Is 20k A Good Salary for a Day Trader?

Want to know if “20k is a good salary for a day trader?” Well, the answer is, 20k is not a great salary for a day trader, especially in the United States.

It’s below the United States average salary, which sets you quite a bit low the bar.

20k salary for a day trader limits you in terms of expenditure, and rent you can afford. But it’s not all gloomy and certainly not impossible to live off 20k a year.

You’ll most likely have to move to an affordable area or find roommates to split the cost of living.

But, wise spending could see you living comfortably on this wage.

Is 20k a Good Salary in the United States?

20k is not the best salary for a full-time day trader, especially when the average national salary was $60,575 in 2022.

Breaking Down a 20k Day Trader Salary

You’ve made 20k salary as a day trader, but how does that break down?

This net wage really depends on a lot of factors in the United States, such as your filing status, deductions, state, etc.

Let’s assume you’re a single filer with no dependents, and will take into consideration only federal tax bracket of 12%.

• Net: $17,600
• Federal tax liability: $2,400

Gross income of $20k per year equals:

• $9.61 per hour
• $76.88 per day
• $384.40 per week
• $768.80 bi-weekly
• $1,537.60 per month

Now, here’s a break down of a $20k salary after federal taxes.

• $8.46 per hour
• $67.68 per day
• $338.40 per week
• $676.80 bi-weekly
• $1,353.60 per month

Can you Live Off a 20k Salary as a Day Trader?

Yes, it’s possible to live off a 20k salary, but you’re going to have to keep your expenses at a minimum, and you will need roommates.

If you live with a partner or a roommate, and they bring another 25k to 30k a year, you should be able to live okay, within reason.

After paying for tax and utilities, you should have around $400 a month to spend on food, and entertainment.

Of course, this isn’t a lot, but it’s enough money to enjoy yourself in an affordable location.

How Much Rent Can a Day Trader Afford on a 20k Salary?

Of your 20k salary, you should only spend around 25-30% on rent.

Why 25-30%? Because this is the recommended amount to spend from your monthly take home and make it feel like you’re running out of cash for other day trades or bills.

But how much does this percentage actually translate to?

Well, if you’re taking home $1,353.60 after taxes, this means you can only spend between $338.40 and $406.08 on monthly rent.

At these prices, it will be difficult to find a place to rent but you can certainly manage if you have a partner or even rent out a room.

Not only would this keep you living within your means, but also you’re spending accordingly on rent.

Can a Day Trader Buy a House with a 20k Salary?

A day trader can certainly buy a house with a 20k salary if they look in rural areas and they’re open minded. If you were to follow the same 25-30% rule for renting to a house, then you can afford a home between $65,000-$70,000 with a 10% deposit.

This doesn’t include property tax, insurance, PMI fees or HOA fees.

3 Tips withs How to Live Off a 20k Salary as a Day Trader

The truth of the matter is that a 20k salary as a day trader is not enough income, and you’ll need to find ways to make it work.

Here’s a quick list of tips to help you stretch your day trading income a bit further.

1. Get More Side Jobs

As a day trader making 20k salary, you need to have other forms of income. If you have any other skills, consider monetizing them and providing them as service to help with any of your losses or just to increase your 20k salary to maybe 50k.

Here’s an article that list 10 side job ideas for day traders: 10 Side Jobs Ideas for Day Traders (alfatoro.com)

2. Budget Correctly

Although this is a difficult task, as a day trader with a 20k salary, you must manage your spending and live below-your means.

By sticking with a budget, you’ll be able to save up enough to have a deposit for a house.

3. Shop Wisely

With a 20k salary as a day trader you’ll need to shop wisely and go to budget friendly stores.

For example if you’re going to buy groceries, consider Aldi or Lidl as they are budget friendly.

Also, cut out monthly entertainment services or bills you do not need. Your pocket will thank you later.

To Sum It Up

So, is 20k a good salary for a day trader in the United States? It’s not great, but with proper spending and budgeting you can manage to get by.