If you’re just currently looking for your first job or maybe you’re looking for a new job you might be wondering what is considered a good salary. No one number is going to fit everyone’s personal situation but there are some guidelines that can help you determine whether or not the salary you’re being offered is going to fit your needs.
What is Considered a Good Salary
First off let’s define what a good salary is.
A good salary will not only pay your bills but also provide you and your family enough money to save money for buying a house or a new car or to pay for your kid’s college education as well as having an emergency fund.
A good salary will also allow you to have some fun in your life.
Most likely you will want to go on trips and visit family or go to Disney or wherever and you want to have the money for that as well.
Finally, you want to be making enough money to save for retirement.
If you’re young this may not seem all that important but the truth is the sooner you start saving the more you’ll have when you do finally retire.
You’ll be happy you started early.
If your salary can’t do all of the above then it’s not going to be a good salary.
A lot of what we’re talking about is discretionary income.
And depending on where you’re living in the country you’ll have more or less of that based on your cost of living.
For example, living in the middle of rural Illinois as I do my expenses are much lower…much lower than if I lived in New York City.
That means that I can make a heck of a lot less money and still live comfortably and meet all my needs as mentioned above than if I was living in a big city.
Finally, you’re going to want to take into account whether you’re single or married or have children.
If you have a family it’s going to take more money to be comfortable than if you’re single.
That’s just common sense.
So let’s take a look at some general guidelines depending on your situation so you can have an understanding of what kind of salary you need to be looking for when you head out on the job trail.
What is a Good Yearly Salary to Live Comfortably
Let’s say for example you live in New York City.
This is considered one of the most expensive cities in the country to live in.
Studies show you’ll need to make around $92,000 per year to live comfortably.
Compare that to a mid-sized city in South Dakota.
There you’ll need to make between $50,000 and $55,000 per year to be comfortable to meet all your needs.
That’s quite a difference.
So while you’re trying to determine what salary you need, the first thing you need to consider is where you live or where you want to live.
While it’s true the average income may be higher in a larger city your cost of living is going to be higher as well. So the two might wash each other out.
On average what is considered a comfortable income is around $65,000 per year.
That’s a good place for you to start when you’re trying to decide what you need to make.
Not all jobs are going to pay that kind of money, and even if you’re in salary negotiations with your prospective employer if the job pays $35,000 a year and they’re not going to give you $65,000 per year.
What you should do before you start job hunting is check out the median income level of your city or the city that you want to move to.
Then decide if those medium wages are going to make you comfortable or have you living paycheck-to-paycheck.
If your annual income is not going to cover all your expenses and leave you money to save for retirement and other necessities then you’ve got a couple of choices.
You’re either going to have to look elsewhere for a job where the cost of living is cheaper or median wages are higher or you may have to consider going back to school for additional education so you will qualify for a higher-paying job.
What is a Good Annual Salary for a Single Person?
If you’re the only income earner in your household then things can get a little more difficult.
Your household income will only be one salary, obviously, so the salary needs to be a bit higher if you want to truly be comfortable and still be able to live an enjoyable life.
So, you want to think about your rent or mortgage and utilities and what percent of income those will be.
These are going to be two of your largest expenses each month.
Next, take into consideration your car payment.
If these three expenses take most of your paycheck then you’re not going to be able to live well and have a secure future.
As a percentage of income, you want to make sure these three large expenses make up no more than 50% of your monthly income.
That will give you plenty of money to save and have some fun.
For example, where I live you can rent a place for $600 dollars per month.
Utilities (heat, electricity, and water) average out to be about $250 per month.
They are higher in the winter and lower in the summer.
For most new cars you will be paying at least $400 dollars per month and most likely higher.
If we add all of these expenses together, rent, car, and utilities, you come up with $1,250 per month.
That means you need to make at least $2,500 dollars per month or $30,000 dollars per month to be comfortable.
Of course, if you live in a big city you’ll need to make a lot more.
Let’s say you are living in Chicago.
Most likely you will be paying $1,500 per month for rent or more.
Even if your other expenses stay the same, you would need to make $51,600 dollars a year to meet all of your needs.
What is Considered a High Salary for One Person
So what’s a higher salary for one person?
Again this is going to depend on where you live but in most places, if you’re making $55,000 to $65,000 per year as a single person this is going to be an average salary to a high salary.
If you’re living someplace like San Francisco then no this will not be a high salary.
You’ll be living paycheck-to-paycheck and be having a difficult time getting by.
Really when it comes to what’s a high salary versus a low salary it really depends on quite a bit on your location and the average cost of living in that area.
Your cost of living will determine whether or not you can barely get through the day or whether you end up retiring with $2,000,000 and your investment accounts.
How you spend your money will make a difference as well.
If you’re spending money all the time and going to the mall every weekend and going out every night and eating out on the weekends then you’re going to have less money to save and cover your bills.
If you’re more frugal with your money, you can still do some of those things but you can also have a nice emergency fund and you can make a lower annual wage and still be comfortable.
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What is a Living Wage for a Single Person
I hate to beat a point to death but once again when it comes to what is a living wage for a single person it’s going to depend on where you’re living and your spending habits.
Having said that if you’re making under $30,000 per year it may be a living wage depending on where you live but chances are you’re going to be living paycheck-to-paycheck.
You won’t have money for savings and you won’t have money for emergencies.
If you’re making minimum wage then you already know that even working full-time making minimum wage is not a living wage.
You’ll have a very difficult time renting an apartment or buying a car.
You certainly won’t have money to save for the future nor will you have any money to enjoy your life.
Is a Salary of $32,000 in the US Considered a Low Salary
If you have a family or you live in a larger city then yes $32,000 is a low salary in the United States.
As I mentioned above, if you’re living in a small town or in a rural area you don’t have a lot of debt then you can live fairly well on this kind of money.
Also if you have children you’re going to find it difficult to live on $32,000 a year even in a small town.
What is a Comfortable Salary for a Family of 4?
If you’re a family of four then you will need a better income than someone who’s single.
An annual income or household income of about $65,000 per year will allow you to be comfortable and save for the future.
However, you will have to be a little frugal. You can’t be buying just anything all the time.
But you should be in a fairly good financial situation as long as you don’t live in a super expensive city like Boston.
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To Sum it All Up:
Your location, your monthly living expenses, your spending habits, and your debts are going to determine how much salary you truly need for a good life. The smaller the city you live in and the lower your cost of living, will go a long way to determining if you have enough money on an average salary to live well and save for the future.