Someone who has been in and out of many jobs can often ask themselves the question: is $21 an hour a good wage?
It's easy to get excited about a new job and the prospect of making a good wage, but knowing what you're getting into is important.
Scroll for a detailed look at how much $21 an hour really is and whether it's enough to live on.
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$21 an hour is how much a year?
First and foremost, let's determine the earnings for both part-time and full-time work based on an hourly rate of $21. It is important to note that this figure is before taxes and does not include any potential overtime pay. And yes, a dollar an hour more or less an hour really does add up. Earning $20 or $22 an hour makes a difference of hundreds of dollars over the course of a year.
- Part-time work. For individuals working part-time, it is essential to calculate the income based on the number of hours worked each week. If you work 20 hours per week at $21 per hour, your annual earnings would amount to $21,840 ($21 x 20 hours x 52 weeks).
- Full-time work. Assuming a full-time work schedule of 40 hours per week at $21 an hour, your annual gross income would be $43,680 ($21 x 40 hours x 52 weeks).
How much is $21 an hour per day?
Now, let's delve into a more detailed breakdown of the wage to gain a clearer perspective on its daily pay conversion.
- Part-time work. If you work 4 hours per day at $21 an hour, your daily earnings would amount to $84. On the other hand, working 6 hours per day would result in a total daily earnings of $126.
- Full-time work. For full-time employees earning $21 an hour, your daily earnings before taxes would be $168, assuming an eight-hour workday.
How much is $21 an hour per week?
Let's examine the weekly earnings for both part-time and full-time work schedules more closely.
- Part-time work. If you work approximately 20 hours per week at a rate of $21 an hour, your weekly earnings would amount to $420 (20 hours x $21). Alternatively, if you work 30 hours a week at the same hourly rate, your weekly earnings would be $630 (30 hours x $21).
- Full-time work. If you work around 40 hours per week at $21 an hour, your weekly earnings would total $840 (40 hours x $21).
How much is $21 an hour bi-weekly?
When your pay is distributed on a bi-weekly basis, it means you will receive a paycheck every two weeks, with the amount varying based on the length of the pay period.
This is how working 20 hours in part-time employment compares to working 40 hours a week.
- Part-time work. If you work a total of 40 hours in a bi-weekly pay period (20 hours per week) at $21 per hour, your earnings would amount to $840 over the course of two weeks (calculated as 40 hours x $21).
- Full-time work. If you work a total of 80 hours in a bi-weekly pay period (40 hours per week) at $21 per hour, you could expect a total earnings of $1,680 bi-weekly (calculated as 80 hours x $21).
How much is $21 an hour per month?
It is essential to consider the number of working days in a month, as it significantly influences your monthly earnings.
- Part-time work. Suppose you work around 80 hours in total during a month at an hourly rate of $21, your overall monthly income would amount to $1,680.
- Full-time work. Assuming a cumulative total of approximately 160 hours in a month at a rate of $21 per hour, your monthly earnings would sum up to around $3,360 (calculated as $21 x 8 hours per day x 20 working days).
How much is $21 an hour quarterly?
To accurately calculate your earnings on a quarterly basis, it is crucial to consider the exact number of working days within that specific quarter.
- Part-time work. Assuming you work approximately 240 hours within a quarter at an hourly rate of $21, your total earnings for the quarter would amount to around $5,040.
- Full-time work. If you work around 480 hours within a quarter at a rate of $21 per hour, your total earnings for the quarter would sum up to $10,080.
Living on $21 an hour
Now that we have examined the value of $21 per hour across various increments, let's get to the big question – is $21 an hour enough to sustain a comfortable standard of living?
Is $21 an hour enough to live on?
Determining whether $21 an hour is sufficient for a livable wage depends on various factors, such as location, lifestyle, expenses, and savings objectives. Here are some scenarios to assist in assessing the livability of $21 an hour.
- Young adult living in a rural area. For a single young adult without dependents and residing in an area with a low cost of living, $21 an hour can potentially provide a livable wage. At this income level, it should generally be adequate to cover essential living expenses and provide room for discretionary spending.
- Single parent. For a single parent, $21 an hour might be enough to cover basic living expenses but would likely be challenging to cover all the costs of raising a family.
$21 an hour vs the national average
According to the Bureau of Labor Statistics, the national average wage in the USA is $33 an hour. This means that $21 an hour is significantly less than the national average.
$21 an hour vs the national median
The national median hourly pay in the USA is $22.26 according to the Bureau of Labor Statistics. This indicates that $21 an hour is a decent rate but still lower than the median hourly pay.
The impact of inflation on the value of $21 an hour
Inflation behaves like a subtle thief, gradually diminishes the value of your hard-earned money over time. Let's imagine you currently earn $21 per hour, which allows you to purchase a specific quantity of goods or services with that amount.
However, as time passes, the overall cost of goods and services tends to increase due to inflation. This means that the same $21 per hour you earn today will not afford you the same quantity of goods or services in the future as it does presently.
For example, if the inflation rate stands at 2% per year, something that costs $21 today will cost around $21.42 next year. Consequently, your $21 per hour will have diminished value in the future compared to its current worth. This does not imply that your nominal income, the amount shown on your paycheck, decreases. Rather, it signifies that your real income or purchasing power—the actual ability of your paycheck to buy things—decreases over time.
That's why it is crucial to account for inflation when planning for the future. Even if you currently earn $21 an hour, it might not stretch as far in the future if your income does not keep up with inflation. To ensure sound financial planning, it is important to aim for wage increases over time that at least match the rate of inflation.
Who is $21 an hour a good salary for?
$21 an hour might be a good salary for someone with few expenses besides rent and bills. Also, someone with no dependents and minimal debt would have more disposable income and would find it easier to live on $21 an hour compared to someone with high debt payments, children, and other financial responsibilities.
When $21 an hour is a good salary
- A college student looking for part-time work to pay for school expenses.
- A retiree looking for some extra income.
- Someone living in a rural area with low living expenses.
When $21 an hour is a bad salary
- Someone supporting dependents, such as children, elderly relatives, or someone with a partner who isn't working or earning very much.
- Someone with high debt payments, such as student loans, credit card debt, etc.
- Someone living in high-cost cities or expensive areas.
Housing on $21 an hour
Housing is often the biggest expense in most people's budgets. Is it enough for renting or buying a home?
Is $21 an hour enough to move out?
If you're trying to move out of your parent's home for the first time, you might wonder if $21 an hour is enough. The answer depends on the cost of living in your area and how much you're willing to spend on rent.
To move out on $21 an hour, you'll need to find a place that is affordable. This will likely mean finding a roommate or living in a less expensive area.
Also, you'll need to factor in the additional costs associated with renting, such as a security deposit, utility bills, heating, and electricity.
How much should rent cost per month on $21 an hour?
As a general rule of thumb, it is recommended that your monthly rent does not exceed 30% of your gross income.
If we assume full-time employment with a 40-hour workweek and 4 weeks in a month, we can calculate the monthly income as follows: $21 per hour multiplied by 40 hours per week, and then multiplied by 4 weeks, resulting in a total of $3,360 before taxes.
Using the 30% guideline, 30% of $3,360 is $1,008. Therefore, as a general guideline, it is advisable to keep your monthly rent below $1,008 when earning $21 an hour.
Is $21 an hour enough to buy a house?
Deciding if earning $21 an hour is enough to afford a nice house in American cities depends on various factors, like where you want to live and the housing market. But in many cases, this income might not be enough to cover the expenses of buying a desirable home in most American cities. Nevertheless, here's what you need to consider:
What's affordable?
Affordability is determined by various factors, such as the Loan-to-Value Ratio (LVR), the ratio of your income to your debt, and Debt-to-Income (DTI) ratio.
For someone earning $21 an hour, you can qualify for a mortgage based on your income. When calculating affordability, mortgage lenders use multiples of your income. Experts suggest that you shouldn't borrow more than 3-4 times your annual income.
Where's affordable?
Real estate values differ across the country. In large cities, where housing demand is high, values are usually higher than in smaller towns.
To purchase a home that is affordable for someone earning $21 an hour, your best bet is to look at neighborhoods or towns with lower costs of living.
Down payment size
When buying a home, you'll need to have some cash in the bank for a down payment. The typical down payment for a home is 20% of the property's value. Gathering up that amount on $21 an hour might be challenging, and you might have to save for a more extended period to accumulate the deposit required.
Following the 30% rule, which suggests allocating a portion of your income towards housing costs, an annual salary on a $21 per hour wage would be approximately $45,760 ($21/hour * 40 hours/week * 52 weeks). According to this guideline, an ideal down payment for a house would be at least $13,728 (30% of $45,760). Therefore, it is wise to start a savings plan as early as possible if you are determined to achieve your goal of owning a home.
Fees
When purchasing a home, there are other fees to consider, such as mortgage application fees, moving, legal fees, and home insurance. You'll need to factor these fees when considering a home purchase.
Buying a car on $21 an hour
For many individuals, owning a car is a necessity in their daily lives. Therefore, it's important to assess whether earning $21 an hour is sufficient to afford the purchase and upkeep of a car.
Is earning $21 an hour enough to buy a new car?
Automobile prices vary widely, with new models often ranging from several thousand dollars to tens of thousands of dollars. When considering purchasing a car, it's important to align your financial situation with your automotive aspirations.
A generally accepted guideline is to allocate no more than 10% to 15% of your annual gross income towards car-related expenses. This includes factors such as the car payment, insurance, maintenance, and fuel costs.
With a salary of $21 per hour, assuming a full-time work schedule of 40 hours per week and 52 weeks in a year, your annual gross income would amount to $43,680 ($21/hour x 40 hours/week x 52 weeks).
Following the guideline of 10% to 15%, your annual car-related expenses should ideally range between $4,368 and $6,552. This should cover all costs associated with owning and maintaining a car while staying within a reasonable portion of your income.
Is it better to lease a car on $21 an hour?
Compared to purchasing a car outright, leasing a vehicle may be a better option for individuals earning $21 per hour.
Lease agreements typically involve lower monthly payments compared to buying a new car with a traditional auto loan. This can make it more affordable to drive a newer vehicle.
Leasing also offers the advantage of flexibility. It allows you to upgrade your car every few years, ensuring you have access to the latest models and technology.
For those seeking even more short-term flexibility, automobile subscription services provide an alternative. However, it's important to note that these services often come with higher monthly payments compared to longer-term leases. It's a trade-off between the convenience of short-term vehicle access and the cost involved.
$21 an hour and money management
Managing your finances effectively is important regardless of your income level. However, when you're earning $21 per hour, it becomes especially crucial to prioritize thoughtful budgeting, saving, and building a good credit history.
Can you do the 50/30/20 budget on $21 an hour?
Even with a wage of $21 an hour, the 50/30/20 budget rule can serve as a realistic guideline. This widely recognized budgeting method suggests dividing your income into three parts: allocating 50% for essential expenses like rent, groceries, and utilities; dedicating 30% to discretionary spending on things you enjoy, such as dining out, hobbies, or vacations; and setting aside 20% for savings and debt repayment.
With $21 an hour or $3,360 per month, your breakdown should look like this:
- Needs: $1,680 per month
- Wants: $1,008 per month
- Savings: $672
It is important to live within your means to avoid financial difficulties and the need to forcefully fit your finances into a restrictive budget.
Is earning $21 an hour enough to get a credit card?
Having an hourly wage of $21 does not automatically disqualify you from being eligible for a credit card, but it doesn't guarantee approval either.
It's important to note that the range of available credit cards may be limited because many of them have minimum income requirements that exceed the equivalent of $21 an hour annually. As a result, you may find that most of the top rewards credit cards are out of reach in terms of eligibility.
The cards you are more likely to be approved for include credit builder credit cards, so-called "near prime" credit cards, and secured credit cards. You might face lower initial credit limits.
If you decide to obtain a credit card, it is essential to handle it responsibly, making sure to live within your means and avoiding the accumulation of high-interest debt.
Is it possible to invest on $21 an hour?
Investing with an hourly wage of $21 is possible by prioritizing saving and budgeting.
By reducing unnecessary expenses and consistently setting aside a portion of your income, even small amounts can be gradually invested. Long-term planning and exploring low-cost investment options are essential, and seeking professional guidance and self-education can provide valuable support. Successful investing is primarily about consistent savings and adopting a long-term perspective, rather than focusing solely on the initial investment amount.
Managing your finances effectively allows you to allocate sufficient funds for investment in low-risk options like mutual funds, ETFs, or index funds. It's important to understand that investing is a long-term commitment that requires time for your investments to grow.
Consistency and persistence are key in the investment journey, except in cases of fortunate timing with stocks. However, over time, these consistent investments can accumulate and create a substantial future fund, thanks to the power of compounding. By continuously investing a portion of your income, you can harness the potential of compounding and witness the growth of your investments over the years.
Improving your credit score on a $21 hourly wage
Developing a solid credit score requires a long-term commitment, but the rewards are plentiful. A higher credit score brings benefits like lower interest rates and improved loan terms, making the effort worthwhile. Here are some key practices to follow:
- Pay your bills on time. Demonstrating consistent, timely bill payments showcases your reliability to creditors, positively impacting your credit score.
- Keep credit utilization low. Aim to utilize less than 30% of your total credit limit. This showcases responsible credit management and helps maintain a favorable credit score.
- Don't close old credit accounts. While it may be tempting to simplify your finances, keeping older credit lines open (unless they carry high fees) contributes to the length of your credit history, which is a factor in determining your credit score.
- Regularly monitor your credit reports. By monitoring your credit reports on a regular basis, you can promptly identify and address any discrepancies or fraudulent activities, ensuring the accuracy of your credit information.
Building an emergency fund at a $21 hourly wage
Having an emergency fund is crucial to prepare for unexpected financial challenges. Here are simple strategies to build one while earning $21 per hour:
- Start small. Begin by saving a manageable amount from each paycheck. Even a small portion adds up over time, so focus on developing a consistent saving habit.
- Automate your savings. Make saving easier by setting up automatic transfers to your emergency fund. This way, a portion of your income is directly deposited into your savings, reducing the temptation to spend.
- Save windfalls. When you receive unexpected funds like a tax refund, bonus, or gift, resist the urge to splurge. Instead, put that money towards your emergency fund to strengthen your financial safety net.
- Cut back on non-essentials. Identify areas where you can reduce discretionary spending. By making small adjustments, such as eating out less or canceling unnecessary subscriptions, you can redirect those savings into your emergency fund.
By implementing these simple strategies, you can gradually build an emergency fund, providing financial security and peace of mind in the face of unforeseen circumstances.
Taxes on $21 an hour
Working full-time (40 hours per week) at this wage, your annual income before taxes is approximately $43,680. This places you in a mid-level income tax bracket, making it important to explore strategies that can help reduce your tax liability.
Tax deductions
Tax deductions are certain expenses you've had during the tax year that can be subtracted from your taxable income, lowering the amount of income tax you owe. Some tax deductions you may qualify for include:
- Standard Deduction. A set dollar amount that reduces the income you're taxed on. The amount varies based on your filing status.
- Home Office Deduction. If you're self-employed and work from home, you can deduct some home expenses, including rent, utilities, and maintenance.
- Student Loan Interest Deduction. You can deduct the amount paid toward interest on student loans, which can be beneficial for recent graduates.
- Health Savings Account (HSA) Contributions. Contributions to an HSA are tax-deductible and can be used to pay for qualifying medical expenses.
- Retirement Contributions. Contributions to a traditional IRA or 401(k) can reduce your taxable income, encouraging long-term savings.
Tax credits
Unlike deductions that lower taxable income, tax credits reduce the amount of tax you owe, dollar for dollar. Some common tax credits include:
- Earned Income Tax Credit (EITC). A refundable credit for low- to moderate-income working individuals and couples, particularly those with children.
- Child and Dependent Care Credit. This credit is available for costs related to the care of a child or dependent, allowing you to work or look for work.
- American Opportunity Tax Credit. This credit covers expenses related to the first four years of post-secondary education.
- Lifetime Learning Credit. A credit for qualified tuition and related expenses for students enrolled in eligible educational institutions.
