Is 50k A Good Salary for a Day Trader?

Is 50k A Good Salary for a Day Trader?

Ruben Leija

$50,000 is a wonderful salary and is more than enough to support yourself. It is well above the median wage in the United States.

Is 50k a Good Salary in the United States?

A $50k salary is above the nation’s average for a full-time employee.

The average yearly salary for full-time workers in the United States in 2021, according to the Census Bureau, was $41,797.

Most people will naturally start much lower to this if they leave university or go straight to work after right after high school.

Here’s a link to the income report in the United States by the Census Bureau Report: https://www.census.gov/content/dam/Census/library/publications/2022/demo/p60-276.pdf

Breaking Down a 50k Day Trader Salary

You’ve made 50k 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 22%.

Gross income of $50k per year equals:

Now, here’s a break down of a $50k salary after federal taxes.

Can you Live Off a 50k Salary as a Day Trader?

The short answer is yes, the majority of day traders can live off a $50k salary if they live frugal. It also depends in the state they live in.

In 2022, the median salary for a single earner in the following states were under $50k.

The lower the median salary is in a state, usually means the expense of living is a lot lower. This may allow you to live comfortably without the feeling of sacrificing a lot of your day trading income.

How Much Rent Can a Day Trader Afford on a 50k Salary?

The goal is to not spend as little as possible on rent. The last thing you want to do is spend your monthly income on rent. If do, you’ll have less money to day trade or buy a home.

With that said, with taxes taken into consideration, the number is between 25-30% of your monthly take-home income for rent.

This means, your monthly rent should cost you no more than $812.50 per month if you’re sticking the 25% rule.

In the United States, you can find states that have rents of that price range, but if you live in a more expensive state, try to find roommates to cut the cost of living.

Can a Day Trader Buy a House with a 50k Salary?

A day trader can certainly buy a house with a 50k salary. If you were to follow the same 25-30% rule for renting to a house, then you can afford a home between $150,000-$170,000 with a 10% deposit.

With today’s current rates at 6.35% 30-year fixed loan, you can afford a mortgage loan of $150,000.

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

If you think you can handle the 30% rule, then you can afford a mortgage loan $170,000.

For a home at this price, it really depends on the area you live in, but you can also find great foreclosure deals.

By the way: If you’re interested in doing calculations and finding current market mortgage rates, here are some links you can use:

5 Tips withs How to Live Off a 50k Salary as a Day Trader

The truth of the matter is that a 50k salary as a day trader does limit you, 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. Pay Off Debt

If you’re earning $50,000 per year as a day trader, you should look into clearing any high interest debt that you may have. This includes:

Targeting high interest debt first is crucial, so you can have excess amount of liquidity for your day trading or other important monthly bills.

The key here is to avoid paying the minimum balance, and overpay so you can get rid of it as quickly as possible.

2. Budget Correctly

I know! budgeting is not a cool topic, it’s mundane and boring. But without one, you’re playing in the dark with a 50k day trader salary.

If your sole income is off day trading, you’re risking your capital, and you may be living paycheck to paycheck. Day trading is already a stressful career, don’t add more stress–budgeting will help you solve this problem.

Understanding what’s coming in and going out allows you to asses your current financial situation as a day trader, and be well prepared for whats ahead.

3. Grow your Savings

As a day trader, you’ll need a savings account, also know as “emergency funds.” You want to make sure you build a safety net, especially for those months that you’re struggling in the market.

Start by saving 3 months, and work your way to 6 months and than a year worth of emergency funds.

4. Consider Dividend Stocks

Day trading is a great career to make cash, but if you’d like supplement some of your losses or even gain extra income passively, try buying solid companies with a solid track record of paying dividends.

It’s a wonderful idea to diversify your portfolio with short-term but also long term investments.

Here’s an article that talks about the best dividend stocks currently in the stock market: Best Stock Dividends & Reward Rates for 2023 (alfatoro.com)

5. Consider Side Jobs

As a day trader making 50k salary, you may want to think of 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 50k salary to maybe 70k.

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

To Sum It Up

So, is 50k a good salary for a day trader in the United States? Well, it really depends on where you live, and how well you can manage your money.

You can make 50k salary and make it work with that capital as a single individual, but if you’re support a family on this wage, it can be quite challenging.

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