The idea of earning $100,000 a year is viewed by most individuals as an ideal salary or a lot of money. And yet, data presented below reveal that there are still many Americans earning an average of $100 K per year and cannot seem to get through the month without a struggle. Then how many individuals earning such type of income survive on a dollar-to-dollar basis?
The Paycheck-to-Paycheck Reality
Recent polls indicate that around 13% of people with an annual income of $100, 000 and above, claim to always or often be broke, financially speaking. More than one-third (34%) of those earning less than $40,000 say that they occasionally struggle financially – 33% report that they often have to pay their bills as soon as they receive them. That means in total, 47% of people earning over $100k feel they are unable to come through the month with some cash left at the end.
It is for this that even when they earn good wages sufficient to afford the necessary comforts of life, some Americans are still able to feel the pinch. Expenditure, including higher cost areas, excess spending, living beyond one’s means, borrowings, poor savings habits, and even job loss are some of the causes of financial pressure. Other such issues as the size of a family, the cost of childcare, and the expenses that come with having to care for aged parents also put pressure on money.
While things have never been rosy in the country, workers particularly those in the formal sector earning six-figure salaries are now feeling the pinch of the rising cost of living.
Some are earning around $100 k and due to high living expenses such as in New York, San Francisco, and Honolulu, their income is easily swarmed. Housing costs such as rent or mortgage are especially for those living in the costly metros are quite hefty. For instance, the average cost of a one-bedroom apartment rent in Manhattan was over $4000 per month last year. One of the largest costs may be a mortgage if it is taken in expensive areas of the country at the moment of purchasing a house. This means that many residents including those earning $100k and above are still required to be wise in how they spend the remaining part of their budgets at month end.
Lenders do not spare even big earners as the figure of indebtedness shows it pulls down even those with high salaries
Debt, another area of concern, does not respect income level. Regardless of their income earner, some financial obligations such as student loans, credit card debt, excessive auto loans, and other personal debts can affect everyone. An individual earning $100k but owing $40,000 in credit card balance and $60,000 in balance in student loan will be able to feel the pinch. Debts require one to spend money and this is because they cannot help in creating wealth. Credit card balances can easily become out of control due to the median interest rates of around 16%, which are charged on credit card balances when people only make minimum payments. Says real life: debt can keep any citizen paycheck to paycheck, including those earning $100k if the case turns out to be unmanageable.
Deficiency in savings is another key measure that underpins the check-to check- existence of an organization
Furthermore, savings deficits are also a factor that keeps some Americans in paycheck to paycheck lifestyle for this income level. The personal savings rate in the U.S. is currently at an average, and it is approximately 7%. However, for individuals who do not have a steady emergency fund and other longer-term monies saved, the lifeline can be the next paycheck in case of emergent expenses and income disparities. It isn’t hard to imagine going bankrupt and having to pay for an emergency repair on the house, unexpected veterinary bills for the dog, or no more income from a spouse who recently lost a job after earning $100,000 a year. If there is no saving to act as a safety net, any interruption in income means having to go through terrible financial situations.
Living Beyond Our Means: Lifestyle Inflation Devours Money Swiftly
There is another reason for living check-to-check, and that is lifestyle creep. As people increase their earnings to six figures and above, it becomes easy for them to emulate the same expenditure on things that are non-essential and not maybe necessary than exercising prudence in spending. It is completely possible to find oneself struggling to afford luxuries such as expensive luxury cars, exotic vacations at least once every few months, membership to prestigious country clubs as well as private schools for children when earning $100k per year in some locations. And when the expensive lifestyle tastes are not controlled they run out very quickly the paychecks do every month.
In conclusion, if there is concrete effort and planning to save intelligently reduce debts, and learn to distinguish between needs and wants when it comes to spending then a $100K salary should be enough for relative comfort in most parts of the country. But a lot still goes with the cost of living in a certain place, coupled with other factors within peoples’ control and their financial habits. However, for nearly half of the young adults in America earning around $100,000, managing to pay their bills without depending on their next salary proves to be challenging.
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