A $100,000 dollar salary sounds like a lot of money, and it is. Even so, you might be wondering just how comfortable is life for those who make $100,000 or more a year. The truth is, it all depends on a few factors that may or may not be in your control.
How Comfortable is Life For Those Who Make $100,000 or More a Year?
A $100,000 dollar salary can be a lot of money, or it might not be much at all. So, you might be very comfortable, or you might just barely be getting by. It all depends on the following…
1. Where You Live
You might be surprised to learn that only about 13 percent of Americans make more than $100,000 per year.
For the rest of us, we have to get by on less, and sometimes much less, but for those lucky ones, are they really comfortable with that salary?
If you live in a large, expensive city, then it can be tough to get buy on a hundred grand a year.
For example, in San Francisco, the average cost of a house is over a million dollars. Not to mention, California is a high-tax state, so by the time you pay all of your federal taxes, state taxes, plus county and city taxes, you might only be bringing home $60,000 dollar a year if you are lucky.
On the other hand, if you live in the middle of the country where you can buy a really nice, large home for $200,000 to $300,000 dollars, in a lower tax state, that 100K will start looking a lot better.
The bottom line is that some cities are just more expensive to live in and your money doesn’t go as far even if you make a lot.
2. Cost of Living
Beyond housing costs, there are other items that make up your cost of living. From groceries to electricity to state, city, and county taxes.
Depending on where you are living, your day-to-day activities could be less or more than the average.
For example, if you live in a big city such as New York City or San Francisco, or Boston, and you drive to work, you could be spending $30 to $50 dollars or more per day just to park your car in a garage.
On the other hand, if you live in a small, rural community as I do, there are no parking garages and all parking is free.
That $50 dollars per day for parking eats up a lot of your salary, and that $100K is looking a lot less comfortable.
Another example is eating out. It is true that you won’t find trendy restaurants where I live, unfortunately, but even the nice ones here are much less expensive than in the big city.
I know that in New York at a lot of restaurants if you want a refill on your drink, soda, or pop as we call it, you will have to pay for those refills.
Here, they are all free regardless of how many you have.
Not to mention, a glass of wine will set you back $4 or $5 dollars but in larger cities, you might be paying $8 or $10 or even more.
The point is, even the small stuff is cheaper in middle America. That’s why your salary goes much further than if you are living in a bigger city or on either coast.
3. Your Lifestyle
Your lifestyle will play a large part when it comes to whether or not a $100,000 dollar income will make you comfortable or not.
If you’re going out every night and engage in a lot of nighttime activities such as eating out, going to clubs, or bars, your money can be used up pretty quickly.
This is even more true in an expensive city.
On the other hand, if you are kind of a homebody that sits at home most nights watching TV or reading a library book, then your big salary will go a lot further.
Even if you feel you are living a middle-class life, if you have kids or do a lot of traveling, you may find that your yearly salary doesn’t match the amount you are spending, and then things can get very uncomfortable.
When it comes to kids, beyond meeting all of their basic needs…food, shelter, clothing, medical needs, and school, there are all of the extras.
How many activities are your kids in? Do they enjoy expensive activities such as ice skating or horse riding?
If so, you can almost see your money flying out the window.
Of course, you want to give your children all that you can and allow them to engage in the activities that they enjoy, but it doesn’t come without a cost, and that $100,000 dollar per year salary is starting to look smaller and smaller.
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4. Your Debt
Another factor that will help determine if making 100K or more per year is comfortable or not is your level of debt.
Student loans by themselves can take a real toll. Student loan payments can be in the hundreds and even thousands of dollars per month.
Credit cards come with high interest rates and while personal loans can be a way to help clean up your credit card debt, if you have too many of them or you don’t consolidate your credit card and personal loan debt, those payments can cause issues.
Heck, if they are high enough you might find yourself living paycheck to paycheck even with a $100,000 dollar or more salary and that is certainly not comfortable.
5. Your Bills
Take a moment and figure up all of your bills such as your health insurance, internet cost, utilities, and other monthly expenses and take that number by twelve, so you can get a yearly cost.
Then subtract that number from your annual income after taxes.
This will give you a good idea of where you stand and how much money you actually have to use for savings, retirement, and your debt.
This will quickly show you whether or not your $100,000 salary will keep you comfortable or whether you will experience sleepless nights wondering how you are going to get by.
Chances are if you have a good salary you want to save for your retirement income. Social security will only go so far, and normally not far enough.
So, you will want to put some of that salary into your retirement accounts.
No one’s personal finance is complete without retirement savings and no one wants to retire without any money set aside if they can help it.
Life is hard enough without having to wonder if you can afford to retire when you’re sixty-five or seventy years old.
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To Sum it All Up:
It all really comes down to this. If you live in a smaller city and have your debts under control and don’t live a lavish lifestyle, then $100,000 dollars per year or more can be very comfortable. However, if you live in a large city and like to enjoy the nightlife then chances are, you will not be very comfortable and may even end up strapped for cash.