60k a year is how much an hour? And how do you budget for a 60k salary? Let's find out.
If you're a high school teacher, public relations specialist, zoologist, HR specialist, or a writer, you may make around $60,000 per year. This is around $4,000 higher than the current US median wage.
How far this amount of money gets you will depend greatly on your budgeting, as well as where in the country you live.
60k a Year Is How Much an Hour?
When figuring out your hourly wage from your total annual income, you'll need to keep in mind how many hours you work each year. It's also important to take into account how much paid and unpaid vacation time you receive.
If you take two weeks of vacation each year that's unpaid, you are working 50 weeks a year. If you work 40 hours a week, then your yearly working hours amount to 2,000 hours.
In order to calculate your salary in this circumstance, you divide $60,000 by 2,000 hours to come to an hourly wage of $30 per hour.
If you receive two weeks of paid vacation time and you make $60,000, your hourly wage will be a bit lower. The hourly wage will be the same as if you worked 52 weeks at 40 hours a week without taking any vacation time. For each hour you work in this scenario, you make $28.85.
Each month that you work at a $60,000/year salary, you make $5,000 per month. Since months vary in length, this is just a rough number and not an exact figure.
If you look at your salary in terms of 13 four-week periods in a year, you make $4,615.38 during each of these four-week periods. Your weekly income when you make $60,000 breaks down to $1,153.85 per week.
Wondering how much money you make each day on a $60,000/year salary? If you are working 2,000 hours a year, it means that you're making $240 each day.
Now Factor in Taxes
It's important to understand that your $60,000 salary is likely the amount you make before taxes. This means that federal, state, and Social Security taxes will be taken out.
Your tax rate will depend on what state you live in, but if it's one that has no state income tax, like Florida, it will obviously be lower. It also depends on whether or not you are married and have children.
If you are married and have one child and live in a state that doesn't tax income, your “effective” tax bill will be about $600/month when factoring in all standard deductions and child credits.
But again, for clarity, your tax bill can vary a lot depending on your circumstances.
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How to Budget for a 60k Salary
We all have goals we're working towards financially. Budgeting is very important because it allows you to cover your expenses, as well as plan for your those goals and the future.
Whether your goals include saving a down payment for a house, taking a relaxing vacation, or paying for your child's college education, budgeting is essential to keep your eye on the prize.
Budgeting also helps keep you from spending money you don't have. American credit card debt has jumped 20% in the last decade.
As the cost of a middle-class lifestyle, health care and education rise, so does our credit card spending. If you are paying interest on credit card balances, you have spent money you don't have, and now you're losing even more of it.
Another reason to create a budget is to set yourself up for a comfortable retirement. It can be difficult to think about things decades down the line, but you'll be glad you did when you get to retirement age. If you budget well and invest, you might even get to retire early.
When you have a budget, you'll be prepared in the case of an emergency. Expensive unexpected events happen to everyone at one point or another, and it's important to have a safety net if and when this does occur.
Having a budget can also give you peace of mind. It's better to shed light on bad spending habits and change course now, rather than to keep your head buried in the sand.
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Budgeting for Necessities
When budgeting for your salary, you want to make sure your necessities don't exceed half of your monthly income. Necessary expenses include groceries, housing, and transportation.
Your housing costs can include mortgage or rent payments, utility bills, and maintenance costs. This will be around 30% of your monthly income, if possible.
The remaining 20% or so of your necessities budget will go towards food and transportation. Whether you pay for public transportation or have a car, it's important to include all necessary expenses in this category when salary budgeting.
Cars have lots of additional expenses beyond their initial cost: gas, maintenance, insurance, registration, repairs, tune-ups, and inspection.
After your transportation costs are accounted for, the rest is leftover for groceries. Take the amount of money you have allotted to groceries each month and divide it by 4. This is how much you should plan to pay at the grocery store each week.
Budgeting for Health Care
Health care is a variable because you may get some of it paid for through your employer. Hopefully, this is the case, because it's expensive to have to cover it all yourself.
In the budget I am including, I've assumed that your employer will be covering a portion of your monthly health insurance premiums.
Budgeting for a Child
Again, this is a big variable. It of course depends on how many kids you have, their ages, what schooling options are available and if both parents work.
For the budget I have included, I assumed one child, two parents in the home, and only one parent working so the other is able to care for the child.
I realize that is only one of many possible scenarios, but that is what I chose for argument's sake.
Budgeting for Discretionary
“Discretionary” is your flexible spending. Anything that isn't absolutely essential falls in this category.
When budgeting for discretionary spending, the percentage will depend greatly on how much you make. As these items are optional, they get reduced if your income is not high.
Additionally, if the other parts of your budget require more funding, you would pull from your discretionary funds to solve that problem.
When trying to save money, this is where you trim spending, rather than for necessities, debt payment, or investment.
Budgeting for Saving and Investing
Ideally, at least 10% of your salary should go to saving and investing for your retirement. This is quite manageable on 60k/year if you are single, but it gets harder if you have a family to support.
That said, as your salary goes up, you really need to increase your savings rate. A minimum goal would be to get your savings rate up to 30% of your gross income. Some FI/RE people go as high as 75%.
However, if you have debt, you may opt to reduce your debt, and then build up a 6-month emergency fund before starting to invest for retirement.
Wondering how to invest your money? Check out this article about the 7 methods for investing.
Budgeting Your Salary Is Essential
No matter how much money you make, it's important to create a budget for your salary. Otherwise, it's easy to spend way more than you make — or at least not save nearly as much as you'd like to.
To help you out, I've put together a simple budget that covers all that I wrote above. Admittedly, it's pretty tight and would require some fiscal discipline to adhere to, but that's how effective budgeting goes.
Answers to questions like: “60k a year is how much an hour?” will help you understand how far your money can go for you. A budget is key to making the most out of your income, whatever it may be.