Make Six Figures

You may read this title and ask why? Or maybe you know damn well why because you were at the grocery store in January 2023 and wanted to buy a dozen eggs. Perhaps your question is how?

"The price of a dozen eggs was up 150% in January from a year prior, to $4.80 a dozen, according to data from the Bureau of Labor Statistics."

Life is expensive. Very expensive. According to Rent.com, in March 2023, the national median rent was $1,937/month. (Rent.com doesn't specify bedroom count or geographic area). Obviously, these factors can change this figure dramatically. Still, the bottom line is regardless of where you live, and for most, a significant portion of your income goes towards just keeping a roof over your head. Throw in taxes, student loans, utilities, car payments, groceries, gas, child care, and health care, and before you know it, you are either in the red or just scraping by. These expenses vary for everyone, and we could discuss how to save or be more efficient with every line item. However, rather than saving, my article focuses on generating. There is a limit to what you can save, but there is no limit on what you can earn.

Making $100,000 a year has always held prestige to it. The six-figure club. As if it is a mythical figure that once you cross, you can spend freely, and money will be abundant. In 2023, we are all aware of the impacts of inflation. The bottom line is every one of our dollars no longer holds the power it did even just one year ago, let alone ten years ago. For this reason, in 2023, and as an individual, I view $100,000/year as an appropriate income level to strive for.

You may be baulking as you read this, but let's address some caveats from the start. First, the income necessary to cover expenses and maintain a healthy savings rate will vary massively from individual to individual. If you live in San Francisco, CA making $100,000/year is different from making $100,000/year in Birmingham, AL. If you have kids, student loans, monthly payments on a Tesla, live in a luxury apartment, or support your parents, these factors will massively change your ability to spend and save.

To further emphasize why I view $100,000/year as an appropriate income to work towards, let's look at a more detailed breakdown below.

It is challenging to find accurate, recent expense averages for individuals as most information is calculated by household and pre-dates 2023.

To avoid getting too deep here and working on averages, I have included below a chart from The Ascent: expense data from 2021 showing the American Households' average monthly expenses. Again, and I need to state this more, inflation has been rampant the last two years, so 2021 info needs to be updated, but we can use it as a baseline. Also worth beating dead, you will see expenses below that do not apply to you or where you are spending less or more. This is a generalization, so stay calm if your expenses vary. This is more to give a general idea.

We are focused on individuals, so I have tweaked slightly with a second chart beneath this first chart to better reflect 2023 and individuals' expenses vs households' expenses.

Now, calculating take-home pay on a $100,000/year salary, I have included a chart below showing gross and net pay monthly. As most states have a state income tax, I chose Georgia for the below example, so depending on the state and city you live in, your take-home pay may vary from the example below.

Based on this above, your personal savings rate is 29.2% (calculated on your take-home pay). While the US Personal Savings Rate in January 2023 was 4.7%, I recommend saving (and investing) a minimum of 20% of your take-home pay.

There are many caveats to the above examples and holes somebody could poke. For example, your expenses may be significantly higher or significantly lower. I am working on assumptions and averages to establish a baseline for my opinion on why I view $100,000/year as no longer an outrageously high income but an appropriate amount to strive for.

Now that we've established why a six-figure income is important let's discuss how to get there. Pathing to this income varies equally as massively as spending, so rather than spending a lot of time on tactical information such as specific career paths or companies that give you a high probability to earn a six-figure income, I am going to more broadly speak to the mindset, motivation, knowledge, and foundational actions to take to get there.

1. Mindset and Motivation

You must establish two things from the start. Number one, you must believe you can achieve this income. You are already out of the game if you tell yourself it is impossible or don't believe you possess the background, education, skills, or capabilities. Listen, depending on your career or industry six figures incomes may not be achievable doing what you do now. You must not use this as a cop-out. Plenty of late-career changes are made, side gigs and alternative options are available to help generate six figures annually. If you're a teacher who makes $50,000/year, what are you doing during your summers? After school? Can you tutor? Get your real estate license? Start a blog focused on tips for people looking to become teachers? It is less about what you do and more about finding a way that works for you.

“In a growth mindset, challenges are exciting rather than threatening. So rather than thinking, oh, I’m going to reveal my weaknesses, you say, wow, here’s a chance to grow.” Carol Dweck.

Secondly, you must have a sound desire for why you want to achieve this income. It should be intrinsically motivated and justified by a strong why. What I mean by this is if it's optional to you, or you don't desire to achieve a six-figure income, you will have a challenging time putting in the work to achieve this goal (side note: there is absolutely nothing wrong with having zero desire to attain a six-figure income if you can support yourself and your family). When you think about motivations, these must be strong. For example, if you are motivated extrinsically by a desire to be accepted by others, you will not have the strength to push through when the going gets tough. On the other hand, if your motivation is to provide for your parents as they enter retirement, this is strong reasoning and will inspire you to push when the going is hard.

2. Knowledge and Action

Now that you have the mindset and will, backed by a strong why, focus on the knowledge and actions to achieve this goal. I am not referring to formal education when I say knowledge. While this can help set you up for a career to earn a high income, I am referring to building an education around how money works and generating income. Learn about passive and active income (alternative income streams, i.e. side gigs, businesses), different professions, and negotiation (are you underpaid relative to other people with similar experience and education, and can you negotiate your salary with your current employer?). Know the difference between being wealthy and being rich, the difference between assets and liabilities.

Research the skills and character traits of high-income earners; what do you possess in common or need to develop? Understand soft and hard skills. Effective communication is an example of a skill universally necessary for career advancement, regardless of your profession.

If you work in sales, read every sales book you can get your hands on. Listen to podcasts, and attend events. Find a mentor. In any career field, someone has done it before you and been successful or unsuccessful. Learn from them, ask questions, and listen, seek to understand. The bottom line is to be the best at what you do. Work smarter and harder, want it more and back that up with massive action.

While this post barely scratches the surface of why and how a six-figure income is important and attainable, I hope you take away this. Your income is something you own, and it is a result of your decisions. You can challenge the idea that a six-figure income is important, or you can have misled motivations for striving for it. Either way, the result will be negative. You won't achieve it; worse, you'll achieve it, and the joy you thought you would feel will be absent.

Works Cited

“Bureau of Labor Statistics Data.” Data.bls.gov, data.bls.gov/timeseries/APU0000708111.

“Rent. May 2023 Rent Report.” Rent. Research, www.rent.com/research/average-rent-price-report/.

“Cost of Living Calculator | San Francisco, ca vs. Birmingham, AL.” NerdWallet, 15 Dec. 2021, www.nerdwallet.com/cost-of-living-calculator/compare/san-francisco-ca-vs-birmingham-al. Accessed 16 July 2023.

Daly, Lyle. “How Frugal Are You? Compare Your Monthly Expenses to the Average.” The Ascent, 22 Feb. 2022, www.fool.com/the-ascent/research/average-monthly-expenses/.

“Personal Saving Rate.” Stlouisfed.org, 2019, fred.stlouisfed.org/series/PSAVERT.

“Carol S. Dweck Quotes.” Quotefancy.com, 15 Aug. 2020, quotefancy.com/carol-s-dweck-quotes. Accessed 30 Sept. 2022.