What is a 6 figure salary? It sounds like a simple question, but I realized there is more to it.
When it comes to compensation, 6 figure salaries are frequently mentioned.
Six figure incomes are viewed by many as a mythical and legendary barrier that only a select few can overcome.
For others, it is the bare minimum wage required to live comfortably in their area due to the high cost of living.
What Does It Mean to Earn a 6 Figure Salary?
A 6 figure salary is one that ranges from $100,000 to $999,999.
Anything in excess of $200,000 is called a multiple six figure income. One thing I would want you to note though is that a person’s income of six figures does not imply that they are wealthy.
Wealth is influenced by a variety of things.
Life as a Six Figure Income Earner
Many people aspire to live in a 6 figure income lifestyle.
Typically, the ‘dream life’ includes flashy automobiles, lavish vacations, and opulent residences.
A luxury lifestyle with expensive items, on the other hand, will soon deplete your funds.
The feeling that you’ve made it when you earn a six figure salary is part of the allure of a 6 figure salary. A large income can make you feel as if you’ve achieved the American Dream.
However, this isn’t always the case. You’ll be locked in a vicious loop if you spend your entire salary on the ‘rich life’ of shiny items.
Despite the fact that your wages will be greater, you may find yourself living paycheck to paycheck.
The issue stems from the fact that many individuals tend to confuse wealth and income. The term “income” refers to the amount of money that is deposited into your bank account on a regular basis.
Money that you have saved and increased through time is referred to be wealth.
Whether or not you have a source of income, wealth is available to you. You can utilize your money to increase your wealth, but income should not be used to replace wealth.
How Can You Make a 6 Figure Income
Do you want to make a six figure annual salary?
The first step is to prioritize your studies. Having a strong foundation can greatly assist you in selecting a career that will lead to financial success.
Only 55 of the 818 jobs included in the Bureau of Labor Statistics’ Occupational Outlook Handbook pay a median annual salary of at least $100,000.
A bachelor’s degree is required for 53 of the 55 occupations.
Several industries pay well and provide more prospects for promotion, so carefully choose your career choice.
Continuing your education is your best choice if you desire a career that pays a six figure wage.
Here are some examples of careers you might want to explore if you want to make a 6 figure salary:
In this day and age, when everything is getting digital, those who work in software development are always in demand.
A median six figure compensation for app developers is $102,280 per year.
Typically, they have a bachelor’s degree in computer science. Many professionals, however, succeed in this industry despite not having a degree.
Manager of Finance
Finance managers are employed by banks, insurance firms, and other organizations and are in charge of formulating plans to keep the company financially healthy and stable.
A finance manager’s median annual six figure compensation is $121,750.
Do you want to work as a finance manager? A bachelor’s degree in finance, accounting, or a related subject is required.
Keep in mind that some businesses favor candidates with a master’s degree.
Read: Is an MBA Worth It?
Actuaries are employed by insurance companies that use statistics and mathematics to identify risks and cut expenses.
As of 2018, they make an average of $100,610.
A bachelor’s degree in mathematics, statistics, or actuarial science is often required by actuaries. Many students also attend database and computer language classes.
Oil and Gas Engineer
Petroleum engineers are responsible for developing new methods for extracting oil and gas from the earth.
They earn a median 6 figure salary of $128,230 each year.
A bachelor’s degree in petroleum, civil, chemical, or mechanical engineering is required to work as a petroleum engineer in an oil company.
Internal Medicine Specialist (Internist)
According to the Bureau of Labor Statistics, doctors typically earn a six-figure annual wage.
Internists, for example, earn a median pay of $182,370 per year.
Everyone is aware that medical professionals go to school for a long time. Doctors should have a bachelor’s degree and have completed medical school.
They also spend three to seven years in internship and residency.
I have mentioned just but a few professions. There are several 6 figure jobs out there that can earn you 6 figures. Some don’t even require you to have a higher learning degree.
Factors Affecting your 6 Figure Income
Even if you make it to the six figure mark, your income will be influenced by a number of things.
You may have responsibilities outside of your control that cause a significant reduction in your earnings.
Let’s look at some of the ways your earnings could be diluted.
i). Where do You Reside?
The cost of living varies greatly across the United States and other countries. Larger cities, on average, have a higher cost of living.
If you reside in a location with a high cost of living, your high salary may not go very far.
A one-bedroom apartment in New York City, for example, costs $2,895 a month on average.
If you spend approximately $35,000 on your apartment’s base rent, the other fees might quickly mount up.
You should keep in mind that in a major city, power expenditures, transportation charges, and food costs can quickly add up.
Orlando, FL, on the other side, has a cheaper cost of living. A one-bedroom apartment in Orlando costs around $1,035 on average.
You can stretch your huge earnings further if you rent an apartment for less than $15,000 a year.
As you look for a six-figure job, keep this in mind.
A high wage in a low-cost-of-living locale can be far more profitable than a large salary in a high-cost metropolis.
ii). Spending Habits
Your spending habits, like of those who earn less than six figures, can make or break your financial status.
Lifestyle creep, in particular, can be detrimental to people seeking to rein down their expenditures.
A considerable number of 6 figure income earners are also plagued with the typical instance of “keeping up with the Joneses.”
Many people in this wage bracket have spoken about feeling pressured to provide their children with the “proper” car, vacations, home, and school, especially when they’re working near other high-income workers who have those things as well.
But all of these things are expensive, and the costs continue to rise over time.
And, similar to people who earn less than six figure salaries, if your spending spirals out of control, you’ll never be able to use that money to achieve your financial goals.
Time is our most valuable resource, whether we like it or not.
Everyone has 24 hours a day to spend as they wish, and we only have so many days in our lives. Our pleasure is determined by how we spend those days.
Many people work 55 to 75 hours per week in order to make a good living.
The time you spend at work detracts from the rest of your life. You may wish for more time with your family, to pursue a hobby, or simply to unwind for an afternoon.
When you don’t have enough time, you tend to spend more money to make up for it. You might, for example, forego cooking meals at home to save time or miss exercising because you simply don’t have enough time.
These tiny decisions may result in a costly lifestyle, further reducing your pay.
Is a Six Figure Salary Required to Amass Wealth?
Many people aspire to make 6 figures, yet the majority do not.
The median pay for all working Americans over the age of 16 is $906 per week, or $47,112 per year, according to the Bureau of Labor Statistics.
For 25 to 34-year-olds, the median income climbs slightly to $1,019 per week, or $52,988. Both sums, though, are a long way from $100,000.
Is this to say that most people will never be able to reach financial stability?
On a considerably lower income, it is entirely possible to accumulate wealth.
Savings are more important than spending when it comes to accumulating wealth. Savings will accumulate as you accumulate wealth over time.
However, if you spend your entire salary, you will never accumulate riches.
Let’s imagine you make $100,000 but spend every penny of it. Are you truly better off than someone who makes $50,000 a year but manages to save $10,000?
The answer is no in the long run. They will have the financial stability to make retirement a reality, while you are here enjoying the pleasure of a “rich” life.
How to Amass Wealth Without a 6 Figure Salary
The good news is that you can live the financially free life you desire even if you don’t earn a six figure salary.
On your current income, you can develop wealth and have extra money for things like trips and new purchases.
Here’s how to turn your current situation into your ideal situation.
1. Invest Wisely Invest Wisely Invest Wisely
You don’t need to earn $200,000 each year to invest.
Speak with a financial advisor about sensible ways to invest your money that will pay you when you retire.
Compounding interest investments are one of the most effective strategies to accumulate wealth. Some people advise investing in real estate, while others advise investing in the stock market.
Every sort of investment has advantages and disadvantages, so it’s critical to speak with someone you can trust.
Simply putting money into your 401(k) or retirement account is a terrific way to begin investing.
Don’t put off investing till you’re older. Begin when you’re young and early!
2. Make A Budget
A well-planned budget benefits everyone, regardless of their income.
When you make a budget, you’re putting yourself in a position to succeed.
This might be as simple as using cash envelopes or as complex as using budget software; the important thing is that it fits your financial mindset.
You’ll get a clear picture of your spending and be able to understand where you can save money and make better decisions.
A budget will also allow you to know ahead of time how long it will take you to save up for that big-ticket item.
It all starts with a budget if you want to build riches.
3. Amass Your Savings
Creating a rainy-day savings account is another way to help you grow money.
This will be used to cover unexpected costs such as a new air conditioner or major engine repairs.
Try to set aside the equivalent of two to three months’ rent. This means, if your job is lost, you’ll still be able to pay your bills while looking for another job.
This savings account will cover expenses that may otherwise put your finances in jeopardy.
You can’t forecast what will go wrong, but you can plan ahead to compensate for it.
4. Get Out of Debt
Paying off your debt as quickly as possible is the first step toward keeping more of your money.
The most effective approach to achieve this is to use the debt snowball method.
The debt snowball works like this:
You start with the smallest debt and pay it off first. Then you apply the payments you’ve been making to your next greatest obligation. When that one is paid off, you apply the total payment to the following one.
Your debt will be paid off before you know it, and you will have a lot more money in your budget each month. It’s a magical and thrilling adventure.
Make a plan to avoid getting into this situation again after you’ve paid off your obligations.
Conclusion on 6 Figure Salary
The aspiration of earning six figures a year is highly prevalent in the United States.
You may believe that now that you have so much money, you would never have to worry about budgeting or financial stress.
What may surprise you is that even people who make this much money have to be careful with their money.
If they don’t, they’ll be living paycheck to paycheck as well.
Learn to live within your means and accumulate wealth on your current salary.
It is unquestionably doable! Get on the grind and make that 6 figure.