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There was a time when a $100,000 salary could create a very comfortable lifestyle, but today that money doesn’t go as far as it used to.
“Earning $100,000 used to be the point where you could say, ‘I can afford to do what I want and live the way I want,'” Ashley F. Morgan, owner of the bankruptcy law firm Ashley F Morgan Law, PC, said in an email to The Independent.
About 18% of American adults earn at least $100,000, according to a 2024 survey by YouGov. And even though $100,000 is more than double the national median salary of $46,960, financial stress remains for many six-figure earners.
In fact, those earning $100,000 or more have now adopted the purchasing habits of lower-income households as they struggle to obtain affordable prices, Todd Vasos, CEO of Dollar General, said at a recent retail conference. This remark leads some consumers to question the value of such a salary.
“I think a lot of people got to six figures and wondered, ‘Wait, why doesn’t this seem like as much money as I expected?’” said Steve Sexton, owner of financial firm Sexton Advisory Group. The Independent in an email.
The numbers tell the story
The average monthly costs for an American household are $8,856, according to an analysis by The Independent.
The figures are based on the latest figures from sources including the nonpartisan think tank Tax Foundation; the nonprofit think tank Urban Institute; Edmunds.com Vehicle Marketplace; student loan analysis site Education Data Initiative; the U.S. Energy Information Administration; wireless and Internet service provider Astound; and Internet service provider comparison site BroadbandNow.
The Independent also used Progressive’s national average for average-priced auto insurance.
An American earning $100,000 receives about $8,333 per month before taxes, or $519 less than the average monthly household spending.
Although the list above considers a few basic items for an average American, not every home or individual has every expense on the list – and some may have additional costs. Many people don’t have to pay for child care or own a car. Others may live in one of the 41 states with state taxes or in a place with a state tax like New York.
Additionally, the list does not account for expenses such as gifts, charitable contributions, clothing, streaming services, or discretionary spending on entertainment or dining.
The sting of city life
The gap between a $100,000 salary and monthly expenses is even greater in some big cities, where rent, groceries and insurance tend to be more expensive.
For example, the average rent in San Francisco is $3,638, according to housing marketplace Apartments.com. Such a high rent would create a monthly deficit of $2,271 for a $100,000 earner. In contrast, the average monthly rent in El Paso, Texas, in October is $1,007, low enough to create a $360 surplus each month.
“Often, whether $100,000 is a large salary depends on whether you have children, your housing costs, how much debt you have, whether you have student loans, what you pay for health insurance and whether you need a car,” said Ashley F. Morgan, owner of the bankruptcy law firm Ashley F Morgan Law, PC, in an email to The Independent.
“In areas with a high cost of living, housing alone can eat up a significant portion of a person’s take-home pay. Add in car payments, insurance, groceries, utilities, and debt payments, and a person earning $100,000 may have surprisingly little money left at the end of the month.”
Creeping costs
Those earning $100,000 may feel like they’re living paycheck to paycheck for reasons that have nothing to do with cost of living, Morgan said. Lifestyle evolution – spending more as you earn more – can also drain a six-figure salary.
“Wanting nicer things is usually not a problem,” Morgan said. “The problem is that while every increase in income immediately translates into an increase in monthly expenses, earning more doesn’t necessarily create more financial stability. I regularly see people who earn good incomes and live paycheck to paycheck.”
Identifying needs and desires is a good way to moderate lifestyle excesses. Write down the maximum amount you want to spend each month on your needs, then stick to that budget.
The “new” $100,000
If that salary isn’t what it once was, what is the “new” $100,000?
“If you had me pick a number, I would probably say $150,000 is starting to look more like the old $100,000,” Sexton said.
Morgan noted that “winning $100,000 can be something to celebrate. It just shouldn’t be confused with being rich.”
She added: “The best measure is how much you are able to keep, save and invest after paying for your living. Financial stability generally comes from flexibility, not from achieving a particular salary.”
This article is sponsored by Credit Karma. We may earn a commission if you use their services using the links in this article.
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