What Does A Six-Figure Salary Get You?

Earning 6 figures

A 6 figure salary can seem like a dream come true. After all of your hard work, you are rewarded with more zeros on your paycheck. However, one thing to keep in mind is that those zeros do not necessarily add up to a rich life.

Most consider a six-figure annual salary to be the epitome of their earning potential. However, many never reach those earnings. So what is a 6 figure salary and what does a high salary really help you achieve?

Let's dive into what a 6 figure income really means for your bottom line. (P.S. You can also check out our posts on what 5 figures7 figures, and even 10 figures mean too!)

What is 6 figures in money?

So what is 6 figures in money anyway? Well, any amount over $100,000 but less than a million is 6 figures in money.

So, then based on that what is a 6 figure salary? Basically, any career that earns more than $100,000 in a year but not over a million dollars is considered a six-figure salary. As you see the range is quite wide when you consider what a 6 figure income is.

That said, a 6 figure income is considered a high income.

What jobs can earn 6 figures?

Now that you know the 6 figure salary meaning, you may be wondering how you can attain it. Well, if you have dreams of becoming a high earner, then you’ll need to find a lucrative career path. 

There are many six-figure jobs out there. Of course, doctors and lawyers immediately come to mind as high earners. Doctors earn a median income of $208,000, while lawyers earn a median income of $120,910. Both earn a six-figure salary, but doctors have a considerably higher median salary.

Other lucrative careers include:

These professionals can earn over 6 figures a year. However, these traditional pathways are not the only option. With the help of the internet, many entrepreneurs are able to pull together a big income without years of school. However, keep in mind that you don't have to choose from just these high-earning careers.

What is a 6 figure income?

Just because you don't technically have a six-figure salary from your 9-5 job doesn't mean you can't earn over six figures! So what is a 6 figure income and how is that different from a 6 figure job?

The key difference between "income" and "job" is where side hustles and passive income come into play. You can earn well over 6 figures by increasing your income streams through these outlets.

For instance, many are learning how to become freelance writersbloggersYouTubers, virtual assistants, and hustling their way to the top, all from the comfort of their own homes. Some lifestyle influencers even make 6 figure salaries!

Who would have thought you could become a six-figure business owner from home! This goes to show big salaries can be earned by people other than actors and professional athletes!

Others make a lucrative living with passive income as well. By diversifying your income streams you can make well over 6 figures a year.

The great news is you don't need a college degree to work your way to a six-figure income either!

Life when earning 6 figures

Many hope to achieve a six-figure lifestyle. Typically, that ‘dream life’ comes with fancy cars, luxury vacations, and extremely large homes. However, a luxurious lifestyle with expensive things will start to eat through your salary quickly.

The hype around a six-figure salary is the feeling that you’ve made it. A big paycheck can feel like you’ve made the American Dream a reality. However, that is not necessarily true.

If you spend that entire salary on the ‘rich life’ filled with shiny things, then you will be trapped in a vicious cycle. Although your paychecks will be larger, it is possible to be swept into living from paycheck to paycheck. 

The problem boils down to the fact that many people confuse income with wealth. Income is something that comes into your bank account each payday. Wealth is money that you have saved and grown over time. 

Wealth is there for you to use whether or not you have an income. You can use your income to grow your wealth, but you should not rely on income to replace wealth.

How much is a 6 figure salary really? 6 Factors that affect your income

Even if you make it to the six-figure salary milestone, many factors will affect the value of your paycheck. You may have obligations beyond your control that take a big cut out of your paycheck.

That means your take-home pay isn't as much as you think! So, how much is a 6 figure salary really worth when these factors come into play?

Let’s take a look at some of the ways your paycheck might be diluted.

1. Credit card debt

A 6 figure salary can be a lot unless you are drowning in credit card debt. High-interest debt can quickly eat away your earnings leaving you without much leftover at the end of the month.

Again, it doesn't matter how much you make if you live beyond your means you will always be living in a paycheck to paycheck cycle.

2. Student loan debt

Student loan debt is a constant burden facing Americans. If you took out a large number of student loans to fund your education, then you are stuck with big payments. In some cases, you may have needed an expensive education to land a high-paying job.

Take doctors for example; the average medical school graduate owes $241,600 in student loan debt!

Once you’ve landed a high-paying job, the student loan debt does not vanish. Instead, it leeches away at your earnings as you pull in a high income. Unless you make a plan to tackle the student loan debt, it can be a drain on your income for decades.

3. Where you live

The cost of living varies widely around the country. Generally, larger cities come with a higher cost of living. San Francisco, New York City, and Washington D.C. are just a few examples of a high cost of living environment. If you live in a high cost of living area, then your high income may not go very far.

For example, the average cost of a one-bedroom apartment in New York City is $3,225 a month. If you are spending over $38,700 a year on just the base rent at your apartment, then the other costs can add up. You’ll need to consider that utility bills, transportation costs, and food costs can add up quickly in a big city.

On the other hand, Orlando, FL. offers a lower cost of living. The average cost of a one-bedroom apartment in Orlando is $1,597. If you are spending under $20,000 to rent an apartment, then you are able to stretch your big paycheck further.

This also applies to buying a home. You don't want to overextend yourself so much that you become "house poor" from your pricey mortgage payments!

Keep this in mind as you search for a 6 figure salary job. A high income in a low cost of living area can be much more lucrative than a big salary in an expensive city.

4. Happiness

They say that money can buy you happiness, but is that really true? Let’s say you have a job that earns $100,000, but it makes you miserable. Will that high salary earn your happiness if you are miserable at least 40 hours a week?

True happiness can not be bought. Sure, earning more can help ease financial stress in some ways but not if you are working somewhere that makes you unhappy.

So, a six-figure income isn't necessary when it comes to true happiness.

5. Time

Whether we like it or not, time is our most valuable resource. We each have 24 hours each day to spend how we wish and a limited number of days in our life. How we spend those days is essential to our happiness.

Many spend 60 to 80 hours a week at the office in order to earn a 6 figure salary. That time spent at the office takes away from the rest of your life. You might long for more time to spend with your family, to cultivate a hobby, or to simply relax for an afternoon.

When you are short on time, you tend to spend more money to compensate for that. For example, you might avoid cooking meals at home in order to save time or skip exercising because you are simply out of time. These small choices may create an expensive lifestyle that cuts your salary further.

6. Taxes

Uncle Sam and his friends will take a portion of every dollar you earn. Although your gross income may be over $100,000, your take-home pay is how much you’ve really earned. Unfortunately, the post-tax figure may be a little bit disappointing.

Let’s take an individual whose 6 figure salary is $100,000 pre-tax. Let's also assume they live in New York City and are single. Using an income tax calculator, their take-home pay would be ~$68,000.

This number is after federal, state, and other taxes. Although $68,000 is still a lot of money, it is much less than $100,000!

Depending on the state you live in, you may be subjected to different taxes. Learn more here to get a better handle on exactly how much taxes will cost you each year.

7. Lifestyle creep

Making 6 figures can be a fantastic way to live. However, you have to be aware of lifestyle inflation. This is when you begin to increase your spending because of your rising income. So, no matter what you earn you still need to ensure that you are living within your means to avoid lifestyle creep.

Otherwise, you will still end up living paycheck to paycheck despite how much you make.

Do you need a 6 figure salary to build wealth?

Many hope to achieve the six-figure salary dream, but most do not. According to the Bureau of Labor Statistics, the median salary for all working Americans over the age of 16 is $908 a week or $47,216 a year. The median rises slightly for 25 to 34-year-olds to $1,022 a week or $53,144. However, both figures are a far cry from $100,000.

Does that mean it is impossible for most people to achieve financial security? No! It is entirely possible to build wealth on a much smaller income. Building wealth is more about what you save than what you spend.

As you build wealth over time, the savings will add up. However, if you spend your entire salary, then you will not build wealth at all. Let’s say you earn $100,000 but spend your entire paycheck.

Are you really better off than someone that earns $50,000 but is able to save $10,000 each year? In the long term, the answer is no. Although you may enjoy the luxury of a ‘rich’ life, they will enjoy the financial stability to make retirement a reality.

How to build wealth without earning a 6 figure salary

Building wealth is not easy, but it is simple to do. Although it will take hard work and dedication to reach your goals, you can build wealth and increase your net worth. Here’s what you will need to do to build wealth without having a six-figure income.

1. Find your reason

Building wealth is a long-term endeavor. It will not happen overnight, and you will need to work hard to achieve it. Many times, you will need to say no to your immediate wants in order to fund your long-term goals.

This might mean eating more meals at home, forgoing a shopping spree, or choosing to drive an older car. These are all perfectly reasonable in the pursuit of a goal. However, without a goal in mind, it can be a struggle to stay on track.

2. Pay off debt

If you have any debt, now is the time to pay it off. Debt has a tremendous ability to harm your long-term wealth-building goals. All of the money that you put towards your debts each month could be better used in an investment strategy towards long-term wealth.

Take a closer look at your debts. Write down exactly what you owe on a single sheet of paper to see exactly how much you owe in black and white. It may be a shock to see on paper, but it is a good way to kick start your motivation.

The stark reality is that unless you do something about your debt, it can take decades to pay off large high-interest loans. Take action and create a debt repayment strategy today.

3. Evaluate your lifestyle

Look at your spending to determine if you can afford your lifestyle. It is critically important to be brutally honest with yourself about your spending to get an accurate picture.

Look for ways to cut your spending without damaging your happiness. You might be surprised by how many savings opportunities present themselves.

4. Save your money

The most important step in building wealth boils down to saving your money. Although you can start by creating an emergency fund, building wealth goes beyond a few thousand dollars. Think about how you want your life to look in the future.

Do you want to continue slogging to work for the next 40 years? Or would you prefer to build enough wealth to create a work optional lifestyle? If you have lofty goals like retiring someday, then saving money now is critical.

You may not feel like you have enough to save, but every little bit counts. Make an effort to build your savings piece by piece. You don't need to be making a 6 figure salary to start saving money!

5. Invest your savings

It is not enough to just save your money; you also need to invest your money. Investments can allow your money to grow over time. As your investments grow, you will thank yourself for taking the step to invest.

If you aren’t sure where to get started investing, then look into planning out your investment strategy. It's important to know how to create a diversified investment portfolio so you can make your money work for you!

6. Increase your income

Although you can achieve wealth on any salary, more income can help to fuel your growth. The most obvious step is to ask for a raise. Although it can seem scary, entering into a salary negotiation with your employer can be rewarding. You may walk away with a higher salary for the same amount of work.

Plus, you’ll gain the self-confidence that comes when you stick up for yourself. If you have attempted salary negotiations but hit a dead end, you still have other options. Picking up a side hustle is one amazing way to boost your income.

A successful side hustle can propel your income higher. At the same time, you will learn new skills that will make you a more valuable asset to your employer. As you increase your income, make sure to funnel those earnings towards wealth creation.

You can build wealth without a 6 figure salary!

A 6 figure income can be helpful but is not the most important piece of wealth building. What you choose to do with your income of any size is more important. If you spend everything on your living expenses, then a high salary will not go very far in the long run.

Taking steps to build wealth today can make you feel rich even without earning 6 figures!

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