Is $2,000 a Month a Good Salary in the US?

You’ve got an offer in hand for $2,000 a month and I’m sure you’re wondering if $2000 a month is good?

$2,000 a month out works to an annual salary of $24,000 or an hourly wage rate of $11.5. Unfortunately, $2k a month is well below the median US salary of $4,700 a month. It’s important however to compare your salary with similar roles elsewhere to get a good market-based benchmark for fair pay. Additionally you will have to consider your level of expenses to assess whether $2k is sufficient or not.

Let’s take a closer look and understand the details further.

What’s considered a good salary in the US?

Before tax, a good salary in the US is likely to start at $60,000. For full-time, year-round workers in the US, the median income is around $56,500. However these statistics vary dramatically across gender as men have a higher median income of around $61,200 whereas women are much lower at $51,200.

$2k a month, which works out to $24k a year, therefore would be well under the US median salary.

We’ve covered this topic in greater detail in our related article, so please head over there to learn much more!

Can you live comfortably on $2000 a month?

It’s a difficult question to provide a generalized answer on, the answer unfortunately is that it depends. If you’re young and living at home, or if you’re a retiree with a paid-off home, you might actually be able to live comfortably on $2k a month of after-tax income. However for singles living alone or adults with families, it might be tough. Remember not to overlook the impact of income taxes.

Let’s look at some numbers to bring things in to perspective:

On average, the living expenses for a single person in the US are $3,420 per month. The biggest single cost item here is housing at $1,271 per month. If you’re able to eliminate this cost, then your monthly expenses drop to $2,150 per month. With some additional savings, you would be able to live comfortably on $2,000 per month of after-tax income.

For families however it’s a different story. The average living expenses for a family of four is anywhere between $7,750 to $8,600 per month. So if one person is earning $2k per month, the spouse/partner would have to earn at least $5,000 to $6,000 per month after taxes.

These are average figures of course and there are many factors to consider. Some of the most relevant items include:

Taxation

Taxes, of course, are where things can get a little tricky. The salaries I’ve discussed thus far are before you pay the IRS. The higher your pay, the higher your tax bracket. If you earn $24,000 per year, you’re paying between $3,000 to $4,000 to Uncle Sam – and that’s just based on current rates and figures. So your current take-home pay (the net income) might only be $20,000 a year, which works out to $1,667 per month.

To bring in $2,000 a month of after-tax pay, you would likely need to earn around $28,000 a year, which works out to $2,333 of gross income. This is equivalent to an hourly rate of around $13.42 per hour.

Your mileage may vary based on the state you live in, whether you are married or not, and whether you have any other deductions that you can claim. Being married can make a big difference on your income tax bill, as opposed to being single – often by a couple of thousand dollars! If you earn big bonuses, your tax rates can climb quite quickly!

If you own a house, you also have to remember that you will likely owe property taxes, which can be quite hefty in some areas.

Cost of Living

If you’re living in a Californian city as opposed to residing in the suburbs of Kansas or Alabama, you’re likely to spend more money just to keep the lights on. Living wages in metropolitan areas will be much higher to compensate for this.

Rent, food, energy bills and transportation will all define whether or not you need to earn much more than the $24,000 as defined above. If you are a renter, in some cases you will have to demonstrate that your income is at least 3x the monthly rent payment. In such situations, with a salary of $24k before taxes, your ability to rent properties will be limited to those with a monthly rent of roughly $667 or lower.

Household Size

Of course, the size of your family will impact how much you need to earn. We’ve talked about this above and of course it’s simple math! If it’s just you and a partner, you’ll spend less, hypothetically, than if you have two to three children to feed and clothe.

Where’s the best place to live on a $2,000 a month?

Your best bet would be to live in a place that has a very low cost of living. According to MERIC, the 5 states with the lowest cost of living in the US are:

1. Mississippi
2. Oklahoma
3. Kansas
4. Alabama
5. Georgia

The color-coded map below shows the situation for the various states in the US. You definitely want to avoid any state shown in red or orange.

If I make $2,000 a month how much should I save?

Remember, the first rule is to cut out whatever debt (credit cards, car loans, etc.) you can, as the cost of debt is usually much higher than what you can make as a consumer. After that, what you can save depends on the many different factors discussed above.

Ultimately you will have a very tight budget on a monthly pay check of $2,000, so you should aim to save whatever you can after your core expenses have been met. A great starting point would be to target $100 a month and then gradually push yourself to get as close as possible to $500 a month.

Before You Go…

Our whole blog is dedicated to help you get on the path of financial freedom. Feel free to browse around and read through the articles.

In a nutshell, the fastest way to becoming financially free is to cut your debt, minimize unnecessary expenses, so you can save and invest your money!

There are plenty of investment books and podcasts that you can use as a learning resource along the way to help you reach your goal faster.

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