Do you dream of greater income? This is a closer look at what a six-figure salary really looks like and what you can do to build wealth. Building wealth is the key to financial security.
What is the American dream? A lot of people would say it’s about graduating college, owning your own house, and making 6 figures a year. Is this really the dream everyone thinks it is? What actually gets you 6 figures a year?
In this guide, I’ll take a closer look at what this income has to offer you. Next, I’ll clearly explain to you how to live a life of abundance even if your salary doesn’t make six figures.
What is a six-figure income?
A salary between $100,000 and $999,999 is considered a 6-figure income. Anything over $200,000 would be considered six-figure income. Just because someone earns 6 figures doesn’t mean they are rich. a a lot One of the factors that play a role in wealth. Let’s dig into those factors!
What does a six-figure salary get you?
Are you one of those people who dream of earning enough money so that you never have to worry about your money again?
Many people think that a higher salary is the answer. They keep six figures as the high and lofty goal they always aim for. If that’s the goal, let’s look at what exactly that salary will give you.
If you break it down, a salary of $100,000 per year comes to at least $8,333 per month. This is what your monthly and annual salary will receive.
Jobs that earn six figures
Your first six-figure salary will be a full-time job. This will become your life – so what types of jobs pay this much money?
These types of jobs usually include jobs such as doctors, lawyers, and other specialized professions. They require training and education.
Here are some of the most common professions and the average income they typically pay.
- Anesthesiologist – $292,000
- Dentist – $150,000
- CFO with MBA – $127,000
- Petroleum engineer – $138,000
- Software developer – $105,000
What about jobs that don’t require a college degree? Yes, you can still earn 6 figures without student loan debt!
These are just a few examples of high-paying jobs that don’t require a college degree:
- Crane Operator – $500,000 per year in New York City
- Real estate broker – $120,000 per year
- Air traffic controller – $159,000 per year
- Web Developer – $100,000 per year
- Commercial pilot – $110,000 per year
Some well-paying jobs in some fields (such as dental hygienists) do not require 4-year college degrees, but do require associates.
Taxes on a six-figure salary
The other thing that six figures will give you is higher taxes because you will be in a higher tax bracket now.
Let’s look at it closer. If your salary is $100,000, you are in the 25% tax bracket. This means your take-home pay is only $75,000.
That’s why many people aim for much higher than $100,000 per year. Essentially, they will be able to bring home more money each month after Taxes.
The lifestyle of the six characters
The lifestyle is what everyone dreams of – and it can be really fun. With the right budget, this income can give you access to different homes, cars, and trips.
As much fun as this can be, it’s also dangerous. “Keeping up with the Joneses” is a real struggle for some people.
Trying to live in a bigger house, drive a newer car, and buy clothes that everyone likes all cost money and can quickly erode your income.
This is one of the things that makes even well-paid professionals live paycheck to paycheck.
Cost of living in well-paid cities
There are a large number of well-paying jobs in major cities. This also means that the cost of living in these cities is much higher, so income will decrease much faster. You’ll pay higher taxes, a higher rent or mortgage payment, and more for food and other amenities.
Let’s look at this closer.
These are the cities that pay the best, along with the average rental price for a two-bedroom apartment.
- Chicago, IL – $2,243
- Portland, Oregon – $1,761
- Philadelphia, Pennsylvania – $2,241
- Baltimore, Maryland – $1,812
- Los Angeles, California – $3,091
- Denver, Colorado – $1,867
- Seattle, Washington – $2,950
- New York City – $3,092
- Washington, DC – $2,672
What about owning a home? If you buy a home for about $500,000, you will pay about $2,387 per month for the mortgage. This doesn’t even include property taxes or home insurance!
As you can see, rent or even a mortgage in these cities (and in the surrounding suburbs) will affect how much disposable income you actually have.
Student loan debt
Many jobs that will pay you six figures require a college degree. This college degree may come with student loan payments each month.
Student loan debt is one of the worst debts for anyone to ignore. If you don’t pay it, they can garnish your wages and take what you owe from your income tax refund.
How much is the student loan payment? The average American pays approx $400 per month For their student loans. Those with a master’s degree tend to pay more for student loans. This number depends on the loan amount. Private colleges will leave people with more debt than public universities or community colleges.
Investments
Even people making six figures have to set a budget and stick to it. If they stick to a budget and invest their extra money wisely, it can pay off in the long run.
Smart investments will earn compound interest the longer they remain in the account. In fact, some investments pay dividends while you’re in them.
time
Traditionally, those who make six figures end up spending more time at work each week and year. With only 24 hours in a day, we all have a choice when it comes to how we spend that time.
High earners often spend more than 40 hours a week earning their six-figure income. This time away from home and family can cause stress on a person’s mental health and relationships.
Many people who earn six figures are willing to trade time for money by hiring outside help with homework. Although this may give them back personal time, it also increases their monthly expenses.
How to build wealth without 6 figures
The good news is that it is possible to live the same kind of financially free life you dream of without 6-figure salary. It is possible to build wealth and have extra money for things like trips and new purchases from your current income.
Here’s how to make your current life the life of your dreams.
Debt repayment
The number one way to retain more of your income is to pay off your debts as quickly as possible. The debt snowball method is the most effective way to do this.
A debt snowball looks like this: You pay off your smallest debt first. Then, you take the payments you’ve been making and apply them to your next largest debt. When that is paid off, you take that total payment and apply it to the next payment.
Before you know it, your debts will be paid off and you’ll have more money in your budget each month.
It is a magical and exciting experience.
After you pay off your debts, make a plan to never go back to this situation again.
Build savings
Another thing that will help you build wealth is setting up a rainy day savings account. This is something you’ll use to pay for surprise expenses like a new air conditioner or major engine repairs.
Try to save 2-3 months rent. This way, if something happens to your job, you’ll still have money to pay your bills while you look for another job.
This savings account will fund expenses that might otherwise strain your finances. You can’t predict what will go wrong, but you can be prepared to pay for it.
Create a budget
Everyone, regardless of their salary, benefits from a well-planned budget. When you create a budget, you set yourself up for success.
This can be as simple as a cash envelope system or as complex as something using budgeting software – just make sure it fits the way you look at money.
You’ll know exactly what your expenses are and will be able to see where you can cut back and make smarter choices.
A budget will also give you the freedom to know how long in advance it will take you to save up for that big dream purchase.
If you want to build wealth, it all starts with a budget.
Invest wisely
You don’t have to make $200,000 a year to invest. Talk to an investment professional and find smart ways to invest your money that will pay off in retirement.
Investments that earn compound interest are one of the best ways to build wealth. Some people suggest investing in real estate, others in the stock market. There are pros and cons to every type of investment, so it’s very important to talk to someone you can trust.
Even just investing in your 401K or retirement account is a great way to start investing. Don’t wait until you’re older to invest. Start small and start early!
Get on the same page with your partner
financial problems They are often listed as reasons behind divorce in America. It’s no secret that money seeps into our daily lives. Combining finances with someone else can be very stressful.
By getting on the same page with your spouse or partner, you’re more likely to save money and write a budget that actually works. This will help you in the long run when it comes to paying off debt and building wealth.
If your partner is hesitant to get on board with the budget, start by simply discussing your family’s goals and dreams. What age do you want to retire at? What would you like to be able to do or see in the future? Do you want to be able to take your grandchildren or friends on a trip?
Start the conversation early in your relationship because it can literally save you money.
Downsizing
Finally, take a look at where you live and what you drive. Sometimes, just by downsizing, you can save a lot of money.
Selling your home and moving to a smaller home in a different neighborhood could mean a big difference in your mortgage payments.
Don’t just downsize your house or car, but look at your spending habits as well. Are there any spending habits you can work around a little?
Every little bit helps. The less you spend, the more you save and keep.
Take up a temporary side hustle
Finally, if you want to build your wealth, take up a temporary side hustle. Invest the income from this aspect into paying off your debts and building your savings account.
When you are financially comfortable, you can stop this side hustle. You will have more time on your hands and enough money that you won’t feel like you have to work as much.
Examples of side hustles include:
- Freelance writing
- Walking dogs or babysitting
- Instacart or door dash
- Virtual assistant
- Freelance graphic design
To learn more about becoming a virtual assistant and making serious money in your free time, check out this Free checklist From my friend Abby to see if this is right for you.
Learn how to budget regardless of your income
Just because you write down six figures doesn’t mean you shouldn’t write down a budget. Likewise, if you’re not making six figures, a budget is for you too!
Learning how to write a budget that works for you and your family can be stressful. By signing up for our free Budgeting and Debt Payoff Cheat Sheet, you’ll learn step-by-step how to write a budget that works for you so you can pay off your debt forever.
Ultimately, you’ll learn how to save money, manage your money better, and start paying off debt. Ready to get started? Sign up below.
Final thoughts on the six salary
The dream of earning six figures a year is very popular with people in America. You might think that with all that money, you’ll never have to worry about budgeting or financial stress again.
What might surprise you is that even people who earn this wage have to watch their budget. If they don’t, they will also live paycheck to paycheck.
Learn how to live within your means and build wealth at your current income level. It’s definitely possible!
