Is $40,000 A Good Salary?

By Zach Buchenau

Last Updated: July 22, 2021

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Is 40K a Good Salary | Be The Budget

Whether you are a college graduate on the job hunt, changing careers, or just assessing your current work situation, your salary is an important consideration. You have bills to pay, retirement to start funding, and life to afford. So, when a job that pays 40K per year piques your interest it’s natural to ask the question, is $40,000 a good salary?

In general, a $40,000 salary is considered below average in America. Though, this depends on your career field, experience, and cost of living. Whereas $40K might be more than enough for a young adult, it would likely be insufficient for someone with years of experience and a family to support.

$40K Salary Breakdown

Before you accept a job that pays $40,000 per year, it is a good idea to break down your income.

In fact, we recommend setting up a hypothetical budget with the salary to make sure the income will work with your lifestyle.

To make things a little easier, here is a quick breakdown of $40,000 per year. Please note, this is gross income, which doesn’t account for taxes. Additionally, these calculations are based on 52 weeks, 5 work days per week, and 8 hours per day.

So, how much is $40,000 a year per month, biweekly, per week, per day, and per hour?

SalaryPer MonthBiweeklyPer WeekPer DayPer Hour

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

When determining how much rent you can afford, there are two schools of thought. The first is that your gross monthly income should be greater than or equal to three times the cost of rent. So, if you make $40,000 per year, you would be able to afford rent up to $1,111.11.

In general, this is the standard that most apartments and property management companies will require in order for you to qualify as a renter. However, this rule of thumb does not allow much room for debt repayment, extra bills, and very much saving or giving.

So, here at Be The Budget, we take a different, more conservative approach. We recommend that your rent should not be more than 25% of your net income. In other words, 25% of your take home pay.

As an example, if you make $40,000 per year, and after taxes you take home $2,775, then your rent should be no more than $693.75 per month.

Now, I understand that this figure might seem low. But if the main point of making a salary is to save money, give generously, and build wealth, then the last thing you should do is spend too much money on rent. So, you might need to find a roommate or two. Or, you might need to move to a less expensive part of town.

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How To Make The Most Of A $40,000 Salary

Whether you make $40,000 per year, or $100,000 per year, if you aren’t careful to live within your means, you will end up broke. And to keep that from happening, we’ve put together a few key financial tips to make the most of your $40,000 salary. These tips will help you keep the money you make, in order to build a strong financial future.

Get On A Budget

As I mentioned earlier, a $40,000 salary is slightly below the median salary in America. For that reason, if you want to make the most of your money, you need to get on a budget. Now, that does not mean you can’t have any fun. It just means that you need to create a monthly financial plan for your money and dedicate yourself to it.

No matter how much money you make, you need to be intentional about it. Your net worth is not determined by how much you make, but how much money you keep. So, get on a budget, and prioritize saving at every turn.

Get Out Of Debt

The more debt you have, the harder it becomes to make ends meet. And when you make $40,000 per year, you need to maximize every penny that comes in.

For that reason, you should avoid debt at all costs. And if you are in debt, you should create a plan to get out of it as fast as possible.

Track Your Money

Tracking your money is a key aspect of maintaining your financial health. Without knowing exactly how much money you have coming in each month, and how much you are spending, it is difficult to make financial improvements.

Give, Save, Live

For most people, the process of personal finance goes in the following order: earn money, spend money, save and give based on the leftover money. However, this is not the financial pattern of the wealthy.

Your savings should not be determined by how much you spend. Instead, your living expenses should fit within the boundaries of whatever money is leftover after you give and save. Essentially, your financial pattern should fall in the following order: give, save, and live off of what’s left over.

Over time, this way of living will lead to financial freedom, no matter what salary you make.


If you want to build enough wealth to live off of the interest of your investments, you need to make investing a big part of your financial plan. Now, I know that $40,000 might not feel like a salary that could generate any kind of wealth, but that is dead wrong.

Consider this: if you were to invest $500 every month for the next 30 years, and earn an average annual interest rate of 10%, you would end up with over $1 million in investments. At that point, you would be earning $100,000 per year on interest alone. I’m betting if you really try, you can find a way to invest $500 per month on a $40,000 salary. (Especially if you are debt free.)

10 U.S. Cities Where A $40K Salary Might Not Be Enough

In most cases, when paired with a solid budget, a $40,000 salary is more than enough to survive. However, there are definitely a few exceptions. More specifically, there are a few cities in the U.S. where $40,000 would be particularly difficult to make work.

According to Kiplinger, the top 10 most expensive cities to live in the U.S. are as follows:

  1. Manhattan, NY
  2. San Francisco, CA
  3. Honolulu, HI
  4. Brooklyn, NY
  5. Washington, D.C.
  6. Seattle, WA
  7. Oakland, CA
  8. Arlington, VA
  9. Queens, NY
  10. Boston, MA

Final Thoughts

Though a $40,000 salary might be below the median individual income in America, in general, it is more than enough to survive. That said, it depends on the city in which you live and how you handle your money.

Would $40,000 be enough for you to survive in your city? Comment below. We would love to hear your responses.

Is 40000 a good salary | Be the Budget

Zach Buchenau

About The Author:

Zach Buchenau is a self-proclaimed personal finance nerd. When he isn't writing about budgeting, getting out of debt, making extra money, and living a frugal life, you can find him building furniture, fly fishing, or developing websites. He is the co-founder of BeTheBudget, and Chipotle's most loyal customer.

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  1. I am 68 yes old imake net $41,000.00 rent $650.00 . I invest I have a managed portfolio that is doing OK I am going to use your advise and put $500.00 a month into. Science and Mrdical advancements give the possibility of living another 30 to 40 years feasible. Besides investing can be very entertaining as long as it doesn’t drive you and consume every hour of each day looking for that one investment thst will be a block buster overnight success. That search and drive behind the investing can ruin a good portfolio trying to make it better.

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