You are applying for jobs but can only see the hourly rate. You might be wondering, $25 an hour is how much a year? When applying for jobs that pay $25 an hour, it's more practical to understand your monthly income for budget planning purposes and your annual salary. Knowing the monthly and annual income will also give job applicants a bigger picture of if they can afford to live on an hourly rate of $25.
The following is a calculation of how much $25 an hour adds to weekly, monthly, and annually. Then we will discuss how to set up a monthly budget while making $25 an hour and how to supplement your income if you need to make more money to live comfortably.
$25 an Hour is How Much a Year?
A typical work week for a full-time job is eight hours a day. For one day of work at $25 an hour, a person would make $200 a day. For one week of work which adds up to 40 hours, $25 an hour for 40 hours equals $1,000 a week.
Finally, to calculate the annual salary, take 40 hours a week and multiply that by 52 weeks in the year, which equals 2,080 working hours per year. 2,080 hours at an hourly rate of $25 equals $52,000.
From the annual salary, we can easily calculate the monthly salary. $52,000 divided by 12 months in the year equals $4,333 per month. The $4,333 is the average monthly salary since some months have 30 days and some months have 31, except for February.
- Daily – $200
- Weekly – $1,000
- Monthly – $4,333
- Annually – $52,000
All the amounts are gross salary, meaning it is the amount before any deductions such as taxes and any insurance and retirement (401k), social security, and healthcare. The salary remaining after taxes is called the net income.
What is the Annual Net Income When You Make $25 an Hour?
The 2021 federal income tax rate is 12% for a taxable income in the bracket of $10,275 to $41,775 set by the federal government. We will do a basic calculation as there are other factors that the government considers, such as the taxable income bracket is different for single-filers and married people.
State taxes vary by state. Another simplistic approach is to assume an average state tax of 5%.
With a gross annual salary of $52,000, taxes will be as follows:
- Federal tax of 12%: $6,240
- State Tax of 5%: $2,600
The net income after taxes equals $43,160 after deducting federal and state taxes. The hourly rate after taxes equals $20.75 an hour ($43,160 divided by 2080 annual working hours).
How to Budget When You Make $25 an Hour
When you accept a job that pays $25, it's essential to understand how to plan a budget so that you have enough money a month to pay all of your expenses and also be able to set money aside for savings, retirement, and an emergency fund.
1. List All of Your Expenses
List all the regularly occurring payments, some will be fixed expenses, and some will be variable. Fixed costs usually include rent or mortgage payments, car payments, and loan installments. Variable expenses aren't as easy to track because the bills can vary each time. Variable expenses include such costs as groceries, gas, and credit card payments.
Keep your receipts for at least a month to estimate your variable expenses and calculate an average.
2. Discretionary Spending
Discretionary spending is money for non-essential things such as entertainment or funding a hobby or activity. Discretionary spending shouldn't be more than 5 – 10% of your net income. It's best to pay all your expenses first, transfer money into savings, and then see how much money is available to spend on extras that month.
Always budget money to go into savings and an emergency fund. Set up automatic transfers so that a specific amount goes into savings without thinking about it.
Many employers offer retirement plans. You may be able to automatically deduct pre-tax income payments each pay period to go into retirement savings plans like a 401k.
How to Save Money When You Make $25 an Hour
Sometimes there are ways to save on expenses even when we believe we have already cut unnecessary items. Here are a few ways to find some savings.
1. Cancel Extra Subscriptions
It's always a good idea to look at your expenses regularly, one of which is your monthly subscriptions. Whether it's cable television, a gym membership, or a monthly subscription box, evaluate the need and if there are better and cheaper alternatives you can consider instead. Cancel the subscriptions that you don't really need or use often.
2. Plan Your Meals
Meal planning is excellent not only for your waistline but also for your wallet. With so many online resources available, you can easily find delicious recipes for every meal and snack. Write down the ingredients you need and make a grocery list accordingly of the items you don't have at home. You can save a lot of money by eating at home instead of in restaurants.
3. Entertain at Home
Rather than going out to watch movies, eating in restaurants, and going to bars, bring the entertainment home. You can invite friends, host a potluck, play board games, and stream movies online.
You can also sign out books and games from your local library and look for free community events.
Side Hustles To Supplement Your $25 Income
Plenty of side hustle opportunities can help people supplement an income when they want to live a more comfortable life by being more financially secure. Here is a list of a few ideas for side hustles on evenings and weekends to bring in some extra cash.
1. Delivery Service
Consider becoming a delivery driver such as with DoorDash, UberEats, or Instacart. You can earn extra money if you can work during peak periods such as the dinner rush. You can choose the hours you work and take the delivery jobs that suit you.
There are several opportunities for freelancing, but it depends on your skills. If you are good at photography, you can take pictures for people's websites. You can write content such as blog posts, news articles, and reviews for people's websites. If you are tech-savvy, you can consider designing websites or becoming a virtual assistant.
3. Open an Online Store
You don't have to be artistic to open an online store. You can sell items from print-on-demand businesses that involve no investment in capital to get started. Many platforms support this, such as Etsy, Shopify, and Amazon.
4. Rent a Room Out
If you have an extra room with a private entrance, you can easily rent it as a short-term rental, such as registering it as an Airbnb. Take good pictures, market your room well and keep the room clean.
5. Help People with Your Talents
Are you good at cleaning and organizing? Do you have a green thumb and can offer landscaping services? You can provide many services in your neighborhood, such as pet sitter, dog walker, child watching, and handy help.
It's worth accepting a job that pays $25 an hour to help pay your bills and get experience. Make sure you understand how much $25 an hour is a year and your annual net income. Make a monthly budget according to your net income and keep your expenses under control by living within your means.
Find ways to save money by meal planning, entertaining more at home, and evaluating your regular discretionary expenses. If you don't feel financially secure making $25 an hour, try supplementing your income until you gain enough experience to return to the job market and look for something higher paying.
You can look at delivery jobs, ways to help people with odd jobs, rent a room if you own a house, and try freelance work. You can work these side hustles during the hours you aren't at your full-time job, such as evenings and weekends.
You should feel more comfortable financially by staying on budget and supplementing your $25 an hour job with a side hustle.