3 Reasons Your Six-Figure Income Isn’t Enough

by Miranda Marquit · 12 comments

how to make six figures
We often think of a six-figure income to be the answer to all our problems. After all, if you make at least $100k a year, you must be doing something right — and have plenty of money.

The reality, though, is that there are plenty of people making six figures and struggling to make ends meet.

While there’s no one reason that this happens, here are three reasons why expenses can get a little out of control with your budget, even if you are considered “rich” in the eyes of others:

1. Your Lifestyle Costs Keep Rising

One of the realities of the situation is that sometimes your lifestyle costs rise as life happens.

Things like kids can start taking a bite out of your monthly budget. If you have a growing family, the costs keep rising.

Other lifestyle costs can get in the way too. If you move into a bigger home, that comes with higher property taxes, utilities, and other expenses. Your more expensive car is also adding to your costs.
Also, look at your other costs. If you go to a lot of parties or you want to go out a lot, you end up paying for babysitters and spending money on food, drink, and entertainment.

Carefully think about what you’re spending money on. There’s nothing wrong with spending on the things you love. I like travel, and I spend money there. I just have to prioritize. If I spend more on travel, I will spend less in other areas. I recently stopped myself from getting a new dress for going out because I want to go out for a nice dinner instead. Decide what you care about and spend money on what makes you tick.

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2. You’re Keeping Up with the Joneses

When my then-husband and I moved into a new house, we purposely chose a neighborhood that had a lower socio-economic profile. We didn’t want to get caught up with the status game — which can be quite expensive.

Everyone wants to feel like they belong. If you move into a neighborhood where people around you are paying for lawncare, driving fancy cars, or taking the boat out for a spin, it’s hard not to feel like you have to join in.

You might not even care about some of the things those around you are doing. So, why are you paying for them? Take the time to really think about what matters to you, and what kind of lifestyle you hope to enjoy. Rather than basing your spending on what’s going on next door or down the street, focus on what you want.

You’ll save more when you stop spending based on others’ values.

3. You Give Too Much

There’s nothing wrong with being generous. I have causes that I consistently give time and money to, but I can’t give to every charity that tugs at my heartstrings. You need to be careful about how much you give, and make sure you aren’t going overboard.

You can’t treat your friends and relatives to dinner all the time. And your kids probably don’t need to do everything all the time either. I like to treat my friends to lunch on occasion. I want my son to do extracurricular activities.

However, I can’t pay for all of those things all the time. That means sometimes we don’t go to dinner, or we split the check. It also means that maybe my son picks the two activities most important to him, and then drops out of the others.

In the end, we all have demands on our budget, no matter how much we make. Figure out what matters to you, where you stand, and take steps to keep your spending in check.

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{ read the comments below or add one }

  • Mark | Moneymink.com says:

    My teacher said having six figures is enough for settlement but that was 15 years ago when I was still on 6th grade. Now, I don’t think that’s entirely true. In today’s world, six figures could not be enough for most lifestyles but I still strive to save both for short term and for retirement.

    • David @ MoneyNing.com says:

      Low six figures is enough but the salary sure isn’t what it used to be. Still, you can retire quite comfortably with that income if you keep saving and investing for the long term.

  • Matt says:

    It’s silly really, I don’t know about everyone else, but I was told that to be set in life, you needed to make $100k.

    But now I know, the more you make, the more the taxman is entitled to- I will never make that mistake again!

  • Thibault says:

    This article is great!

    We were always taught in school that a 6 figure income had you set for life.

    But this proves that this is NOT true!

    Thanks so much!

  • Jeremy says:

    Thank you for your insight! Being wealthy is a mindset or a series of habits. Accumulation of money is just a side effect.

  • CentSai says:

    Keeping up with the Joneses is a dangerous game to play! Sometimes it starts to become very competitive to the point that you have to not only keep up with them but feel like you have to “one-up” them!

  • Financial Coach Brad says:

    So true. Lifestyle inflation can wreck otherwise good financial plans. If I continued to live like I did with my first job after college, making about 1/5th of what I made a few years ago, I could have retired 10 years earlier!

  • Bernadine Donaldson says:

    You forgot about having to pay what amounts to 2 mortgages when you have a huge student loan debt, which is probably why you make 6 figures.

  • Anders says:

    Hey, and thank you for the article, Miranda!

    What you wrote about keeping up with the Joneses got me thinking. I never thought about a strategy for it like the one you explain. But my wife and I bought a house that had been empty for ten or so years. The yard was a mess, the house is a bit rough on the outside still (and parts of the inside).

    When talking to our neighbors we’ve noticed a funny thing. We excuse that we’ve not yet gotten around to painting the facade and the windows and they seem to respond with surprise to the statement. Usually, they say that we’ve done so many other things and they can hardly remember how the house and yard looked before.

    It’s not the same as what you’re describing, Miranda. In a way, it has given us a similar result, though. We can take it a bit easier with everything because they compare to how things were – while we compare to how things around us are right now, and where we want to be.

  • Logan @ Millennial Money Club says:

    $100,000 just isn’t was it used to be, nor is being a “millionaire.” Sure, in the 1950s, someone with a six-figure income or who had a net worth of $1,000,000 was doing extremely well. But while those goalposts haven’t changed in the public perception, the value of a dollar sure has.

  • steveark says:

    We always gave 10% of our gross income, before taxes or anything else was taken out of it. On paper I’d have over a million more in investments if I hadn’t done that but in reality I think I’d actually have less. I believe the act of giving a significant amount of your resources changes you in a good way. And that change increases your earning power. I can’t prove that but I do think learning to be generous makes you a person that others tend to like more and trust more and that leads to promotions and opportunities at work and in the marketplace.

  • Tim Kim @ Tub of Cash says:

    Agreed. $100K is barely making it in HCOL areas. And what sucks is that the more you make, the more the taxman taketh. And everything phases out. My wife and I bring in a little over $300K together, up to $400K depending on profit sharing. But with a kid, day care, mortgage, and private school tuition payments. A lot of that gets eaten up. Not wanting any sympathy by the way, lol. We’re hugely fortunate. And we max out all of our tax advantaged accounts and also save a lot in our taxable accounts. Just wanted to agree with you that low six figures ain’t gonna cut it in a lot of places!

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