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Six figures might not mean as much as it used to, but it’s still a decent amount of money. But just how much is it in today’s economy?
I can’t imagine making over $100,000 a year. That’s a whopping $8,333 a month! However, making more money comes with problems like lifestyle inflation and higher taxes.
These 13 things were inspired by Business Insider. To keep it interesting, I included personal and financial changes you should make.
1. Focus on Retirement
Retirement creeps up fast. One second, you are 25 and carefree, and the next, you’re nearing 60. When you start making six figures a year, focusing on retirement accounts is a good idea.
It doesn’t hurt to use both employer-based retirement accounts like 401ks and independent ones like Roth IRAs. Either way, the earlier you start, the better.
2. Budget
Just because you start making more money doesn’t mean you should stop budgeting. Without a budget, it’s incredibly easy to lose everything you’ve worked for. Either create a new budget based on your new income or stick to the old one.
I know people making six figures who live paycheck to paycheck because of debt and poor spending. Most of them don’t budget at all.
3. Live Below Your Means
You’ve probably heard this before, “live below your means.” By all means, spend money on yourself as a treat for making it to six figures. However, it would be best if you didn’t suddenly increase spending in every part of your life.
Imagine all the savings you can have sticking with your rent of $1,200 compared to $2,000. Just because you can afford something doesn’t mean you need it.
4. Fund an Emergency Fund
Anything that can happen will happen. Funding an emergency savings account is a lot easier when you’re making a strong income, like six figures. This only works, of course, if your budget allows for savings.
I really recommend beefing up your savings. Everyone has their own rule, but keeping at least six months of expenses in a savings account is best. If you’re looking to make money from your savings, consider opening a high-yield savings account (HYSA).
5. Eliminate High Interest Debt
High-interest debt is painful. It’s so frustrating to watch as your total balance only slowly climbs down because of high interest rates. The average credit card interest rate in the U.S. in May of 2024 was 22.76%. This hefty interest rate can make it hard to save.
When you make six figures, you should completely erase your high-interest debt as much as possible. You never know how long you’ll be earning the same wage. What happens if you lose your six-figure job? You’ll still be stuck with high-interest debt.
7. Define Short-Term Goals
While it’s true that earning six figures doesn’t make you a millionaire, it’s really good money. I’d feel so much more secure in my financial decisions if I made over $8,000 a month.
When you get here, start creating short-term goals. What are some things you want to achieve? Do you want to pay off your car next year? Or boost your savings account?
8. Define Long-Term Goals
Long-term goals are just as important. I recommend adding short-term goals so the waiting doesn’t feel agonizing.
So, what kind of long-term goals can you come up with? You can make big decisions like starting to save for a down payment on a home or college for your children.
9. Start Investing
Investing is another thing you should do when you start earning six figures. It’s a way to grow your money, aside from retirement. I know people who invest their house fund in hopes it’ll grow.
Investing takes a lot of research, so take your time. There are so many different types of accounts, each with its own benefits and cons.
10. Don’t Forget About Taxes
Once you start making more money, you’ll owe more money. I don’t make six figures (yet), but have noticed my annual taxes increasing. If you know you’re about to make six figures, look into your federal and state taxes.
If necessary, work with a tax professional. They can help you find tax credits and deductions.
11. Enjoy It
Why have money if you can’t enjoy it? Be reasonable, but enjoy your money. Plan a trip or event if you have a new high salary and the budget for it.
When I got a bonus at my last job, I planned a weekend spa getaway. It cost $500, but it left me relaxed and was a perfect reset.
12. Invest in Yourself
When I mentioned investing earlier, I meant it more technically. In this item, I mean it more personally. Invest in yourself.
Is there a certification or course that could elevate your career? Do you need a more reliable car to finish your goals? Consider all of these things while focusing on yourself.
13. Give back to Your Community
Earning six figures doesn’t mean you’re rich. Still, it’s decent money that you can use on yourself, your family, and your community. After focusing on getting rid of your debt and boosting your savings, think about giving back to your community.
It’s a great way to get involved in your home while also potentially earning a tax credit.
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