You may be wondering if your salary is enough to live in peace. In case you earn a similar salary and wonder: “is $60,000 a good salary? We will help you answer this question by calculating some expenses.
The quick answer is that a salary of $60,000 for a single person is no reason to complain. We’ve turned to the latest Census analysis of U.S. income, and the average household income in 2020 was around $67,521 per year. Knowing this, you can get an idea about whether $60,000 is a good salary or not.
The U.S. is very large, and living in America does not cost the same depending on the place, so we need to look closer at some data. That is, of course, if you want an honest answer to your questions. Let’s get started
$60,000 Salary Breakdown
To start with this analysis, we must know what the true value of your work is. We must divide it into smaller sections to calculate how much of your day you dedicate to your job. It isn’t very easy to live day by day paying when you calculate your salary by year. So it will be much more comfortable to concentrate on smaller amounts to find out if $60,000 is a good salary.
While it is very likely that you will not have the same hourly workload or the same working days as most readers, let’s generalize. The workload for Americans is typically 40 hours per week, over 52 weeks per year.
We count a Monday to Friday schedule, 9 to 5, and on weekends. If you have different schedules, more or less working days, you can change the equation to your advantage.
Having cleared all this up, let’s look at your salary breaks down for a monthly, biweekly, weekly, daily, and hourly income.
Monthly Salary Breakdown
This first calculation is relatively easy, as some companies usually pay monthly. If this is your case, you probably are already accustomed to this figure. In this case, since it’s 12 months out of the year, you should divide your salary by 12. In this case, you would be earning $5000 per month.
Weekly and Biweekly
The other most common way to receive your paycheck is on a weekly or biweekly basis. This way is usually more complicated since you have to make a more difficult account. Let’s see:
- Weekly: You should keep in mind that there are 52 weeks in a year, but there may be weeks in which you do not work and do not receive income. If you are part of this exception, consider it when doing the calculation. What you should calculate is 60,000 divided by 52. In total, you would earn $1,154 per week.
- Biweekly: It is easier to calculate biweekly if you have already calculated how much you earn per week. All you have to do is multiply the result of the previous calculation by 2. This way, you would earn $2,307 every two weeks.
This is the case in which most people do incorrect calculations and reach the wrong assumption. To calculate how much you earn per day, you must consider that the year has 365 days, but you do not work every day of the year.
A typical work week consists of 5 days a week, from Monday to Friday. So it would help if you deducted weekends, which means the number of working days is reduced from 365 to 260 per year.
So, to calculate how much you generate per day, you must divide $60,000 by 260, so you would be receiving $230.7 per day.
The final calculation consists of taking all of the above data and applying it. Having 260 working days of 8 hours each, you must multiply them, and this should be applied to your specific case in case it is different.
We are generalizing at 2080 work hours in a year. Now you must divide $60,000 by 2080 to calculate how much an hour of your work is worth. In all, you would earn almost $29 per hour.
$60,000 income after taxes
Although we have considered how much your time costs and how much you generate per hour, this is not the actual amount you will receive. It would help if you kept in mind that what you get in your pocket is less than the gross amount of your salary because you have to pay taxes.
The corresponding taxes will depend on what you do for a living and which state you live in. What is certain is that you will most likely have to pay federal and state income tax, Social Security, and Medicare. So this will considerably reduce the amount of money that will come into your account.
Federal Income Tax
Considering that you earn around $60,000, you would fall into the category of 22% for single filers. This does not mean that you pay 22% of all your income in taxes. Luckily the IRS operates a marginal tax system. Right now there are 7 different categories of marginal brackets for federal taxes: 10%, 12%, 22%, 24%, 32%, 35% and 37%.
Considering that you are a single filer and apply the taxes as they are today, you would pay 10.44% in federal taxes. Therefore, from your $60,000, you should deduct about $6264 per year.
State Income Tax
In this section, we cannot help you too much, as it is not up to you. The state income tax is charged depending on where you are paid. So we can’t calculate it for you as the percentage varies a lot from state to state.
For example, some states charge a flat rate on all of your income, but there are other states where the more you charge, the more you are taxed. Even some states have no state income tax, but they are usually the exception.
Suppose you have to pay a flat rate of 4% (this is an average of most states). In that case, the calculation you should do is as follows: 60,000 multiplied by 0.04. Therefore, the state income tax you should pay is $2,400.
You can find the latest information on this tax here.
Social Security & Medicare
Finally, we must consider the FICA taxes. This is the set of taxes for Social Security and Medicare. Currently, the rate is fixed, and it is always 7.65%, regardless of how much you earn. Therefore, you must perform the following calculation:
60,000 multiplied by 7.65%. The result is $4,590 per year in deductions for FICA taxes.
Now that we know how much we must pay for each specific tax, we must add them up. This time the operation is quite simple: $6,242 + $2,400 + $4,590 = $15,562
Remember that all these taxes can vary a lot depending on your specific case. We have tried to estimate by generalizing things a lot, but maybe it is more beneficial to perform these operations according to your case.
However, according to our calculations, from the initial $60,000, you will probably receive in your account around $45,000. So before doing any activity with your money, it is always important to calculate how much money you have to pay in taxes. After all, $15k is a considerable amount!
How Far Will a $60,000 Salary Stretch?
Now that we know how much money we have to pay in taxes, we will focus on the basic expenses that any person must make. It is essential to keep in mind that the value of your salary can fluctuate a lot depending on the city where you live, and this affects how much you will pay in taxes and how much you will spend on a day-to-day basis.
Although we could calculate precisely for each state depending on whether you live in an expensive or cheap place, we believe that the fairest thing to do is to look for a balance. By calculating in this way, we will have an approximate value that applies to most people in the United States.
However, it would help if you remembered that $60,000 is a good salary, depending on where you live. The value of rent, food prices and even personal transportation can all vary.
Considering that you will receive around $45,000 a year after taxes, we estimate that you will have a monthly salary of $3,750. This way, it will be easier to calculate the expenses you will have daily.
We will also use the percentage rule that we recommend you keep in mind: the 50/30/20 rule. This works by allocating your money as follows:
- 50% of your income for your needs.
- 30% for wants, basically those things you don’t need but consume anyway, as we will see later.
- 20% of your salary, we recommend that you save for future purchases or debt repayment if necessary.
Applying the 50/30/20 rule, we can assume that with your monthly money of $3,750, you have almost $1,900 for your needs. Among them are mandatory expenses for a human being, such as groceries, housing, transportation, or insurance.
Let’s see how much each one can cost and find out if $60,000 is a good salary or not!
This expense is almost mandatory and is probably the highest cost, but it can vary a lot depending on where you live. For example: according to this Douglas Elliman report, the most expensive place you can live in the United States is in New York. It is costly to live in this city since a room for one person costs around $2,500, and it is more than what you would have calculated for your needs.
Luckily there are places where living is much cheaper, such as Mississippi. This southeastern state has the lowest average price in the U.S., at about $800.
So with the same money, you could pay for a room in some states, in others, you could rent a bigger house.
To generate an approximate value, we must rule out many options in cities where renting exceeds our budget. States like Maryland, New York, Washington, California, Florida, or New Jersey are places where you probably can’t live comfortably with this salary.
Making a balance between the most expensive and the cheapest states, we estimate that you will need $1,200 a month approximately in the rest of the States.
When it comes to utilities, we need to differentiate ourselves from the rest of the population. Most of the studies about how much Americans pay annually in utilities are measured by families. In our case, we want to find out if $60,000 is a good salary for a single person, so we need to calculate a little less.
Approximately an average U.S. family spends $2,060 a year on utility bills. The most common of these are water, electricity, heating, internet, and garbage collection. This adds up to almost $180 a month for the average family, but we will calculate a little less since we will be living alone. You will probably require $120 a month if you are in the average range.
The amount you spend on groceries will depend on your lifestyle. If you follow some exclusive diet or something like that, this value may vary. According to the 2020 U.S. Bureau of Labor Statistics, the average spending for a family is $4,942. This value can also be very different depending on where you live.
We assume that you will spend much less than this figure considering that: you will be living alone and we have already ruled out living inexpensive places. We can reduce this price to approximately $3,500 per year, leaving us with a figure of about $291 per month.
We will use Bureau of Labor Statistics data as our Source again. Studies done in 2020 show that the average household expenditure is $819, and logically the expenses will be much lower considering you will be living alone.
What will have the most impact on this section is the way you decide to use it. This is entirely up to you, whether you want to own a car, take the bus, or work from home. There are so many options it isn’t easy to calculate a value, but we estimate approximately $300 per month.
Here we consider the cost of medical insurance. Last year’s values reveal that health insurance is around $305 per month per person. This will depend on each specific case and the health plan you choose to pay for.
Now that we have an approximate value for each category, we will know how much we will pay for utilities. For this, we will use the monthly values since it will be easier:
- Housing: $1,200
- Utilities: $120
- Groceries: $291
- Transportation: $300
- Insurance: $305
The sum of all these expenses is $2,216 per month out of the $3,750 you earn. This expense exceeds 50% of your income, so sticking to the 50/30/20 rule is not possible. Although this value is approximate, depending on where you live, expenses can be very much lower.
As mentioned above, you should consider the expenses you will have on things you don’t need – expenses such as gym subscriptions, streaming platforms and gaming services, travel, cinema, and restaurants. You can also consider collectibles, clothing, or jewelry. Anything that is not essential for living but makes life more enjoyable for you.
This depends on you and your tastes, but we estimate that with $1,000 per month, you will be able to spend whatever you want and enjoy everything. You may not even need to spend 30% of your monthly income!
According to our calculations, out of your income of $3,750, you have spent $2,216 on needs and $1,000 on wants. That leaves you with approximately $550 per month for saving. If you live in a cheaper than average cost of living, this amount may be higher. We recommend that you save this money and use it exclusively to pay off debt.
If you don’t have any debt, save it, you don’t know if someday something may happen that makes you need extra money. The best way not to fall into debt is to always have some cash just in case!
Conclusion: How Good is a $60k Salary?
Having calculated how much it costs to live in the United States, it’s time to find out if $60,000 is a good salary. As you have already found out, you can live perfectly well in many places throughout the United States.
So in most cases, we would say yes, $60,000 is a good salary for a single person. However, you should be aware of many exceptions that we have mentioned throughout this article. You will have to keep in mind that there are places where you will not be able to live on your salary only.
The most expensive states like New York, Washington, or New Jersey have a cost of living that you will not be able to afford alone. It may be advisable to split your expenses by living with friends or a partner. This way, with two incomes you can have more money for yourself.
Beyond that, in the rest of the states, you will be able to live comfortably and even afford to save. You can significantly improve even if you live in a state where the cost of living is low. In which case, a $60,000 salary will allow you to live with the luxuries you want, such as larger homes or going out to eat almost every day.
So if you were wondering if “is $60,000 a good salary for a single person?” The answer is yes; it most certainly is. However, you will have to accept that you will have to be a little more careful with your money to live in the most expensive places. However, you can rest assured that you will be able to live very well in most places in the United States.
We hope that this analysis has helped you in case you want to live on your own. You can read our other reviews and let us know if they have been helpful.
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