Want to know how much money you make per hour if you earn a $45,000 per year salary?
You can earn money from a full-time job, from contract work or from part-time employment like freelancing. But when you add up the income from all these sources and the number of hours you work, how much do you get paid per hour?
$45,000 a year may sound like a lot of money, but when you break it down into an hourly wage, the number looks more like $20.00-$22.00 per hour.
If you want to know the answer to “$45,000 per year is how much an hour?” keep reading!
$45,000 Per Year is How Much an Hour?
To calculate this you need to know how many hours per year you work, then just divide $45,000 by that number.
That means, if you work the standard 40 hour work week, 52 weeks per year, you’d need to divide $45,000 by 2,080 hours (40 * 52).
If this is your measure, $45,000 per year is $21.63 an hour.
However, if you freelance, side hustle or work as an independent contractor, you might not work 40 hours per week. Instead, you could work more or less depending on the nature of your work.
In the case where you work more hours, that hourly wage decreases because the numerator remains constant ($45,000) while the denominator (number of hours worked) increases.
The lowest hourly wage you can with a $45,000 income in a year is $5.14/hour. That’s not quite half of the federal minimum wage.
Though, to achieve such a low average wage, you’d need to work every hour of the year: 8,760 hours (24 hours per day * 7 days per week * 52 weeks per year)!
While it’s important to learn how to make money while you sleep, something tells me no one could work literally every hour of one year.
We do have to sleep, eat, relax and be social. That takes away at least a third of those hours (at an absolute minimum). You’ve also got to factor in weekends, holidays and vacation.
On the other end of the spectrum, when you work fewer hours but still take home $45,000 per year, you actually earn a much higher wage.
Perhaps you only work part-time at 20 hours per week but still earn $45k per year. If so, your average wage actually comes to $43.27 per hour (same pay but half as many hours).
As you can see, the amount of income remains constant, but the hours you work may vary. Therefore, it is important to get the most out of your time.
Know the Opportunity Cost of Your Time
It’s important to know what your average hourly wage is because you can then judge the cost of your time and then what your opportunity cost is. This means the cost of your next best alternative.
In this case, if you earn $45,000 per year and work 2,080 hours per year (40 hours per week), you know your opportunity cost is $21.63/hour.
That means if you have an opportunity to earn more than this wage per hour and you have the ability and desire to do so, it is worth your time to pursue this opportunity.
Doing so makes you better off financially and earns you a higher return on your time than your current job.
You can increase the opportunity cost of your time (or earn a higher wage at your current work) by working fewer hours but making the same annual pay.
This works by accomplishing the same work responsibilities in less time and more efficiently.
You can accomplish this by:
- gaining on the job experience
- going to school to get a specialized education to work more effectively and efficiently in your job
- automating routine, time-consuming tasks
- outsourcing work where possible
This last one requires an even deeper understanding of opportunity cost and return on investment.
Outsourcing work likely entails added expense and lower margin. However, if you can take this saved time to earn even more money, you’ve made a great investment.
Do it enough and at scale and you’ve made yourself an entrepreneur capable of arbitraging an income from a company and managing freelancers or contractors to handle your responsibilities.
As another outlet for increasing your hourly wage, you can also earn money from income generating assets. While these don’t directly relate to how many hours you work, it can increase your annual income and result in a higher net effective wage.
Investments like these are some of the best assets to invest in because they don’t require you to take time to earn money beyond investing in them and letting the income payments come directly to your bank account.
How Much is Your Paycheck if You Make $45,000 a Year?
Now that we understand calculations for hourly wage, let’s explore what a person with a yearly salary of $45,000 can expect from his or her paycheck.
→ $45,000 a Year is How Much Biweekly?
When looking at how much $45,000 a year is biweekly in your paycheck, you simply need to calculate how much you would earn over every two weeks.
If you assume a full-time position with no overtime and exactly 40 hours per week, then you would earn $45,000 / 26 bi-weekly pay periods = $1,730.77 per biweekly paycheck.
However, this is pre-tax, pre-deduction earnings. For anyone who lives in the real world, we know this doesn’t account for things like:
- Income taxes
- FICA (Social Security and Medicare)
- Pre-tax deductions like those to retirement accounts, health savings accounts, dependent care flexible spending accounts or anything else
- Health insurance premiums
→ How Much is $45k a Year Monthly?
If you received your salary in a monthly series of paychecks rather than biweekly, the checks would be less frequent but more per paycheck.
Ignoring the effects of taxes and deductions, $45k a year monthly is $3,750 per paycheck.
You might be paid time off and federal holidays, depending on how many are given per year. If so, your monthly pay effectively goes up on an hourly view.
How Much is $22 an Hour Annually?
If you can earn $22 an hour, this translates into $45,760 a year. Assuming of course you mean for a 2,080 hour work year.
If you work 20 hours per week, $22 an hour equals $22,880 a year.
If you work 30 hours per week, $22 an hour equals $34,320 a year.
If you can earn a raise at your job from $21.63 to $22 an hour, you’ll earn an extra $770 per year (ignoring taxes)!
- $50,000 a Year is How Much an Hour?
- $40,000 a Year is How Much an Hour?
- $55,000 a Year is How Much an Hour?
$45,000 a Year is How Much After Taxes?
Never, ever forgot that Uncle Sam always wants to weigh in on your earnings. Unless you earn passive income from long-term capital gains or qualified income sources and learn how to pay zero taxes, you’ll need to pay the man.
Because of this unfortunate reality, your effective wage is actually less than $21.63 per hour or $45,000 per year.
Taxes are a complicated topic, and it’s difficult to offer tax information without knowing the full details about your income, job status, retirement contributions, state of residency and other factors. So, I won’t! Especially being a CPA, that’s a big no-no.
(If you need specialized tax advice, you’ll need to talk to me as a client. Find my email address on my contact page and hit me up if you’d like to hire me.)
So, let’s just stick to a general example. We’ll keep it easy, too. I’m picking a state without an income tax like Florida. Heat, humidity and no state income tax. I hear they’ve also got some nice beaches on the Gulf of Mexico side of the state.
I’ll also assume you have a simple tax situation and you only claim the standard deduction as a single person. Your $45,000 a year would be this much after taxes:
- $45,000 annual pre-tax income
- -$3,715 federal income taxes
- -$3,443 FICA taxes
- $37,843 after-tax take home income
If you get paid on a biweekly basis as a full-time employee, you’d have $1,455.50 per bi-weekly paycheck in after-tax income.
If you get paid on a monthly basis as a full-time employee, you’d have $3,153.58 per monthly paycheck in after-tax income.
How Much is a $45,000 Salary Compared to All Americans?
Median household income for an American in 2018 was ~$63,000 annually. This means that the total annual household income of every family member is taken into consideration, not just one individual’s income, or a per capita measure.
If your household has two earners making $45,000 a year, your household income is $90,000. This would put you above the median American household income in 2018.
Likewise, if your household has one earner making $45,000 a year, you’d have fallen below the median household income during that year.
What Types of Jobs Pay $45,000 Per Year?
According to the Bureau of Labor Statistics’ Occupational Outlook Handbook, these professions appear to offer median pay in the $40,000 – $60,000 range.
Meaning, you might start at the lower end of the pay scale but possibly able to work your way up to higher pay as you gain experience.
Some of these jobs do not require a high level of education or have many barriers to entry because they provide on-the-job training.
This list doesn’t even pick up on the high-paying and most in demand job opportunities that come with a tech degree. Many of which can pay over $75,000 per year.
|Occupation||Entry-Level Education||On-the-Job Training||Projected Number of New Jobs||Projected Growth Rate||2020 Median Pay|
|Survey researchers||Master’s degree||None||Declining||Decline||$40,000 to $59,999|
|Electro-mechanical and mechatronics technologists and technicians||Associate’s degree||None||0 to 999||As fast as average||$40,000 to $59,999|
|Physical therapist assistants||Associate’s degree||None||10,000 to 49,999||Much faster than average||$40,000 to $59,999|
|Crane and tower operators||High school diploma or equivalent||Moderate-term on-the-job training||0 to 999||Slower than average||$40,000 to $59,999|
|Property, real estate, and community association managers||High school diploma or equivalent||None||0 to 999||Little or no change||$40,000 to $59,999|
|Fundraisers||Bachelor’s degree||None||10,000 to 49,999||Much faster than average||$40,000 to $59,999|
|Legal support workers, all other||Associate’s degree||None||Declining||Decline||$40,000 to $59,999|
|Tapers||No formal educational credential||Moderate-term on-the-job training||Declining||Decline||$40,000 to $59,999|
|Cardiovascular technologists and technicians||Associate’s degree||None||1,000 to 4,999||Faster than average||$40,000 to $59,999|
|Flight attendants||High school diploma or equivalent||Moderate-term on-the-job training||10,000 to 49,999||Much faster than average||$40,000 to $59,999|
|Plant and system operators, all other||High school diploma or equivalent||Moderate-term on-the-job training||0 to 999||Little or no change||$40,000 to $59,999|
|Telecommunications line installers and repairers||High school diploma or equivalent||Long-term on-the-job training||Declining||Decline||$40,000 to $59,999|
|Sales representatives of services, except advertising, insurance, financial services, and travel||High school diploma or equivalent||Moderate-term on-the-job training||50,000 or more||Faster than average||$40,000 to $59,999|
|Property appraisers and assessors||Bachelor’s degree||Long-term on-the-job training||1,000 to 4,999||As fast as average||$40,000 to $59,999|
|Source: Occupational Outlook Handbook|
Is $21.63 a Good Hourly Rate?
Earning $21.63 per hour is a living wage that can support yourself and a small family. For 2020, if you are a single individual without any dependents, the federal poverty level is $12,760.
If you have a small family of 4, the federal poverty level rises to $26,200. If you account for taxes, $45,000 a year of income after-taxes is roughly $37,800.
This places a decent level of cushion between your income and what the federal government deems to be the level national average for poverty.
However, this federal poverty level measure may have different mileage depending on the cost of living in your area and where you live.
$45,000 in New York City won’t go as far as $45,000 in Houston, Texas. Consider the cost of living for your area before deciding if $21.63 is a good hourly rate.
For most Americans living outside of expensive metropolitan areas, $21.63 is a good hourly rate which can support your living needs, though not live an extravagant lifestyle.
You might consider developing some high income skills to increase that hourly rate.
Udacity offers online courses that can provide in-demand job skills for an individual. Skill workshops, on-demand lessons and job placement opportunities are all offered by the learning platform.
A nano-degree can help you learn valuable skills to advance your career and earn a higher paycheck.
Is $45,000 a Good Salary?
The answer to this question will vary, but $45,000 a year will firmly place you inside the American middle class.
In most metropolitan areas, $45,000 per year is a respectable salary.
$45,000 in Houston may not be enough for your lifestyle while $45,000 in New Orleans will pay your expenses, but you’ll need to live within your means and find a cost-cutting living situation.
If you are on your own and live alone, then $45,000 annually can be a good salary to support yourself. You may also want to invest in your retirement and build up a respectable net worth.
You can do this on $45,000 a year, but the challenge will be harder than if you earned $50,000 or $60,000 a year.
That doesn’t mean you need a six-figure salary to live the American dream, because $100,000 per year is not necessary either.
In most cities and towns in the United States you can make it on less than $45,000 annually if your lifestyle isn’t extravagant.
Want to Make More than $45,000 a Year?
All of the calculations in this article consider that you work all 2,080 hours of a full-time employee per year. In practice, many people take time off from work to enjoy other activities.
Don’t forget, your hourly may remain the same, but you might not actually work the full year. You may get paid time off work, or PTO.
If you receive 2 weeks of PTO per year, your hourly earnings are actually higher than they would otherwise be because the hours you get for vacation time are calculated into the rate.
Meanwhile, you may also have federal holidays like 4th of July, Christmas, New Year’s and other major events. Some salaried employees get between 8 – 10 federal holidays off plus 2 weeks PTO. This means 3-4 weeks of annual leave per year.
If that’s the case, then you actually earn more than $21.63 per hour because you take the same $45,000 per year and divide it by 48 weeks, or 1,920 hours, and earn $23.44 per hour.
With these four weeks away from work, you have a chance to take a break, get ahead in your current position or pick up a side hustle or freelance.
→ Start Freelancing and Side Hustling
Personally, I supplement my job by working as a freelance finance content marketing writer to increase my annual pay. You might want to investigate other ways to supplement your income with lucrative side hustles.
But this can mean taking up a job that is best suited to your skills and ambitions.
This can include things like:
- Taking surveys
- Working as a virtual assistant
- Making videos, games or apps for mobile devices
- Offering services on sites like Fiverr. (Learn how to get started selling your services on Fiverr with their low-cost introductory courses)
- Becoming a rideshare driver
- Performing transcription services for videos or audio recordings
- Selling on eBay or Amazon (or other online selling sites)
- Flipping furniture
- Designing and styling websites (or resume templates)
- Renting out your car on a platform like Hyrecar
- Becoming a dropshipper
→ Learn How to Make Money from Your Money
To get ahead, you really need to learn how to turn money into more money.
This means investing in appreciating assets, as well as one that provide you an extra income source as well.
Budgets can help you trim the unnecessary expenses. Start there by cataloging where your money goes and figuring out how you can reorient where it should go.
This will allow you to control your finances and free up money for more important things like investing. This lets you make money from your money through stocks, bonds, ETFs and mutual funds to provide you with long-term returns and income.
You’ll need to start first by establishing an emergency fund if you haven’t already. Afterward, I’d also recommend starting to invest in your employer’s 401k if they offer a match and good investment options.
This will give you more control over your investments and provide tax-deferred growth, which will help make money from your money in the long run.
The next logical step is to contribute an individual retirement account—you can choose between a traditional and Roth IRA—to provide you with tax-deferred or tax-free growth, respectively.
The traditional IRA is great for people who anticipate a lower income in retirement, while the Roth IRA offers no taxes on withdrawals–meaning more money to spend later when you’ll likely be in a higher income tax bracket after you’ve saved so much.
If kids earn income, setting up a Roth IRA for kids can lock in low income tax rates now and let them have decades of tax-free compounding returns.
It’s important not to put all of your eggs into one basket though – diversify what you invest in so it won’t be as hard on the pocketbook if we experience a downturn in the market.
There are several services that offer stock advice through investment newsletters or stock picking services. Be sure to read through the investment advice provided and determine if any of them match your own personal financial goals.
Learn how to research stocks with useful stock analysis apps and begin investing through free stock apps to keep more money in your pocket. Many investing apps will offer you a sign-up bonus when you open an account and make a minimum deposit.
- How to Stop Hemorrhaging Money and Get Back on Track
- I Appreciate You: What It Means & Why You Should Say It
→ Invest to Earn Passive Income
You may want to pick investments that generate passive income for you so your annual earnings will be higher.
Those who have persistence and determination can make $45,000 per year in passive income. Continue investing in worthwhile endeavors like real estate investing and your investments will earn you $45,000 per year.
Add in your work income and you’ll be upgrading your annual take home pay in no time.
You might consider investing with a crowdfunding real estate platform like DiversyFund. The company targets multi-family housing complexes with 100-200 units and reinvests the cash flows received from tenants to improve the building.
After about 5 years, the company flips the property to another investor and distributes the returns to DiversyFund investors.
$45,000 a Year is How Much an Hour?
An average person works about 40 hours per week, which means if they make $45,000 a year, they earn $21.63 per hour.
This is a living wage in some parts of the country, especially if you’re part of a dual-earner household with both partners earning $45,000 per year.
Learn how to invest with $45,000 a year in income from your main source of income and pick up other side hustles to increase your income further.
It is possible to make a lot of money if you have the freedom to do what you love.
Just keep investing to build your net worth and practicing good money habits.