Do you know what is a good salary to make to live comfortably? Does it matter if you’re single, married, or have a family of four?
How could your life change if you weren’t so stressed about money?
Luckily for you, I’m going to talk about what a good salary to make is in order for you to live comfortably. Hopefully, you can use this information to better your situation or feel more relaxed about your income.
This article may contain affiliate links which pays a commission and supports this blog. Thank you for your support.
What is a good salary to make to live comfortably?
A Princeton survey of over 450,000 people set out to find if money really does buy happiness. Not surprisingly, the answer is yes, money can buy happiness. However, money can only buy happiness to a point.
The survey found that happiness increases significantly up to a household income of $75,000. After $75,000, happiness begins to taper off.
According to the United States Census Bureau, the average 2018 household income was $63,179. Therefore, the majority of Americans can still increase happiness by increasing their income.
The results of the survey are based on household income. Therefore, it doesn’t matter if you are single, married, or a family of four. If you make $75,000 or greater, then you have achieved optimal happiness by means of income.
Interestingly enough, people making less than $1,000 per month have more problems than those making over $3,000. Low income people experience less happiness on the weekends, frequent headaches, asthma, divorce, and are more likely to be alone.Click to Tweet! Please Share!Click To Tweet
So what job makes the most money a month?
So now you know $75k promotes living comfortably and happiness. How do you find a job or degree that makes you the most money a month to increase your happiness?
In order to answer this, FourPillarFreedom wrote an awesome post about which degree pays the most with the least amount of stress. The article includes an interactive chart which shows you the job salaries compared to stress levels.
According to the article, the highest paying and least stress jobs were in the STEM fields.
Although, don’t feel obligated to put yourself through college for a STEM degree. There are plenty of other high-paying, low-stress jobs available.
What salary should I be making at my age?
Salary is only one factor of wealth building. People focus entirely too much on salary. However, earning a good salary doesn’t always make you more successful.
Yes, make no mistake, I would much rather earn a high paying salary. Having a higher paying salary makes it easier to build wealth.
However, most people earning a high paying salary aren’t using their extra income effectively. Consider two different people.
The first person earns $100k per year, but only saves $10k. This person’s savings rate (amount saved vs earned) is only 10%! The second person earns $60k per year, but is able to save $20k. The second person has a savings rate of 33 percent!
When it comes to investing and building long-term wealth, the second person earning $60k will be better off. Most high-income earners are spending their salaries instead of increasing their net worth.
Therefore, net worth is a better measurement of success. Use your income effectively to build your net worth.Click to Tweet! Please Share!Click To Tweet
So what is the formula for net worth?
Net worth is the difference between your assets and your liabilities. Assets are worth money and have the potential to increase in value. Liabilities cost you money and can decrease in value over time.
Therefore, net worth is defined as:
Net Worth = Assets – Liabilities
Purchasing a quality stock is an example of an asset. I might buy Amazon stock and sell it later for twice what I purchased it at. Because the share price increased, owning the stock was an asset that made me money.
Owning a car can be a liability. Purchasing a new car might seem like a good idea, but it begins to lose value once you drive it off the lot. The car will continue to lose value over time.
You can use a net worth calculator to help you determine your net worth. Simply enter in the value of your assets and liabilities and the calculator will determine your net worth for you.
What should my net worth be?
According to the Millionaire Next Door, there is a specific formula you should follow to determine if you’re considered wealthy.
The formula is:
Net worth minimum = (Your Age x Your Gross income)/10
As long as your net worth exceeds the number calculated, you are considered wealthy. If you’re net worth is lower than the calculated number, you are not considered wealthy.
For example, a 42 year old makes $63,000 per year and has a net worth of $200,000. According to the formula, his net worth minimum is $264,600 [=(42 x $63,000)/10]. Unfortunately, his net worth lags behind by $64,600 and is behind on building wealth.
The formula considers your age and income, which makes it applicable to your current situation. With every year and each pay increase, your net worth minimum will change.Click to Tweet! Please Share!Click To Tweet
Summary: What is a good salary to make to live comfortably? (Single, Married, or Family of 4)
As you can see, your household income should be $75k or greater to be content and live comfortably. However, most Americans are only earning an average income of $63k.
Therefore, one of the biggest things you can do to increase your happiness is increase your income. Most of the highest-paying jobs with the lowest stress levels are in the STEM fields. However, there are plenty of jobs outside of the STEM fields which are acceptable.
A good salary is not enough to be considered successful or wealthy. You should focus on your savings rate (e.g. how much of your income you save). Invest your money in dividend paying stocks or exchange trade funds.
It’s difficult to say what salary you should earn at your age. Earning a good salary doesn’t mean you’ll live comfortably or have enough money for retirement.
Tracking your net worth can be a valuable tool in determining your progress towards wealth accumulation. Wealth accumulation takes a great deal of personal money management.
According to the Millionaire Next Door, you are considered wealthy if your net worth is greater than your age times gross income, all divided by 10.