When we look at finances, it can be difficult to picture what a number means in real terms.
If you are looking at jobs earning $140k salary per year, or if you are looking at lucrative career paths to go down, you may wonder what life would be like with an income like this. Let’s look at what makes $140k a good salary to earn, and how to make the most of this level of income.
There are numerous different facets to look at, including how a $140k per year salary compares to the median income, home prices and basic expenses where you want to live, income tax, and how much it costs to raise a family, from one kid to two children to more.
Let’s get started looking at how a $140k income measures up.
How does $140k compare to the national median household income?
One good way to measure how good a salary is by looking at the national median household income.
The median household income of the US is around $31,000. This makes $140k a good salary of over four times the national median household income, suggesting that this level of income can help someone lead a comfortable life, and may be considered rich.
However, it is important to note that the USA is a large country and the states vary greatly In terms of median salary and cost of living.
How does area affect finances?
Cost of living varies massively across the US. Between housing costs, health insurance costs, property tax, food costs and entertainment costs, you will find that a different level of income will be needed to live comfortably in different areas.
This does of course have the advantage that if you select and area with a typical low income and a low cost of living, you can live a more comfortable life than in other areas, provided you are earning a good salary – and with remote working becoming more and more common, there are more possibilities to earn a higher-than-average salary while living in a cheaper area.
Let’s look at how much in can vary.
Is $140k a good salary for the San Francisco bay area?
The average income for a household in the San Francisco Bay area is around $112,000. This means that $140k per year is much closer to the average median household income. Of course, if you have a partner who is earning similar amounts you can split some costs to have a better standard of living. However, if you are the only income earner in your household, you may find that it is harder to live a comfortable life if you choose to live in San Francisco bay area or a similar expensive city. Earning close to the median household income means that you should be able to afford a decent house and a good life, but you would find you have far less money left over for nicer housing, holidays, or other pleasures in life. Of course, this is why plenty of people choose not to live in the SF Bay area or a similar area with high home prices.
It can be difficult to balance finding an income and finding an area with lower incomes so that you can live a more comfortable lifestyle, with a big house, more holidays, private schools for your children, etc. However, thanks to remote working you may find that you can find a high paying job without the need to actually live in San Francisco, San Diego, or another city, giving you more money left to enjoy life.
Is 140k a good salary for a more rural area?
While lots of people want to have a high salary to live in a more expensive area, as a general rule, the lower the cost of living is where you are, the better life you can have.
The average income in a state like Kentucky is around $26,000. This means that $140k a year is far above the median income. Comapred to somewhere like the San Francisco Bay area, a $140k salary would put you firmly in the top percentages of earners.
This makes $140k a good salary for these areas, allowing you to afford a lot of the luxuries that people strive to get. For example, with a high income like $140k, you could afford private school for your children instead of public schools, as well as good childcare while you are working. You would also be able to a larger house rather than a more average apartment. Having a high income for your living costs also means you can afford holidays, a nicer car, and can allow you to invest money in real estate or stocks, which can help you grow your money and work towards financial independence for your retirement or for your decendants.
Breaking down a $140k salary
$140,000 is al large number and it can be hard to look past this to see what your income would leave you able to spend on your day to day life. Let’s look at breaking down a $140k salary into a more manageable figure.
What is a $140k salary monthly?
A $140k salary workers out to roughly $11,600 as a monthly income. This means that you are firmly in the higher earning brackets.
What is a $140k salary hourly?
Based on a 40 hour working week, a $140k salary would be roughly $70 per hour. However, it is not uncommon to work more hours in jobs with high incomes, so you may find that your hourly rate is different.
While both of these figures can be very helpful for looking at how much you are earning, this is not the same as the income you have to spend. You need to consider how income tax will affect your income.
Tax on a $140k salary
While $140k is a good salary and most people earning this much are considered rich, it is important to note that this is the gross income. Taxes will change how much of this you can actually spend.
The current federal income tax brackets that affect a salary of $140,000 are:
- Up to $9,950 – 10% of the taxable income
- Over $9,950 but $40,525 – $995 plus 12% of not over the excess over $9,950
- Over $40,525 but not over $86,375 – $4,664 plus 22% of the amount over $40,525
- Over $86,375 but not over $164,925 – $14,751 plus 24% of the amount over $86,375
This means that your income tax on £140,000 would be roughly $25,000 per year, though there can be differences in taxes in different states and there may be additional payments that need to be covered.
When you work out your disposable income it is also very important to consider student loan debt, mortgage payments, debts, health insurance and anything else that you have to pay for.
Am I going to be worse off than before?
It is a common concern to worry that you may be worse off due to income tax when you start to earn more money. However, this is not something to worry about. Income tax brackets mean that you only pay the higher tax rates on the amount that is over the threshold. Earning more money does not mean that you have less money left after taxes.
Is $140k an upper middle class income?
While it is not always helpful to think in terms of income and class, a $140k salary is almost certainly an upper middle class income in large parts of the USA. However, this again depends on the area that you live in. If you live in San Francisco or another area with high median household income, your income may not meet middle class living standards, especially if you are a single person household.
However, being in lower cost of living areas makes $140k a good salary that is more likely to be an upper middle class income, and means you can more easily afford the trappings and luxuries of a middle class income.
Can I live comfortably on a $140,000 annual salary?
Again, living in a different area can drastically change the lifestyle you will be able to afford. However, it is definitely possible to live comfortably on an income of $140,000 in the US.
Provided that you are not living somewhere with a high cost of living, $140,000 should allow people to afford a good middle class standard of living, including good housing, child care, funds for children for college, as well as healthcare, holidays, and you should still be able to have money left over for savings.
Is 140k a good salary to support a family?
ot of people worry about building a suitable life for their families, whether this is their parents, their siblings, their partner, or their children. Since $140k is well above the median household income of the US, you should be able to comfortably support a family on this salary. This means you can afford suitable child care which is useful for young families while you are at work, have a secure living arrangement, and be able to feed and clothe your family. With a household income of $140k you should also be able to affords a lot of the trappings of life that are considered rich, such as private school, funding towards collage and grad school for your children, holidays, and having better housing than an average apartment, including a garden, pool, and other luxuries.
If you have a second earner in the household, such as your partner, this will also help, since your household income could potentially double but your cost of living will be less than double for if you were living alone.
How many dependants can I support on $140k?
If you are wondering how many children you can support, or if you can help your parents on a salary of $140k, you should know that in many areas of the US you will be able to support multiple depandants on a salary of $140k. Again, if you live in San Francisco bay area or another expensive area, you may find that this is more difficult. However, living in a cheaper city or a rural area can make this easier.
Most people in the US want to have a family with two children and will wonder is $140k a good salary for this. In most areas of the US, this type of salary can definitely support two children as long as you are careful with your finances.
What about if I have no dependants?
If you have no dependants, you should find that a salary of $140k a year stretches even further, giving you more disposable income to help you enjoy life. If you have a partner and no dependants such as children this will also help, but either way you would have above average amounts of disposable income.
Can I afford a house on a $140k salary?
Yes. House prices vary a lot between different areas, but you can find many housing options if you have a salary of $140k per year. If you want to live in an area with higher real estate costs you may find that you are living in an average apartment – you will usually find that real estate prices are higher in cities such as San Francisco, San Jose, or San Diego, or areas with specialised job markets such as Silicon valley. However, if you live somewhere with a lower cost of living, you could look for a big house and still live comfortably.
Can I get a mortgage on $140k a year?
Absolutely, a lot of banks will offer mortgages for people who are earning $140k a year. There may be exceptions if you have a bad credit rating or have too much debt currently. If you do not qualify for a mortgage loan, you should look at paying down any existing loans you currently have, as this will help improve your credit rating.
How much can I borrow for a mortgage?
Most banks will let people borrow between four and five times their income for a mortgage. This means that you could potentially borrow up to $700,000 for a mortgage. If you are applying for a mortgage with a partner, the amount you borrow should be based off the total household income you have, meaning you could borrow more.
How much deposit should I have?
Typically, you should focus on keeping your deposit as high as possible. Mortgages are one of the most high cost loans that people are likely to take out, and the interest rate is typically lower if you have a bigger deposit, plus you will take less time to pay off the mortgage.
Having said that, most banks will offer mortgages as long as you have a deposit of at least 5% of the property value.
Should I rent instead of buying a house?
Many people prefer to rent even when they are earning a high income. There are a few benefits to renting. If you rent a house you have less that ties you to it, meaning that if you want to move you can do so without having to sell your house. This can be very beneficial for people who want to try living in an area before they commit to buying a house, or if they need to move frequently for work. It can also be beneficial to rent a smaller house before you plan to start a family in order to save money until you need the additional space, or until you find a house that you absolutely love.
On the other hand, mortgage repayments can often be a lower cost than rental prices, especially as real estate costs are rising, so buying a house can save you money in the long run as long as property values stay high. It can also be beneficial to purchase a house because the mortgage payments go towards building equity, rather than simply getting you a place to live.
How do I make the most out of a $140k salary?
Especially for people in emergent job fields, it can be confusing to figure out what to do with a salary of $140k. People may not have expected to earn this level of income, and while they may feel right, they do not know how to approach their newfound upper middle class income. Let’s look at some of the ways that financial advisors may suggest people use their money.
Saving money for a rainy day
It is always advisable to have savings. If you or someone in your family loses their job, has unexpected medical bills, or if something in your home or car breaks, you will want to make sure that you are protected.
How much should I have in savings?
Most financial advisors suggest that people have at least three months’ worth of expenses saves up. This means having enough money to cover any possible expenses for three months – including rent or mortgage payments, child care, health insurance, car payments, household bills, food bills, and more.
If you work in a competitive field it may be worth having more savings than this. While most people would hope to get a new comparative-paying job in three months after losing their job, if you think it will take longer than this to get back on your feet, you may want to have the equivalent of half a year’s monthly income to act as a safety net. This is helpful if you have to accept a job that is closer to an average salary.
Vehicles and transport
For many people, when they start to feel rich, they want to look at upgrading their car, bike, or other transport. However, it is important avoid getting into too much avoidable debt. Buying anything on a payment plan usually means that you will be paying interest, which means it will cost you more overall. Even if a payment is interest free, it can still be a problem if your income lowers, leaving you unable to pay off the vehicle. Some financial independence advisors suggest only buying new assets when you can afford them outright, with the exception of a house. Saving up to buy a vehicle outright can also be achieved a lot sooner than people think if you invest your money appropriately.
Should I buy a new car?
It can be hard to decide if you should buy a new car. A more modern car will often have better fuel efficiency and may be cheaper to repair in the long run, which can make it tempting to purchase a new vehicle. It is always work making sure that you compare the running costs of a new vehicle prior to buying it to avoid unexpected bills.
Once people have an income that is considered middle class or upper class, they often want to look at using their income to build wealth for themselves or their children.
Investments can help you build wealth, but there are a lot of different types of investment to look at, all of which have their own risks, possibilities for return, and their own processes.
What kind of investments should I consider?
One of the most common types of investment is real estate. Real estate investments have typically given people a lot of additional streams of income, which can help them build wealth, however like any investment there are risks. A lot of people also choose to invest in stocks, shares, or projects. It is vital to make sure that you understand any investments before you commit.
Should I have a portfolio manager for my investments?
It is always advisable to have an expert look over your finances and advise you on investments. Some investments can have hidden costs – for example sales tax, property tax, or more – which can cause financial hardship for people who are not expecting this. However, you need to make sure that your financial advisor is properly accredited and experienced and is working in your best interests.
Hopefully, this has been an interesting post to help answer the question of is 140k a good salary. The main things to remember is that your finances are tied hugely to the circumstances you live in. Your lifestyle will depend on where you live, as well as who you live with, and what debts or payments you have to make. However, most people can live very comfortably on a salary of $140k a year.
Curious about what your lifestyle would be on other incomes? Check out some of our other finance guides about different salaries and different lifestyles. Whether you are looking at jobs earning $100k a year or $45k a year, or any other amount, our expert guides can help you know what kind of lifestyle you could lead, and how to make the most out of your salary.