# \$86 an Hour is How Much a Year? Before and After Taxes

An hourly wage of \$86 per hour is well above the average pay rate, but what does this translate to over various time periods? This article will break down the gross and net annual, monthly, biweekly, and weekly earnings for someone making \$86 per hour. We will calculate totals for both part-time and full-time work schedules and factor in how overtime pay and unpaid time off can impact yearly income.

Additionally,we will evaluate whether \$86/hour is considered a good salary in today’s economy by looking at the effects of inflation, standard of living, and comparing it to other common wages. Relevant topics covered include: converting the hourly pay to different time frames, estimating yearly pay for part and full-time, the impact of taxes on take-home pay, sample budgets and lifestyle costs, affording major purchases like a house or car, and tips for further increasing your earnings.

By providing this comprehensive overview, the article will illustrate the earning power of \$86 per hour and what it equates to in practical everyday terms.

## Convert \$86 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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### \$86 an Hour is How Much a Year?

If you make \$86 an hour, your yearly salary would be \$178,880. 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(\$86) x Weeks worked per year(52) = \$178,880

### \$86 an Hour is How Much a Month?

If you make \$86 an hour, your monthly salary would be \$14,906.67. We calculated this number by dividing your annual income by 12 months.

Hours worked per week (40) x Hourly wage(\$86) x Weeks worked per year(52) / Months per Year(12) = \$14,906.67

### \$86 an Hour is How Much Biweekly?

If you make \$86 an hour, your biweekly salary would be \$6,880.

Hours worked per week (40) x Hourly wage(\$86) x 2 = \$6,880

### \$86 an Hour is How Much a Week?

If you make \$86 an hour, your weekly salary would be \$3,440. Calculating based on 5 days per week and 8 hours each day.

Hours worked per week (40) x Hourly wage(\$86) = \$3,440

### \$86 an Hour is How Much a Day?

If you make \$86 an hour, your daily salary would be \$688. We calculated your daily income based on 8 hours per day.

Hours worked per day (8) x Hourly wage(\$86) = \$688

## \$86 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:

\$86 per hour x 40 hours per week x 52 weeks per year = \$178,880

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 \$178,880 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 \$178,880 .

## Part time \$86 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 30 hours per week instead of 40. Here’s how you calculate your new yearly total:

\$86 per hour x 30 hours per week x 52 weeks per year = \$134,160

By working 10 fewer hours per week (30 instead of 40), your annual earnings at \$86 an hour drop from \$178,880 to \$134,160.

That’s a \$44,720 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 \$86 an hour:

Hours Per Week Earnings Per Week Annual Earnings
40 \$3,440 \$178,880
35 \$3,010 \$156,520
30 \$2,580 \$134,160
25 \$2,150 \$111,800
20 \$1,720 \$89,440
15 \$1,290 \$67,080

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.

## \$86 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 \$86 per hour normally, you would make \$129 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 \$86 per hour = \$3,440
• 5 overtime hours paid at \$129 per hour = \$645
• Your total one Week earnings =\$3,440 + \$645 = \$4,085

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

\$4,085 per week x 52 weeks per year = \$212,420

That’s \$33,540 more than you’d earn working just 40 hours per week at \$86 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 \$86 an hour:

 Overtime hours per work day Hours Per Week Earnings Per Week Annual Earnings 0 40 \$3,440 \$178,880 1 45 \$4,085 \$212,420 2 50 \$4,730 \$245,960 3 55 \$5,375 \$279,500 4 60 \$6,020 \$313,040 5 65 \$6,665 \$346,580 6 70 \$7,310 \$380,120 7 75 \$7,955 \$413,660

## How Unpaid Time Off Impacts \$86/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(\$86) x Weeks worked per year(50) = \$172,000 annual salary

With 2 weeks unpaid time off, your annual earnings at \$86/hour would drop by \$6,880.

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 \$3,440 \$178,880 1 51 \$3,440 \$175,440 2 50 \$3,440 \$172,000 3 49 \$3,440 \$168,560 4 48 \$3,440 \$165,120 5 47 \$3,440 \$161,680 6 46 \$3,440 \$158,240 7 45 \$3,440 \$154,800

## Key Takeaways for \$86 Hourly Wage

In summary, here are some key points on annual earnings when making \$86 per hour:

• At 40 hours per week, you’ll earn \$178,880 per year.
• Part-time of 30 hours/week results in \$134,160 annual salary.
• Overtime pay can boost yearly earnings, e.g. \$33,540 extra at 45 hours/week.
• Unpaid time off reduces your total income, around \$6,880 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.

## \$86 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 \$86 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 \$86 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 \$178,880 gross annual pay, your federal tax bracket is 24%.

Your estimated federal tax would be:

\$16,290 + (\$178,880 – \$95,376) x 24% = \$36,330.96

So at \$86/hour with \$178,880 gross pay, you would owe about \$36,330.96 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:

\$178,880 gross pay x 3.07% PA tax rate = \$5,491.62 estimated state income tax

So with \$178,880 gross annual income, you would owe around \$5,491.62 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:

\$178,880 gross pay x 2.5% local tax rate = \$4,472 estimated local tax

So with \$178,880 in gross earnings, you may owe around \$4,472 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:

\$160,200 x 6.2% + \$178,880 x 1.45% = \$13,684.32

So you can expect to pay about \$13,684.32 in Social Security and Medicare taxes out of your gross \$178,880 in earnings.

### Total Estimated Tax Payments

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

Federal tax: \$36,330.96

State tax: \$5,491.62

Local tax: \$4,472

FICA tax: \$13,684.32

Total Estimated Tax: \$59,978.90

### Calculating Your Take Home Pay

To calculate your annual take home pay at \$86 /hour:

2. Subtract your estimated total tax payments

\$178,880 gross pay – \$59,978.90 Total Estimated Tax = \$118,901.10 Your Take Home Pay

n summary, if you make \$86 per hour and work full-time, you would take home around \$118,901.10 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 \$86 Per Hour to Yearly, Monthly, Biweekly, and Weekly Salary After Taxes

If you make \$86 an hour and work full-time (40 hours per week), your estimated yearly salary would be \$178,880 .

The \$178,880 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 \$86 An Hour Is How Much A Year After Taxes, we assumed the following conditions:

• You are single with \$178,880 gross annual pay, your federal tax bracket is 24 %.
• 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 \$59,978.90 , Your Take Home Pay is \$118,901.10 , Total tax rate is 33.53%.

So next we’ll use 33.53% as the estimated tax rate to calculate your weekly, biweekly, and monthly after-tax income.

### \$86 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 \$178,880 33.53% \$59,978.90 \$118,901.10 Monthly Salary \$14,906.67 33.53% \$4,998.24 \$9,908.43 BiWeekly Salary \$6,880 33.53% \$2,306.88 \$4,573.12 Weekly Salary \$3,440 33.53% \$1,153.44 \$2,286.56

### \$86  an hour is how much a year after taxes

Here is the adjusted yearly salary after a 33.53% tax reduction:

• Yearly salary before taxes: \$178,880
• Estimated tax rate: 33.53%
• Taxes owed (33.53% * \$178,880 )= \$59,978.90
• Yearly salary after taxes: \$118,901.10
Hourly Wage Hours Worked Per Week Weeks Worked Per Year Total Yearly Salary Estimated Tax Rate Taxes Owed After-Tax Yearly Salary
\$86 40 52 \$178,880 33.53% \$59,978.90 \$118,901.10

### \$86 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 \$86 per hour: \$178,880
• Divided by 12 months per year: \$178,880 / 12 = \$14,906.67 per month

The monthly salary based on a 40 hour work week at \$86 per hour is \$14,906.67 before taxes.

After applying the estimated 33.53% tax rate, the monthly after-tax salary would be:

• Monthly before-tax salary: \$14,906.67
• Estimated tax rate: 33.53%
• Taxes owed (33.53% * \$14,906.67 )= \$4,998.24
• Monthly after-tax salary: \$9,908.43

Monthly Salary Based on \$86 Per Hour

Hourly Wage Yearly Salary Months Per Year Before-Tax Monthly Salary Estimated Tax Rate Taxes Owed After-Tax Monthly Salary
\$86 \$178,880 12 \$14,906.67 33.53% \$4,998.24 \$9,908.43

### \$86 an hour is how much biweekly after taxes

Many people are paid biweekly, meaning every other week. To calculate the biweekly pay at \$86 per hour:

• Hourly wage: \$86
• Hours worked per week: 40
• Weeks per biweekly pay period: 2
• \$86 * 40 hours * 2 weeks = \$6,880 biweekly

Applying the 33.53%estimated tax rate:

• Biweekly before-tax salary: \$6,880
• Estimated tax rate: 33.53%
• Taxes owed (33.53% * \$6,880 )= \$2,306.88
• Biweekly after-tax salary: \$4,573.12

Biweekly Salary at \$86 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
\$86 40 2 \$6,880 33.53% \$2,306.88 \$4,573.12

### \$86 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: \$86
• Hours worked per week: 40
• \$86 * 40 hours = \$3,440 per week

Accounting for the estimated 33.53% tax rate:

• Weekly before-tax salary: \$3,440
• Estimated tax rate: 33.53%
• Taxes owed (33.53% * \$3,440 )= \$1,153.44
• Weekly after-tax salary: \$2,286.56

Weekly Salary at \$86 Per Hour

Hourly Wage Hours Worked Per Week Before-Tax Weekly Salary Estimated Tax Rate Taxes Owed After-Tax Weekly Salary
\$86 40 \$3,440 33.53% \$1,153.44 \$2,286.56

### Key Takeaways

• An hourly wage of \$86 per hour equals a yearly salary of \$178,880 before taxes, assuming a 40 hour work week.
• After accounting for an estimated 33.53% tax rate, the yearly after-tax salary is approximately \$118,901.10 .
• On a monthly basis before taxes, \$86 per hour equals \$14,906.67 per month. After estimated taxes, the monthly take-home pay is about \$9,908.43 .
• The before-tax weekly salary at \$86 per hour is \$3,440 . After taxes, the weekly take-home pay is approximately \$2,286.56 .
• For biweekly pay, the pre-tax salary at \$86 per hour is \$6,880 . After estimated taxes, the biweekly take-home pay is around \$4,573.12 .

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 \$86 an Hour a Good Salary?

Whether \$86 an hour is considered a good salary largely depends on where you live and your lifestyle expectations. In lower cost areas of the country, this hourly wage goes a lot further. But in major metropolitan areas like New York City or San Francisco, everything from rent to groceries is far more expensive.

To put \$86 an hour in perspective, the median hourly wage in the United States is around \$20 an hour. So a job paying \$86 an hour is clearly well above what a typical American worker earns. However, the cost of living varies tremendously. Making \$86 an hour in rural Iowa is not the same as making that wage in NYC.

According to the U.S. Census Bureau, the median household income in the United States is about \$67,000 a year. Assuming a full-time job, \$86 an hour works out to an annual salary that is almost three times higher than the median. So purely looking at the number, this wage seems quite generous. But again, where you live is a major factor.

Overall, \$86 an hour is a well-above-average wage. But in high cost urban areas, it may only mean a middle class lifestyle. In lower cost regions, this hourly pay allows for a very comfortable standard of living.

## Jobs that pay \$86 an hour

Very few jobs pay \$86 an hour or more to start. This high hourly wage is usually only earned by experienced professionals with advanced degrees. Some examples of careers with an earning potential of \$86 an hour include:

• Doctors – Experienced physicians and surgeons can earn \$86 an hour or more, particularly specialists like anesthesiologists, radiologists and emergency room doctors. However, becoming a doctor requires extensive training.
• Dentists – Like physicians, experienced dentists can charge high hourly rates for their services. But dentists also have the overhead of running their own practice.
• Lawyers – Lawyers at top law firms or those who own their own practice can bill \$86 or more per hour. However, associates just starting out at a law firm typically make much less.
• Engineers – Engineers in high paying fields like petroleum, software and aerospace engineering can make \$86 an hour once they reach senior levels. Becoming an engineer requires at least a bachelor’s degree.
• Executives – Upper level management and executives at Fortune 500 companies are sometimes paid on an hourly basis in excess of \$86 per hour. But it often takes decades of exemplary performance to reach this compensation level.
• Contractors – Some plumbers, electricians, carpenters and other skilled tradespeople who own their own contracting business can charge over \$86 an hour for labor and services. However, it takes time to build up a business’ reputation and client base.

As you can see, the jobs that pay \$86 an hour or more are usually only obtained after years of education, training and experience. Very few people can attain this high hourly wage immediately out of school. It often requires paying one’s dues in a given career and slowly working up to higher paid roles.

## Can You Live Off \$86 An Hour?

The answer to whether you can live off of \$86 an hour depends largely on the cost of living in your city and your personal lifestyle. In a place like San Francisco or New York, it will be far harder to get by on this wage than somewhere like Memphis or Columbus.

Some key factors that determine whether \$86 an hour provides an adequate standard of living include:

• Housing costs – In major metro areas, housing is probably the biggest expense. Rent or mortgage payments for a median home often eat up \$30,000 or more of annual income. At \$86 an hour, housing costs will consume a sizable portion of your pay.
• Transportation costs – Do you need to own a car and pay for gas, insurance and parking? Public transportation is cheaper but commuting time is longer. Transportation costs also vary widely based on where you live.
• Food costs – Groceries and dining out are more expensive in cities like San Francisco and New York. You’ll have less disposable income for dining out frequently on \$86 an hour in high cost areas.
• Healthcare costs – Do you have employer provided health insurance or have to pay your own premiums? Out of pocket medical expenses can also eat up a chunk of \$86 an hour.
• Other expenses – What’s your lifestyle like? Do you spend a lot on entertainment, travel or hobbies? Or are you frugal and maintain a minimalist lifestyle? Your specific spending habits impact whether \$86 an hour is enough.

Considering typical costs, living reasonably well on \$86 an hour is certainly achievable in most areas of the country. However, you’ll need to budget wisely and not overspend, particularly in high cost cities.

## The impact of inflation on the value of \$86 an hour

With U.S. inflation recently hitting 40 year highs, it’s important to consider the impact of rising prices on an hourly wage like \$86 an hour. Inflation erodes the purchasing power of your money over time.

Here are some ways that inflation diminishes the value and buying power of \$86 per hour:

• Housing appreciation – As home values and rents rise faster than wages, more of your \$86 an hour income will need to be devoted to housing costs.
• Food inflation – Grocery bills are increasing due to inflation, further reducing disposable income. Dining out also becomes more expensive over time.
• Transportation costs – Vehicles, gasoline and public transit costs all typically rise faster than wages. Just commuting to work eats up more of the \$86 per hour.
• Reduced savings – High inflation makes it harder to save and invest money. Less of the \$86 an hour can be put away for retirement or other goals.
• Higher interest rates – To combat inflation, interest rates rise which increases the cost of borrowing money for big purchases like cars or homes.
• Bracket creep – As wages gradually increase to keep up with inflation, more income may fall into higher tax brackets resulting in higher taxes owed.

Over a long time period of years or decades, inflation can substantially reduce the purchasing power and living standard that \$86 an hour provides. Costs rise faster than wages.

To maintain a consistent living standard over many years, the \$86 hourly pay may need to gradually increase to offset inflation. Getting occasional pay raises above the rate of inflation helps to preserve purchasing power.

## 5 Ways To Increase Your Hourly Wage

For those earning less than \$86 an hour, there are some potential ways to increase your hourly pay rate. While few jobs pay that high starting out, here are some suggestions:

• Get more education – Degree programs like a masters, PhD or professional certification can qualify you for higher paying roles. Education broadens job opportunities.
• Acquire new skills – Learn high demand skills like software development, nursing, or technical trades. Employers pay more for specialized skills and knowledge.
• Ask for raises – If you’ve gained experience and proven your value, ask for a raise to increase your hourly pay. Promotions also boost compensation.
• Switch companies – Changing employers opens up possibilities for higher pay when moving into a new role. Don’t get stuck at one employer forever.
• Negotiate salary – When accepting a job offer, negotiate to increase the initial salary. Know your worth and aim for better compensation.

Remember that the highest hourly wages are usually only obtained after dedicating time to education, training and building in-demand skills. Patience and persistence often pay off financially.

## Buying a car on \$86 an hour

Is buying a brand new car affordable if you earn \$86 an hour? The answer depends greatly on the type of car and your budget priorities. With careful planning, buying a modestly priced new car on \$86 hourly wages is feasible in most parts of the country.

Here are some tips for buying a car when earning \$86 an hour:

• Focus on practical, economy vehicles rather than luxury cars to save money. Aim to spend \$25,000 or less.
• Get pre-approved for an auto loan to see what monthly payments you can afford. Don’t overextend your budget.
• Save up to make a larger down payment. At least 20% down is recommended but more is better.
• Shop for the lowest financing rates. Getting approved below 5% interest will save substantially on a car loan.
• Buy used instead of new if you want greater value. Let someone else take the depreciation hit.
• Limit loan term to 3 years or less. Stretching out payments builds excessive interest.
• Pay down principal faster if possible. Prepaying reduces interest costs over time.

With prudent planning, an \$86 an hour wage makes buying a new economy car quite reasonable. But carefully consider costs before splurging on a more lavish vehicle.

## Can You Buy a House on \$86 An Hour?

Is home ownership possible for someone earning \$86 an hour? In most housing markets, the answer is yes – buying a modestly priced house on \$86 an hour is feasible with disciplined savings habits and wise budgeting.

Here are some mortgage guidelines and tips for buying a home on \$86 hourly pay:

• Get preapproved for a loan to determine your maximum purchase budget. Shoot for homes well below your upper limit.
• Save up a downpayment of at least 10-20% of the purchase price. More down reduces your mortgage payments.
• Make sure mortgage payment, insurance, taxes and other costs total no more than 28% of your gross income.
• Consider getting a 15-year fixed rate mortgage instead of a 30-year loan to pay the home off faster.
• Buy a starter home you can afford now and upgrade later as income grows. Don’t attempt to buy your dream home immediately.
• Consider moving to a less costly area if your target city has exaggerated home prices relative to income.
• Get quotes from multiple lenders and compare interest rates to find the lowest rate. Refinance later if rates drop.

Owning a home on \$86 an hour is attainable for many people if they live within their means. Just be careful not to overextend your budget by purchasing more house than you can comfortably afford.

## Example Budget For \$86 Per Hour

Budgeting wisely is essential to living comfortably on \$86 an hour. Here is an example monthly budget for someone earning this hourly wage:

Note: This assumes a full-time job at 40 hours/week and a semi-monthly pay frequency (getting paid twice a month).

• Gross Monthly Pay: \$7,280
• Federal & State Taxes: \$1,400
• 401k Retirement Contribution: \$300
• Take Home Pay: \$5,180
• Housing Costs: \$1,500
• Rent/mortgage for a modest 1-2 bedroom home or apartment
• Utilities: \$300
• Electricity, gas, water, phone, internet
• Transportation: \$460
• Car payment, insurance, gas and maintenance
• Food: \$450
• Groceries and some dining out
• Entertainment: \$200
• Subscriptions, movies, concerts, etc.
• Clothing & Personal Care: \$170
• Debt Payments: \$100
• Credit card, student loan, or personal loan payments
• Savings Contribution: \$500
• Emergency fund, retirement, other savings
• Miscellaneous: \$500
• Everything else including medical costs, travel, gifts, etc.
• Total Monthly Spending: \$5,180

This leaves no wiggle room but a budget of this nature allows someone earning \$86 an hour to cover basic needs, have some fun money for discretionary spending, and still save over \$500 a month. The exact budget breakdown will vary based on your individual circumstances.

## In Summary

Having a job that pays \$86 an hour places you well above average on the income spectrum. This hourly wage translates to nearly \$180,000 per year if working full-time. However, cost of living varies dramatically based on your location.

while \$86 an hour is a dream salary for many, in high cost urban areas it provides more of an upper middle class lifestyle. Careful budgeting is still required, especially saving for retirement and managing healthcare costs.

Yet this hourly pay affords a comfortable standard of living in most of the country. With prudent financial decisions like limiting housing costs, maintaining a budget, and avoiding excessive debts, happiness is certainly attainable at this income level.

Just recognize that inflation will continue eroding purchasing power over time. So strive to get periodic raises and boost your earning potential. With some financial discipline, \$86 an hour provides a solid living in today’s economy.