To some people, earning 90,000 dollars a year may sound like a decent salary. To some, it may even seem like a crazy amount of money while to others it may not be nearly enough. As people are always working to earn money, it is important to stop at different points and ask whether your salary is good enough for you.
Your annual salary defines your tax bracket as well as your class, so you should understand what makes for a ‘good’ salary and what doesn’t. A 90k yearly salary is significantly higher than the average US earner, but does that make it a good salary?
Not for everyone. In this article, we will be exploring what factors go into determining whether your salary is good and how you can determine whether you need a higher salary. We will be discussing around a $90,000 salary for this article.
What are the average salary values for different demographics?
Understanding whether 90,000 a year is a good salary or not is impossible without first understanding what the average salary for most people is. The median income of people varies according to different things like age and industry.
Most people consider that if you can make at least $30,000 a year, you are no longer ‘poor’. But whether or not your salary price is good enough for you is more than just whether you can be considered poor or not.
For Americans, the median income across all ages is $56,516. For people ages 15-24, the median income shifts to a much lower $36,108. These figures are enough to show that what counts as a ‘good’ salary is relative.
The median household income for a simple nuclear family is about $61,937. With all these values in mind, why might someone still think that a 90k salary may not be good? This might be because, ideally, we are all striving to live above average.
While $90,000 a year can be a great salary for some, it may not be enough for others.
Breaking down a 90k salary
Talking about a salary in terms of annual payment may not be relatable to some people. Many people are paid monthly while some are paid bi-weekly, weekly, or even daily. For a better understanding of how much a 90k salary is on different levels, we will be breaking it down into smaller amounts.
Monthly:
The monthly salary for a 90k annual salary would be $7,500.
This can be calculated by dividing 90,000 by 12 months.
Weekly:
The weekly pay for a 90k annual salary would be $1,731.
You can get this by dividing 90,000 by 52 weeks in a year.
Bi-weekly:
The bi-weekly payment for someone earning 90k a year would be $3,462.
This is found by multiplying the weekly wage of $1,731 by 2.
Daily:
The daily wage for a 90k annual salary would be $346.
To find this, divide 90,000 by the 260 working days in a year.
Hourly:
The hourly wage for a 90k annual salary would be $33.04.
This can be found by dividing the daily rate of $346 by 8 working hours in a day.
Factors that determine whether your salary is good
Whether or not 90,000 a year is a good salary is not a question that can be answered with a simple yes or no. This is because what makes a good salary is dependent on many different factors. For some people, 90k a year is more than enough.
For some people though, even with a salary like 90k a year, they may find themselves struggling or unsatisfied. Below are some of the factors that can determine whether or not any salary range is good or not for someone.
The cost of living for where you live
Whether or not your salary is good enough for you will depend heavily on where you live and the cost of living. Cost of living refers to the average pricing of housing, amenities, and other basics in a given area. The cost of living in places varies.
If you live in a state like New York or California, the cost of living would be significantly higher than if you lived in states like West Virginia or Kentucky. The prices of housing alone would mean that you had to be in very different salary ranges.
The median home price for the state of California according to Zillow is about $547k. Meanwhile, for the state of West Virginia, the price is about $98k. So, simply concerning housing prices, 90k might be a good salary for some people and not enough for others.
Also consider how expensive things like restaurants, transportation, leisure activities, and others will be in different locations. So, when you are considering whether 90k is a good salary for you, take these into account.
Taxes
Tax rates also greatly affect whether a salary is good enough for you or not. Since the net value of your salary is how much you get after being taxed, you have to consider if that amount is enough to meet all of your wants and needs.
The higher your salary range, the more you will have to pay when paying taxes so you should consider that. Taking into account federal income tax and other federal taxes, stare rates, social security and Medicare can leave a huge dent in your after-tax income.
Average tax requirements are about 12% federal tax, 4% state taxes, and 7.65% for social security and Medicare. This can leave you with about $68,715 yearly. Though, it is important to keep in mind that if you live in a state with a mediocre tax your balance could be much higher than this.
You should also take note of how much you have to pay in different types of taxes so you can have a full picture of your final amount. Some companies only tell you how much your gross income is and you may have to do the net calculations yourself.
Consider spending creep
Spending creep is a phenomenon in which people’s expenses increase with their income. It is a very common phenomenon and a situation that many people find themselves in as they move from lower incomes to higher values.
Because of spending creep, what is considered a ‘good salary’ becomes very relative. As you consider whether or not 90,000 a year is good enough for you, you should consider the spending creep and try to avoid it if you can.
Spending creep leaves people feeling unsatisfied even when they reach the financial benchmarks that they had once strived for. This can leave you feeling like your salary is not enough for you, even though it ideally should be.
If you find yourself in a situation where you moved from one income level to another, take care to not increase your expenses too much. Naturally, your cost of living increases with your income, but it shouldn’t increase to the point that you become dissatisfied again.
Spending creep is the reason why some high-powered executives with a six-figure job might feel just as unsatisfied with their income as you do making 90k a year.
Lifestyle
Your lifestyle determines how much money is enough for your monthly or yearly. People have vastly different lifestyles which means that people could be in the same financial situation but have completely different opinions on what a good salary is.
Your lifestyle determines your living expenses. Therefore, if you have a more minimalist or conservative lifestyle, 90k might be a perfect salary for you. Meanwhile, someone who lives an extravagant lifestyle may need more money.
Different factors determine someone’s lifestyle such as their upbringing, their social circle, peers, age, demographic and more. Taking all of these into account will determine whether or not 90k is a good annual salary.
It is also important to note that if someone has a means of earning passive income, they may be able to sustain a more extravagant lifestyle with their 90k salary. This is because their net pay is not only determined by their salary. Therefore, you should consider getting a side hustle that can earn passive income if you don’t think 90k is enough.
The work/life balance of the job
Some jobs are worth it for the amount that you get paid while some jobs seem like you are not earning enough. Calculating the worth of your work is not simply based on the values you get paid. You may be getting paid a high amount like 90k but your job doesn’t afford that you have a good work/life balance.
If the personal cost of doing your job is too high, 90k a year might not seem good enough for you. Even if your employer pays higher than that, it may not seem like enough to compensate for the sacrifices you have made for the job.
When you are considering a job and a salary, you should also take into account the amount of physical, mental, or emotional labor you will have to put into the work. Weigh this against the salary to know if it is worth doing the job or not.
Living situation and personal life
This factor mostly has to do with how you are living. Are you a single person or are you in a relationship? Do you live alone or do you have a partner, spouse, or even children? Does your income go only into your expenses or do you have people to take care of?
These questions are important in determining whether or not your salary is good enough for you. If a person has to provide not only for themselves but also for his or her kids, you will have to consider higher salary rates than a single person.
You also have to consider how much time you spend on the job in relation to how much you are paid. Your work-life balance matters, even more, when you have a spouse and children waiting for you at home.
If your job requires that you spend long hours at the office, it may feel like you are trading life events for money such as spending time with your family and creating valuable memories with them. This factors into whether or not your salary is enough to compensate for these sacrifices.
Even as a single person, your living situation may be complicated. You may have to take care of a sick family member or cover fees for younger siblings. There are countless scenarios that we could come up with. The bottom line is that you have to consider your living situation and personal life when trying to determine whether or not your salary is good enough.
Disposable income
How much disposable income a person has is a good indicator of whether they have a good salary. Your disposable income is how much money you have left in your bank account once you have covered taxes, bills, and necessary expenses.
A good average salary should leave a person with enough disposable income to cover their needs and wants. People should be able to afford their basic needs and should have enough money to satisfy simple desires and cravings.
If your 90k salary does not leave you with enough disposable income, it is possible that it is not a good salary for you. When you consider the average budget of the average taxpayer, they will likely set aside some money for recreational or nonessential needs.
If your 90k salary cannot cater to these types of needs, that might be an indication that it is not a good salary. Of course, budgeting can be done to increase your disposable income, so you shouldn’t write off your 90k salary until you have done some proper budgeting.
Financial goals and plans
Most people have big financial goals and plan that they are saving towards. This could be buying their own house, purchasing a car, or planning for a vacation. Significant amounts of their average annual budget will go into saving towards these goals.
A good salary allows the person to save towards their goals while still being able to spend at will. If you have to deprive yourself of many expenses because you are saving, your salary may not be good for you.
Consider your financial goals and how long it will take to reach them with your current salary. This is a good indication of whether you need to find a higher-paying job or not. Financial planning is essential and your salary should accommodate your future plans.
Stage in Career
Another great factor that determines whether a salary price is good is the stage of a career that the person is in. if you are new to a company or a fresh graduate and you get an offer for a 90k annual salary that is a great deal.
However, if you have been working at a company for decades or you have received a promotion without increased pay, 90k a year might be a disservice to your expertise and experience. This should be considered when determining if a salary is good or not.
Your salary should correlate to your level of work experience. It is common and expected for a person’s salary to increase as they climb the corporate ladder or whatever its equivalent is in their industry.
If you are at a point in your career where you should be earning much more than 90k a year that is a big sign that your salary may not be good for you. You should consider asking for a raise or searching for a higher-paying job.
How to budget with your salary
No matter how much you earn, budgeting is the best way to ensure that your salary is enough for you. When you have good budgeting skills, you can ensure that your monthly salary is enough and you do not end up going broke.
Budgeting also helps to make sure that you reach your financial goals and spend wisely. Just because you are on a budget does not mean that you have to spend frugally or deny yourself often. A good budget makes allowances for all provisions and helps you track your spending.
Here are a few tips for how you can budget your money properly and make your money count, no matter your salary range. Of course, your expenses may change monthly but you can still establish an average budget for your expenses and change it accordingly when necessary.
Note that all these tips should be included in a fully written out budgeting plan for constant reference.
Start with recurring expenses
When it comes to budgeting, the most important first step is setting money aside for your urgent and recurring expenses. These are the expenses that you cannot avoid paying and that you do not have a choice in paying.
The first thing you must do with your salary is settle these expenses. They may include utility bills, debts, recurring payments like insurance or mortgages, and more. These bills must be paid every month or at whatever interval they are set up.
It is important to keep these bills at the forefront because of how critical they are. Before you get to planning on how to spend the rest of your money, make sure that your essentials are fully covered so that you are out of debt.
Track your spending
Tracking your daily expenses is one of the best budgeting tips you can get. More often than not, we end up spending money mindlessly and wondering where it all went at the end of the day. When you track your spending, you begin to see your patterns.
Tracking your spending is crucial because it lets you know where you spend the most, where you can cut down on and how you can better control your money. When you are conscious of how you spend, you are less likely to spend recklessly.
Some apps help you track your spending or you could just keep a record of your daily expenses. While some expenses may end up being unplanned or one-offs, you will surely start to notice your spending patterns which lead to learning how to change or improve them.
Identify and reduce unnecessary expenses
One thing that tracking your spending does is that it allows you to recognize the areas where you can reduce your spending. Many people think that they do not have any expenses they can cut from their budget, but they would be surprised at how much extra money they would have if they cut down on some expenses.
Things like buying lunches or dinners from restaurants, impulse buying or retail therapy, and other forms of spending can end up reducing your cash flow quickly. When you can identify the areas where you overspend, you can cut down on them.
Consider eating more home-cooked meals or setting a monthly shopping budget for yourself. Small changes like these can end up helping you save hundreds or even thousands of dollars. If you have noticed that you spend money often on things you don’t really need, consider cutting down on them.
Set allowances
Just because you are budgeting doesn’t mean you can’t enjoy a treat here and there. It is important to make allowances in your budget for things like snacks, trips, shopping, and more. If your budget is too restrictive, you will end up abandoning it.
Make room in your budget to eat out a few nights a week or to take trips with your friends. The point of a budget is to plan out your expenses not to stop you from spending at all. After all, the point of making money is to spend it.
You can set apart money in your budget for leisure and fun activities while still spending wisely and saving. These allowances in your budget are important for your emotional well-being. It would be pointless to have enough money but be too depressed or stressed to spend it.
Always prepare for unexpected expenses
Every budget must also include an allowance for miscellaneous spending. This includes unplanned expenses, impromptu spending, and emergencies. Situations like these always come up, so you don’t want to tie up all your money in the other parts of your budget.
Emergencies can come up in different forms such as unexpected bills, costs of buying items, medical bills, travel, and more. The amount you set aside for emergencies and other miscellaneous bills depends on you. What matters most is that you budget something for this.
Conclusion
As this article has proven, many different factors go into determining whether a salary is good or not. 90,000 dollars is a decent salary payment for the average person but these factors may make it difficult for them to survive on that amount.
The impact that taxes have on your salary also cannot be overstated. The taxing on your salary can end up reducing your line income number drastically. You should pay close attention to what taxes you have to pay, especially state and local taxes.
When all is said and done, a good salary depends on the person. If your salary doesn’t seem to be enough, there are a few options available for you to rectify that. You could find a new job or request a raise from your current one.
You could also try out budgeting activities that will leave you with more disposable income. No matter your situation or circumstances, earning 90k a year is undoubtedly a decent salary that can be properly utilized by most people.
