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.
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If you want to know the answer to “$45,000 per year is how much an hour?” keep reading!
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$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 experiencegoing to school to get a specialized education to work more effectively and efficiently in your jobautomating routine, time-consuming tasksoutsourcing 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.
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:Working as a virtual assistantMaking videos, games or apps for mobile devicesBecoming a rideshare driverPerforming transcription services for videos or audio recordingsSelling on eBay or Amazon (or other online selling sites)Flipping furnitureDesigning and styling websites (or resume templates)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.
Learn how to get free stocks from a number of brokerages best for beginners.
→ 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 micro-investing app like Public.com. The free stock trading app allows you to invest in increments as small as $1 in index funds and individual stocks.
Starting small can let you grow a larger investment balance over time, especially with high-yield investments.
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Doing this consistently across several years can lead to significant returns that can raise your income.