# \$5 an Hour is How Much a Year? Before and After Taxes

With rising inflation and cost of living expenses, an hourly wage of \$5 is very low compared to average earnings. In this article, we’ll calculate the weekly, monthly, and annual pre-tax salary for someone earning \$5 per hour. We’ll look at incomes for both part-time and full-time schedules. We’ll also see how overtime paid at time-and-a-half can somewhat increase the yearly pay.

In addition, we’ll examine how unpaid time off can reduce someone’s gross income over a year when making just \$5/hour. After covering pre-tax earnings, we’ll look at how federal and state taxes impact the net annual salary. Even at \$5/hour, taxes can significantly diminish take-home pay.

Beyond the numbers, we’ll discuss whether \$5/hour is considered a livable wage nowadays. With inflation driving prices up, it would be challenging to afford basic necessities on this pay rate. We’ll look at bare bones sample budgets to analyze getting by on \$5 an hour. We’ll also highlight options for supplementing income and increasing one’s hourly wage. While the annual earnings are low, we’ll explore whether it’s feasible to live on \$5/hour in today’s economy.

## Convert \$5 Per Hour to Weekly, Monthly, and Yearly Salary

Input your wage and hours per week to see how much you’ll make monthly, yearly and more.

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### \$5 an Hour is How Much a Year?

If you make \$5 an hour, your yearly salary would be \$10,400. We calculate your annual income based on 8 hours per day, 5 days per week and 52 weeks in the year.

Hours worked per week (40) x Hourly wage(\$5) x Weeks worked per year(52) = \$10,400

### \$5 an Hour is How Much a Month?

If you make \$5 an hour, your monthly salary would be \$866.67. We calculated this number by dividing your annual income by 12 months.

Hours worked per week (40) x Hourly wage(\$5) x Weeks worked per year(52) / Months per Year(12) = \$866.67

### \$5 an Hour is How Much Biweekly?

If you make \$5 an hour, your biweekly salary would be \$400.

Hours worked per week (40) x Hourly wage(\$5) x 2 = \$400

### \$5 an Hour is How Much a Week?

If you make \$5 an hour, your weekly salary would be \$200. Calculating based on 5 days per week and 8 hours each day.

Hours worked per week (40) x Hourly wage(\$5) = \$200

### \$5 an Hour is How Much a Day?

If you make \$5 an hour, your daily salary would be \$40. We calculated your daily income based on 8 hours per day.

Hours worked per day (8) x Hourly wage(\$5) = \$40

## \$5 an Hour is How Much a Year?

The basic formula to calculate your annual salary from an hourly wage is:

Hourly Rate x Hours Worked per Week x Number of Weeks Worked per Year = Annual Salary

So for a \$20 per hour job:

\$5 per hour x 40 hours per week x 52 weeks per year = \$10,400

However, this simple calculation makes some assumptions:

• You will work 40 hours every week of the year
• You will not get any paid time off

Therefore, it represents your earnings if you worked every week of the year, without any vacation, holidays, or sick days.

Accounting for Paid Time Off

The \$10,400 base salary does not yet factor in paid time off (PTO). Let’s assume the job provides:

• 2 weeks (10 days) paid vacation
• 6 paid holidays
• 3 paid sick days

This totals 19 paid days off, or nearly 4 weeks of PTO.

Importantly, this paid time off should not be deducted from the annual salary, since you still get paid for those days.

So with 4 weeks PTO, the annual salary would remain \$10,400 .

## Part time \$5 an hour is How Much a Year?

Your annual income changes significantly if you work part-time and not full-time.

For example, let’s say you work 25 hours per week instead of 40. Here’s how you calculate your new yearly total:

\$5 per hour x 25 hours per week x 52 weeks per year = \$6,500

By working 15 fewer hours per week (25 instead of 40), your annual earnings at \$5 an hour drop from \$10,400 to \$6,500.

That’s a \$3,900 per year difference just by working part-time!

Here’s a table summarizing how your annual earnings change depending on how many hours you work per week at \$5 an hour:

Hours Per Week Earnings Per Week Annual Earnings
40 \$200 \$10,400
35 \$175 \$9,100
30 \$150 \$7,800
25 \$125 \$6,500
20 \$100 \$5,200
15 \$75 \$3,900

The more hours per week, the higher your total yearly earnings. But part-time work allows for more life balance if you don’t need the full salary.

## \$5 an Hour With Overtime is How Much a Year?

Now let’s look at how overtime can increase your annual earnings.

Overtime kicks in once you work more than 40 hours in a week. Typically, you earn 1.5x your regular hourly wage for overtime hours.

So if you make \$5 per hour normally, you would make \$7.50 per hour for any hours over 40 in a week.

Here’s an example:

• You work 45 hours in a Week
• 40 regular hours paid at \$5 per hour = \$200
• 5 overtime hours paid at \$7.50 per hour = \$37.50
• Your total one Week earnings =\$200 + \$37.50 = \$237.50

If you worked 45 hours each week for 52 weeks, here’s how your annual earnings increase thanks to overtime pay:

\$237.50 per week x 52 weeks per year = \$12,350

That’s \$1,950 more than you’d earn working just 40 hours per week at \$5 an hour.

Overtime can add up! But also consider taxes and work-life balance when deciding on extra hours.

Here’s a table summarizing how your annual earnings change depending on how many hours you work per week at \$5 an hour:

 Overtime hours per work day Hours Per Week Earnings Per Week Annual Earnings 0 40 \$200 \$10,400 1 45 \$237.50 \$12,350 2 50 \$275 \$14,300 3 55 \$312.50 \$16,250 4 60 \$350 \$18,200 5 65 \$387.50 \$20,150 6 70 \$425 \$22,100 7 75 \$462.50 \$24,050

## How Unpaid Time Off Impacts \$5/Hour Yearly Earnings

So far we’ve assumed you work 52 paid weeks per year. Any unpaid time off will reduce your total income.

For example, let’s say you take 2 weeks of unpaid leave. That brings your paid weeks down to 50:

Hours worked per week (40) x Hourly wage(\$5) x Weeks worked per year(50) = \$10,000 annual salary

With 2 weeks unpaid time off, your annual earnings at \$5/hour would drop by \$400.

The table below summarizes how your annual income changes depending on the number of weeks of unpaid leave.

 Weeks of unpaid leave Paid weeks per year Earnings Per Week Annual Earnings 0 52 \$200 \$10,400 1 51 \$200 \$10,200 2 50 \$200 \$10,000 3 49 \$200 \$9,800 4 48 \$200 \$9,600 5 47 \$200 \$9,400 6 46 \$200 \$9,200 7 45 \$200 \$9,000

## Key Takeaways for \$5 Hourly Wage

In summary, here are some key points on annual earnings when making \$5 per hour:

• At 40 hours per week, you’ll earn \$10,400 per year.
• Part-time of 30 hours/week results in \$7,800 annual salary.
• Overtime pay can boost yearly earnings, e.g. \$1,950 extra at 45 hours/week.
• Unpaid time off reduces your total income, around \$400 less per 2 weeks off.
• Your specific situation and location impacts taxes and PTO.

Knowing your approximate annual salary and factors impacting it makes it easier to budget and plan your finances. The next step is calculating take-home pay after deductions like taxes.

## \$5 An Hour Is How Much A Year After Taxes

Figuring out your actual annual earnings based on an hourly wage can be complicated once taxes are taken into account. In addition to federal, state, and local income taxes, 7.65% of your gross pay also goes to Social Security and Medicare through FICA payroll taxes. So how much does \$5 an hour equal per year after FICA and income taxes are deducted from your gross pay?

Below we’ll walk through the steps to calculate your annual net take home pay if you make \$5 per hour. This will factor in estimated federal, FICA, state, and local taxes so you know exactly what to expect.

### Factoring in Federal Income Tax

Your federal income tax will be a big chunk out of your gross pay. Federal tax rates range from 10% to 37%, depending on your tax bracket.

To estimate your federal income tax rate and liability:

Look up your federal income tax bracket based on your gross pay.

2023 tax brackets: single filers

Tax rate Taxable income bracket Tax owed
10% \$0 to \$11,000. 10% of taxable income.
12% \$11,001 to \$44,725. \$1,100 plus 12% of the amount over \$11,000.
22% \$44,726 to \$95,375. \$5,147 plus 22% of the amount over \$44,725.
24% \$95,376 to \$182,100. \$16,290 plus 24% of the amount over \$95,375.
32% \$182,101 to \$231,250. \$37,104 plus 32% of the amount over \$182,100.
35% \$231,251 to \$578,125. \$52,832 plus 35% of the amount over \$231,250.
37% \$578,126 or more. \$174,238.25 plus 37% of the amount over \$578,125.

For example, if you are single with \$10,400 gross annual pay, your federal tax bracket is 10%.

Your estimated federal tax would be:

\$10,40010% = \$1,040

So at \$5/hour with \$10,400 gross pay, you would owe about \$1,040 in federal income taxes.

### Considering State Income Tax

In addition to federal tax, most states also charge a state income tax. State income tax rates range from about 1% to 13%, with most falling between 4% and 6%.

Key Takeaways

• California, Hawaii, New York, New Jersey, and Oregon have some of the highest state income tax rates.
• Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming don’t impose an income tax at all.
• Another 10 U.S states have a flat tax rate—everyone pays the same percentage regardless of how much they earn.

A State-by-State Comparison of Income Tax Rates

STATE TAX RATES LOWEST AND HIGHEST INCOME BRACKETS
Florida 0% None
South Dakota 0% None
Tennessee 0% None
Texas 0% None
Washington 0% None
Wyoming 0% None
Colorado 4.55% Flat rate applies to all incomes
Illinois 4.95% Flat rate applies to all incomes
Indiana 3.23% Flat rate applies to all incomes
Kentucky 5% Flat rate applies to all incomes
Massachusetts 5% Flat rate applies to all incomes
New Hampshire 5% Flat rate on interest and dividend income only
North Carolina 4.99% Flat rate applies to all incomes
Pennsylvania 3.07% Flat rate applies to all incomes
Utah 4.95% Flat rate applies to all incomes
Michigan 4.25% Flat rate applies to all incomes
Arizona 2.59% to 4.5% \$27,806 and \$166,843
Arkansas 2% to 5.5% \$4,300 and \$8,501
California 1% to 13.3% \$9,325 and \$1 million
Connecticut 3% to 6.99% \$10,000 and \$500,000
Delaware 0% to 6.6% \$2,000 and \$60,001
Alabama 2% to 5% \$500 and \$3,001
Georgia 1% to 5.75% \$750 and \$7,001
Hawaii 1.4% to 11% \$2,400 and \$200,000
Idaho 1.125% to 6.5% \$1,568 and \$7,939
Iowa 0.33% to 8.53% \$1,743 and \$78,435
Kansas 3.1% to 5.7% \$15,000 and \$30,000
Louisiana 1.85% to 4.25% \$12,500 and \$50,001
Maine 5.8% to 7.15% \$23,000 and \$54,450
Maryland 2% to 5.75%  \$1,000 and \$250,000
Minnesota 5.35% to 9.85% \$28,080 and \$171,221
Mississippi 0% to 5% \$5,000 and \$10,001
Missouri 1.5% to 5.3% \$1,121 and \$8,968
Montana 1% to 6.75% \$2,900and \$17,400
Nebraska 2.46% to 6.84% \$3,340 and \$32,210
New Jersey 1.4% to 10.75% \$20,000 and \$1 million
New Mexico 1.7% to 5.9% \$5,500 and \$210,000
New York 4% to 10.9% \$8,500 and \$25 million
North Dakota 1.1% to 2.9% \$41,775 and \$458,350
Ohio 0% to 3.99% \$25,000 and \$110,650
Oklahoma 0.25% to 4.75% \$1,000 and \$7,200
Oregon 4.75% to 9.9% \$3,750 and \$125,000
Rhode Island 3.75% to 5.99% \$68,200 and \$155,050
South Carolina 0% to 7% \$3,110 and \$15,560
Vermont 3.35% to 8.75% \$42,150 and \$213,150
Virginia 2% to 5.75% \$3,000 and \$17,001
Washington, D.C. 4% to 9.75% \$10,000 and \$1 million
West Virginia 3% to 6.5% \$10,000 and \$60,000
Wisconsin 3.54% to 7.65% \$12,760 and \$280,950

To estimate your state income tax:

Look up your state income tax rate based on your gross pay and filing status.

Multiply your gross annual pay by the state tax rate.

For example, if you live in Pennsylvania which has a flat 3.07% tax rate, your estimated state tax would be:

\$10,400 gross pay x 3.07% PA tax rate = \$319.28 estimated state income tax

So with \$10,400 gross annual income, you would owe around \$319.28 in Pennsylvania state income tax. Make sure to check your specific state’s rates.

### Factoring in Local Taxes

Some cities and counties levy local income taxes ranging from 1-3% of taxable income.

To estimate potential local taxes you may owe:

• Check if your city or county charges a local income tax.
• If yes, look up the local income tax rate.
• Multiply your gross annual pay by the local tax rate.

For example, say you live in Columbus, OH which has a 2.5% local income tax. Your estimated local tax would be:

\$10,400 gross pay x 2.5% local tax rate = \$260 estimated local tax

So with \$10,400 in gross earnings, you may owe around \$260 in Columbus local income taxes. Verify rates for your own city/county.

### Accounting for FICA Taxes (Social Security & Medicare)

FICA taxes are a combination of Social Security and Medicare taxes that equal 15.3% of your earnings. You are responsible for half of the total bill (7.65%), which includes a 6.2% Social Security tax and 1.45% Medicare tax on your earnings.

In 2023, only the first \$160,200 of your earnings are subject to the Social Security tax

There is an additional 0.9% surtax on top of the standard 1.45% Medicare tax for those who earn over \$200,000 (single filers) or \$250,000 (joint filers).

To estimate your FICA tax payment:

\$10,400 x 6.2% + \$10,400 x 1.45% = \$795.60

So you can expect to pay about \$795.60 in Social Security and Medicare taxes out of your gross \$10,400 in earnings.

### Total Estimated Tax Payments

Based on the examples above, your total estimated tax payments would be:

Federal tax: \$1,040

State tax: \$319.28

Local tax: \$260

FICA tax: \$795.60

Total Estimated Tax: \$2,414.88

### Calculating Your Take Home Pay

To calculate your annual take home pay at \$5 /hour:

2. Subtract your estimated total tax payments

\$10,400 gross pay – \$2,414.88 Total Estimated Tax = \$7,985.12 Your Take Home Pay

n summary, if you make \$5 per hour and work full-time, you would take home around \$7,985.12 per year after federal, state, local , FICA taxes.

Your actual net income may vary depending on your specific tax situation. But this gives you a general idea of what to expect.

## Convert \$5 Per Hour to Yearly, Monthly, Biweekly, and Weekly Salary After Taxes

If you make \$5 an hour and work full-time (40 hours per week), your estimated yearly salary would be \$10,400 .

The \$10,400 per year salary does not account for taxes. Federal, state, and local taxes will reduce your take-home pay. The amount withheld depends on your location, filing status, dependents, and other factors.

Just now during our calculation of \$5 An Hour Is How Much A Year After Taxes, we assumed the following conditions:

• You are single with \$10,400 gross annual pay, your federal tax bracket is 10 %.
• You live in Pennsylvania which has a flat 3.07% tax rate
• You live in Columbus, OH which has a 2.5% local income tax.

In the end, we calculated your Total Estimated Tax is \$2,414.88 , Your Take Home Pay is \$7,985.12 , Total tax rate is 23.22%.

So next we’ll use 23.22% as the estimated tax rate to calculate your weekly, biweekly, and monthly after-tax income.

### \$5 Per Hour to Yearly, Monthly, Biweekly, Weekly,and Week Salary After Taxes Table

 Income before taxes Estimated Tax Rate Income Taxes After Tax Income Yearly Salary \$10,400 23.22% \$2,414.88 \$7,985.12 Monthly Salary \$866.67 23.22% \$201.24 \$665.43 BiWeekly Salary \$400 23.22% \$92.88 \$307.12 Weekly Salary \$200 23.22% \$46.44 \$153.56

### \$5  an hour is how much a year after taxes

Here is the adjusted yearly salary after a 23.22% tax reduction:

• Yearly salary before taxes: \$10,400
• Estimated tax rate: 23.22%
• Taxes owed (23.22% * \$10,400 )= \$2,414.88
• Yearly salary after taxes: \$7,985.12
Hourly Wage Hours Worked Per Week Weeks Worked Per Year Total Yearly Salary Estimated Tax Rate Taxes Owed After-Tax Yearly Salary
\$5 40 52 \$10,400 23.22% \$2,414.88 \$7,985.12

### \$5 an hour is how much a month after taxes

To calculate the monthly salary based on an hourly wage, you first need the yearly salary amount. Then divide by 12 months.

• Yearly salary before taxes at \$5 per hour: \$10,400
• Divided by 12 months per year: \$10,400 / 12 = \$866.67 per month

The monthly salary based on a 40 hour work week at \$5 per hour is \$866.67 before taxes.

After applying the estimated 23.22% tax rate, the monthly after-tax salary would be:

• Monthly before-tax salary: \$866.67
• Estimated tax rate: 23.22%
• Taxes owed (23.22% * \$866.67 )= \$201.24
• Monthly after-tax salary: \$665.43

Monthly Salary Based on \$5 Per Hour

Hourly Wage Yearly Salary Months Per Year Before-Tax Monthly Salary Estimated Tax Rate Taxes Owed After-Tax Monthly Salary
\$5 \$10,400 12 \$866.67 23.22% \$201.24 \$665.43

### \$5 an hour is how much biweekly after taxes

Many people are paid biweekly, meaning every other week. To calculate the biweekly pay at \$5 per hour:

• Hourly wage: \$5
• Hours worked per week: 40
• Weeks per biweekly pay period: 2
• \$5 * 40 hours * 2 weeks = \$400 biweekly

Applying the 23.22%estimated tax rate:

• Biweekly before-tax salary: \$400
• Estimated tax rate: 23.22%
• Taxes owed (23.22% * \$400 )= \$92.88
• Biweekly after-tax salary: \$307.12

Biweekly Salary at \$5 Per Hour

Hourly Wage Hours Worked Per Week Weeks Per Pay Period Before-Tax Biweekly Salary Estimated Tax Rate Taxes Owed After-Tax Biweekly Salary
\$5 40 2 \$400 23.22% \$92.88 \$307.12

### \$5 an hour is how much weekly after taxes

To find the weekly salary based on an hourly wage, you need to know the number of hours worked per week. At 40 hours per week, the calculation is:

• Hourly wage: \$5
• Hours worked per week: 40
• \$5 * 40 hours = \$200 per week

Accounting for the estimated 23.22% tax rate:

• Weekly before-tax salary: \$200
• Estimated tax rate: 23.22%
• Taxes owed (23.22% * \$200 )= \$46.44
• Weekly after-tax salary: \$153.56

Weekly Salary at \$5 Per Hour

Hourly Wage Hours Worked Per Week Before-Tax Weekly Salary Estimated Tax Rate Taxes Owed After-Tax Weekly Salary
\$5 40 \$200 23.22% \$46.44 \$153.56

### Key Takeaways

• An hourly wage of \$5 per hour equals a yearly salary of \$10,400 before taxes, assuming a 40 hour work week.
• After accounting for an estimated 23.22% tax rate, the yearly after-tax salary is approximately \$7,985.12 .
• On a monthly basis before taxes, \$5 per hour equals \$866.67 per month. After estimated taxes, the monthly take-home pay is about \$665.43 .
• The before-tax weekly salary at \$5 per hour is \$200 . After taxes, the weekly take-home pay is approximately \$153.56 .
• For biweekly pay, the pre-tax salary at \$5 per hour is \$400 . After estimated taxes, the biweekly take-home pay is around \$307.12 .

Understanding annual, monthly, weekly, and biweekly salary equivalents based on an hourly wage is useful when budgeting and financial planning. Taxes make a significant difference in take-home pay, so be sure to account for them when making income conversions. Use this guide as a reference when making salary calculations.

## What Is the Average Hourly Wage in the US?

Last Updated: Sep 1 2023

US Average Hourly Earnings is at a current level of \$33.82, up from 33.74 last month and up from 32.43 one year ago. This is a change of 0.24% from last month and 4.29% from one year ago.

Average Hourly Earnings is the average dollars that a private employee makes per hour in the US. This metric is a part of one of the most important releases every month which includes unemployment numbers as well. This is normally released on the first Friday of every month. This metric is released by the Bureau of Labor Statistics (BLS).

## What is the average salary in the U.S.?

Last Updated: July 18, 2023

The U.S. Bureau of Labor Statistics uses median salary data rather than averages to avoid skewed numbers from outlying high and low numbers. Median weekly earnings of the nation's 121.5 million full-time wage and salary workers were \$1,100 in the second quarter of 2023, the U.S.

If a person works 52 weeks in the year, then this represents a national annual salary of \$57,200.

## Is \$5 an Hour a Good Salary?

Quite simply, \$5 an hour is not considered a livable wage in any part of the country today. Even working full-time at 40 hours per week, this hourly rate only equates to an annual salary of \$10,400. This falls far below the federal poverty line for individuals and families. It leaves people unable to afford even the most basic necessities to get by month to month.

With skyrocketing inflation, the value of \$5 an hour has plummeted dramatically. Everything from food and fuel to housing and transportation costs significantly more today. Despite working full time, individuals earning only \$5 an hour likely can’t afford housing or healthcare. And they certainly can’t save meaningfully for retirement or emergencies.

While there are some entry-level jobs that pay rates in this ballpark, that does not make it a viable livable wage. Even supplemented with food assistance programs, this income level leaves people impoverished with extremely stressful financial circumstances. Overall, \$5 an hour is sadly not even close to a minimum for getting by.

## Jobs that pay \$5 an hour

Given how low \$5 an hour is, what types of jobs pay only this hourly rate? Here are some of the most common roles:

• Food service – Jobs like dishwashers, some fast food workers, and casual counter help often pay around \$5/hour, especially with no experience. Tipped restaurant jobs pay a bit more per hour.
• Retail – Entry level retail associates and seasonal store help often start around the \$5/hour mark before small raises kick in.
• Childcare – Some nannies, babysitters, and daycare assistants may earn only \$5/hour or just slightly more, especially if they are young or have minimal experience.
• Manual labor – Some basic manual labor jobs like cleaning or basic construction assistance pay rates in the \$5/hour range.
• Service industry – Jobs like ushers, parking attendants, maids, landscapers, and gas station attendants sometimes pay wages equivalent to \$5 an hour or lower.
• Gig work – When factoring in gas, maintenance, and other costs, gig jobs like food delivery or rideshare driving may net out to around \$5/hour in some cases.

As shown above, jobs paying just \$5 an hour are often informal, part-time, or off the books roles largely in hospitality, services, and gig work. They are not formal skilled career paths.

## Can You Live Off \$5 An Hour?

Attempting to live off \$5 an hour would be extremely challenging, if not impossible, for most people. Here is some perspective on why this wage is unlivable:

• Average national rent is over \$1,100/month. At \$5 an hour, rent alone would consume a massive chunk of monthly take home pay after taxes.
• Covering basic living essentials like electricity, food, a phone, used car expenses and insurance would quickly surpass monthly earnings.
• Healthcare, even just the premiums, would be prohibitively expensive. Same for any form of entertainment, clothing, or travel expenses.
• No ability to save at all for retirement, emergencies, vacations, or big purchases like a home or newer vehicle.
• Almost no discretionary income for hobbies, going out, gifts, helping friends and family financially, charitable donations, etc.
• Any small emergency like a doctor visit, car repair, phone replacement could be crushing. Forget large emergencies.

Living off \$5 an hour would mean constantly struggling, accumulating debt, sacrificing health and happiness, and living paycheck to paycheck without any security. It is simply well below the minimum required for basic financial stability.

## The impact of inflation on the value of \$5 an hour

With high inflation, the meager \$5 an hour minimum wage has lost significant buying power:

• Inflation of 15% from 2021 to 2023 means \$5 an hour today is equivalent to just \$4.25 only two years ago.
• Housing costs are up 11% nationally, so rent and utilities take a larger bite out of earnings.
• Vehicles, gas, food, healthcare all cost 10-30% more today than in 2021.
• Essentials like groceries, phone bills, and clothing cost 8-15% more now.

As prices increase across the board, \$5 buys dramatically less than it did even recently. Any small wage gains get essentially cancelled out byinflation shrinking purchasing power. This makes it exponentially harder to survive on very low hourly pay.

## 5 Ways To Increase Your Hourly Wage

For those stuck earning \$5 an hour, any increase can hugely help their quality of life. Here are some potential steps:

• Ask for a small raise from current employer if you have been working there 6+ months. Outline contributions you have made.
• Transition from informal roles to formal hourly jobs – retail stores, fast food, etc – that tend to start around \$7-\$9 per hour.
• Look for higher tipped jobs like waiting tables that might earn \$5/hour plus tips.
• Learn basic skills online to qualify for roles like data entry or customer service that pay \$8-\$12 per hour typically.
• Explore side gigs that leverage skills or assets. Things like ride sharing, freelance writing, selling arts and crafts, or monetizing a spare room.

The key is incremental progress. Even increasing pay by a dollar or two an hour makes a meaningful difference. Develop skills and experience to continue earning more over time.

## Buying a car on \$5 an hour

Sadly, attempting to buy a car while earning just \$5 an hour is not realistic. Here is why:

• Average used car prices are around \$30,000 today. On \$5/hour, even a clunker for a few thousand dollars would be tough to save up for.
• Auto loans require proof of income. \$5/hour would not qualify for any meaningful financing.
• Insurance costs would dwarf earnings from part-time minimum wage work. Basic liability alone could surpass monthly take home income.
• Ongoing costs like gas and repairs would quickly become impossible. Even basic maintenance is unaffordable.

Unless a vehicle is gifted or inherited, purchasing a car while earning only \$5 an hour is unfortunately just not financially feasible today. Public transportation, getting rides, and walking are required for basic mobility.

## Can You Buy a House on \$5 An Hour?

Home ownership is financially out of reach on an income of \$5 per hour:

• Average home prices today are around \$400,000. Saving even 3.5% for a down payment would take years on a \$5/hour income.
• Monthly mortgage payments, taxes, insurance and utilities on a median priced home far exceed total monthly income at \$5/hour.
• Mortgage lenders require provable income well above \$5/hour and significant down payment funds, neither of which are attainable.
• Ongoing home repairs and maintenance are costly. These would be unaffordable emergencies on a \$5/hour budget.

Unless family can provide the home as a gift, home ownership is simply not possible for full-time employees earning only \$5 per hour in today’s real estate market. The economics do not even come close to making sense.

## Example Budget For \$5 Per Hour

Here is what a monthly budget would realistically look like at \$5 per hour:

• Gross Monthly Income at 40 Hours Per Week – \$800
• Taxes (10%) – \$80

Monthly Net Income = \$720

• Rent (shared apartment) – \$600
• Public Transit Pass – \$50
• Used Phone – \$30
• Groceries/Food – \$200
• Utilities – \$50
• Healthcare – \$0
• Clothing/Household Essentials – \$0
• Everything Else (Entertainment, Gifts, Unforeseen Expenses) – \$0

Total Monthly Expenses – \$930

This bare bones budget shows that even basic necessities cost more than earning \$5 an hour full time. Expenses quickly exceed income, forcing reliance on charity, debt, and assistance programs to survive. Saving for goals or emergencies is impossible at this wage.

## In Summary

Attempting to live on \$5 an hour would require huge sacrifices, carry constant financial stress, and result in a dangerously unstable financial situation. While attaining jobs starting at \$5 an hour is straightforward, actually supporting oneself or a family at that income level is simply unrealistic today. Any unexpected expenses or emergencies trigger immediate crisis. Unless supplemented through government programs, gifts, savings, or charity, \$5 an hour leaves individuals and families severely impoverished and at risk. Any amount of incremental progress in hourly pay makes a monumental difference. But \$5 alone is inadequate for basic financial stability.