycheck. Knowing how much money comes in and out of your bank account each month helps you stay on track with your savings goals. To get started, list down all of your expenses for the month and see how much money is left after deducting your bills, loan payments, and other necessities.

Here are the most common expenses associated with a $20/hour salary:

1. Rent/Mortgage

2. Utilities

3. Insurance Payments

4. Transportation

5. Groceries

6. Savings & Investments

7. Eating Out/Entertainment

8. Clothing

9. Gifts & Donations

TIP: To keep track of your variable expenses, collect your receipts for a month and calculate the average.

Create a Budget

To stay aware of your expenses, it’s important to budget your money. An example budget planner can help you keep track of where each dollar is spent on a monthly or weekly basis. To begin, search online for a sample monthly budget.

Here’s the sample budget for $20 per hour after taxes

CategoryMonthly Budget

Minimize Debt

If you earn $20 per hour, it’s important to prioritize reducing your debt when budgeting. Begin by paying off high-interest debts, such as credit card balances. It may also be possible to negotiate a lower interest rate on loans with your lender.

Consider Living in Tax-free States if Possible

Living below your means is a crucial aspect of budgeting. Don’t overspend your income on unnecessary items, and remember that you can save more money if you live within your budget.

Consider living in one of the tax-free states, such as South Dakota, Washington, or New Hampshire, to maximize your savings.

Managing Discretionary Spending

To clarify, discretionary spending means spending on things that are not necessary, such as hobbies or entertainment. It’s suggested that you limit your discretionary spending to between 5-10% of your overall income. It’s important to pay your bills and put money into savings first, and then see how much you have left over to use on non-essential items.

Save and Retirement Funds Consistently

To secure your future, it’s crucial to save for retirement if you earn $20/hour. Try to contribute 10-15% of your salary to a 401(k) or IRA. It will gradually help you create a nest egg for a financially secure retirement. Additionally, consider setting aside at least 10% of your monthly salary for unforeseeable circumstances. An emergency fund will come in handy during unexpected financial situations.

Prioritize Expenses

Prioritize your expenses and pay the most important bills first. Rent or mortgage, utilities, and food should be at the top of the list, followed by other necessities like transportation, insurance, and medical expenses.

Review Your Budget Regularly

To keep your budget in line with your current financial situation, it’s important to review and adjust it on a regular basis since your expenses and income may vary over time. And, in this inflationary environment, it’s essential to review your budget regularly to ensure that you’re staying within your means and not overspending.

Do Some Side Hustle

Earning extra money on the side will help you save more. Look for freelance gigs or part-time jobs in your area that pay well and fit your abilities. Doing side gigs will help you make more money, pay off debts faster, and eventually reach your savings goals.

You will get a detailed list of side hustles in the next section of this article.

Side Hustles To Supplement Your $20 Income

side hustle ideas

If you’re like most of us, earning $20 an hour isn’t going to lead to financial freedom anytime soon. But don’t worry. There are plenty of creative side hustles you can start to supplement your income and reach your financial goals. Here are some ideas to get you started:

Freelance Writing

We know that freelance writing is one of the most popular side hustles out there and for a good reason. If you have a knack for writing, you can easily make extra money writing articles, blog posts, and web content for businesses.

There are plenty of opportunities out there, and you can set your own rates.

Pet Sitting

If you love animals, consider pet sitting as a side hustle. You can make good money by walking dogs, feeding cats, and providing companionship to pets while their owners are away.

Short-Term Rentals

One way to earn more money is by listing your spare room on Airbnb or other short-term rental platforms. Make sure the room is presented nicely, advertised effectively, and kept clean to attract guests. It’s also important that the room has a private entrance to ensure privacy for both you and your guests.

Don’t worry; if you don’t have the space for a rental, you can still make money with Airbnb by managing other people’s properties.

Etsy Shop Owner

If you enjoy crafting, Etsy is a great platform to sell your handmade goods. From jewelry to home decor, the options are endless.

Virtual Tutoring

Are you proficient in a specific subject and hold a degree in it? You can work as an online tutor and earn $20 per hour by teaching students from different corners of the world. It’s a great way to use your knowledge to help people learn and make money in the process.

Food Delivery

Sign up to become a food delivery driver for companies like Uber Eats, GrubHub, or DoorDash. These gigs typically offer flexible schedules and can help you earn extra cash.

Graphic Design

If you have a talent for graphic design, there are many businesses and individuals looking for someone to create logos, social media graphics, and other promotional materials.

Brand Ambassador

Companies need people to promote their brands at events, festivals, or in-store. This can be an exciting way to earn extra money and meet new people.

Virtual Assistant

Consider becoming a virtual assistant for business owners or freelancers who could use extra help with administrative tasks like scheduling appointments, managing social media, or handling email.

Types of Jobs That Pay 20/Hour Salary

If you’re searching for jobs that pay $20/hour, websites that offer job search and career advice can help. You can find job titles that fit this salary, like the ones listed below:

  • Hotel Manager
  • Virtual Assistant
  • Wind Turbine Technician
  • Dental Hygienist
  • Carpenter
  • Freelance Editor
  • Athletic Trainers
  • Maintenance Mechanic
  • Bank Tellers
  • Plumber
  • Warehouse Workers
  • Route Driver
  • Heavy Equipment Operator
  • Event Planners
  • Medical Coder
  • Occupational Therapy Assistant
  • Insurance Agent
  • Customer Service Managers
  • Electrician
  • Solar Installer
  • Freight Broker
  • Movers
  • Entry-Level Marketing Jobs
  • Interpreter
  • Food Serving Job
  • Hvac Technician
  • Maintenance Workers

You can earn a salary of $20/hour or more in any of these professions. Dedication and hard work can help you achieve this goal.

Bonus Tip:

To increase your chances of getting hired and potentially earning more money, make use of free resources like online courses and tutorials to broaden your skills. These resources can make you more desirable to employers.

Is $20 an Hour Enough to Buy a House?

Financial ObligationsInformation
Hourly Rate$20
Gross Monthly Income$3,467
Down Payment3%
Loan TypeConventional
Credit Score760 or Higher
Monthly DebtsNone
Maximum Spending on a Home50% of Gross Income
Total Monthly Repayment$1,750
Other Financial ObligationsCan Reduce Qualifying Amount for Home Purchase

While earning $20 an hour can be a decent income, it does not guarantee that you can buy a house. As shown in the table, several factors affect your ability to purchase a home, including your credit score, monthly debts, and down payment.

Assuming you have no monthly debts and a credit score of 760 or higher, you could potentially spend up to 50% of your gross income on buying a home, resulting in a total monthly repayment of $1,750.

However, if you have other financial obligations, such as car payments or student loans, your qualifying amount may be less. Therefore, it’s important to carefully consider all financial factors and ensure that you can comfortably afford the monthly repayments before purchasing a home.

Can You Live On $20 an Hour?

The ability to survive on a wage of $20 per hour depends on your individual circumstances. A single person with no dependents may be able to live comfortably on this amount, but if you are married and have to pay rent, it could be challenging to make ends meet with $20 per hour.

Final Thoughts on a $20/Hour Salary

A salary of $20 per hour can be an attractive compensation rate, particularly if you are looking for flexibility in your job. This wage provides a comfortable living for many, but it is important to consider your monthly expenses and budget before making any financial decisions.

Don’t forget to make use of free online tutorials and courses to increase your knowledge, making you more attractive to employers.

FAQs – $20 Per Hour

How is the annual salary calculated from an hourly wage of $20?

To calculate the annual salary, multiply the hourly wage by the number of hours worked in a year (usually 2,080 for full-time employees). This gets you: $20/hour x 2,080 hours = $41,600/year.

What kind of jobs pay $20 per hour or more?

Jobs that pay $20 per hour or more include skilled trades such as electricians, plumbers, and carpenters, as well as healthcare positions such as registered nurses and medical assistants. Other jobs that pay $20 per hour or more include positions in information technology, real estate (REITs), engineering, and finance.

Are there entry-level jobs that pay $20 per hour or more?

While many jobs that pay $20 per hour or more may require some level of experience or education, there are some entry-level jobs that pay this rate. Examples include some customer service and administrative roles, as well as some manufacturing, consumer services and warehouse positions.

How can I find jobs that pay $20 per hour or more?

There are many online job boards that allow you to filter job postings by salary. You can also research industries that typically pay higher wages, such as healthcare, technology, and skilled trades, and look for job openings in those fields. Additionally, networking and reaching out to recruiters may help you find job opportunities that match your salary expectations.

The post $20 an Hour Is How Much a Year? appeared first on Good Financial Cents®.

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