Here’s What People Who Earn $100,000 a Year Really Spend Their Money On

For many, a six-figure salary is the ultimate dream — it speaks of a luxurious lifestyle and having enough money to go ahead and order that extra avocado on your salad without worrying about how much it costs. But does earning six figures really afford you peace of mind or do things pretty much stay the same when that extra zero on your paycheck comes into play?

Find out what those who make six figures typically do with their money. See if it’s really so different from what you do with yours, and find out the bad habit that keeps many high-income earners in debt (page 7).

1. Some invest more

magnifying glass on a business report

With more expendable income, some people choose to invest more. | Source: iStock

According to Business Insider, earning six figures doesn’t translate into your living a crazy, lavish lifestyle. It does, however, hopefully free up some income so you can invest more aggressively and compound your wealth. This way, you can likely retire comfortably, eliminate debt, and still make those big purchases like a home. Often, those who make six figures are even more financially conscious than those who make less.

Next: Not as much discretionary income as you think

2. They might be just making ends meet

husband and wife working on finances with calculator and laptop

A big salary doesn’t always make things easier. | Tomwang112

When CNBC interviewed Sharon Winick, 49, and her husband Michael in 2017, some of their answers about making six figures were surprising. The Winicks have three children, own a home in Chevy Chase, Maryland, and together bring in around $125,000 per year. And they still barely make ends meet.

“The amount of money we spend every month is more that we make, it’s been that way since we had our first daughter,” Winick said. The Winicks are also worried about sending their children to college. “I don’t know how we are going to do it without borrowing from the house.”

Next: They’re probably just like you in this 1 way.

3. Some don’t know where their money goes

Dollar bills burning in fire

Some people don’t know where their money goes, even if they make a lot. | iStock

A lot of six-figure earners spend it all, according to CNBC. “This just shows that if you are earning six figures and you feel like you are struggling, it’s not like you are crazy,” said Mandi Woodruff, executive editor at MagnifyMoney. “Fixed expenses are increasing at a faster rate than incomes, making it harder to live the lifestyle our parents lived.”

“The number one issue we get is ‘I feel like I am making a lot of money but I don’t know where it all goes,'” Ted Jenkin, a certified financial planner at XYGen Financial in Atlanta, told CNBC. For those who are making six figures but aren’t sure where it all goes, Jenkin suggests a budget “cleanse” for 21 days. The cleanse involves scrutinizing all of your bills and trying to find ways to cut them, then redirecting that cash toward other goals, such as college tuition or retirement saving.

Next: The numbers tell the story

4. Many live paycheck to paycheck

businessman working with generic design notebook

Despite a high income, many high-income earners still struggle to make ends meet.  | iStock.com/Pinkypills

Many Americans struggle to make ends meet on six-figure paychecks – which some would consider the salaries of the “upper income” or even rich, according to The Guardian. But the 2008 recession hit some people in this group hard.

The trend of Americans earning six figures living from paycheck to paycheck grew during the 2008 recession from 21% to 30% in 2009. By 2015, things hadn’t improved much — approximately 25% of earners making more than $100,000 were still in that predicament.

Next: Something money can’t buy

5. They don’t automatically attain happiness

young man carrying his girlfriend on his back at the beach

Even if you make good money, your problems aren’t going to go away. | Jacoblund/iStock/Getty Images

If you think making a six-figure salary would solve all your problems, you’d likely be wrong, according to The Guardian. In fact, there is no big difference between how happy Forbes 400 execs are and how happy Maasai herdsmen in Africa are, according to a survey. Other factors, such as your psychological outlook, your career, and your relationships are where you should be looking to find happiness.

Next: Dreaded debt?

6. They might pile up debts

woman choose one credit card from many

More money does sometimes mean more problems.  | BernardaSv/iStock/Getty Images

Because those making six figures typically opt for things such as private schools, tennis lessons, summer camps, and more for their children, they might rack up debt more than those who don’t make as much, according to The Guardian. Because those in this income bracket don’t want to sacrifice all the extras, they are usually more comfortable going into debt. They feel they can dig themselves out of it later and that “later” is still far down the road.

Next: Keeping up with the Joneses

7. Many spend money just to keep up

Murfreesboro, Tennessee

Keeping up with the Joneses is a very real phenomenon. | Swarmcatcher/iStock/Getty Images

According to The Guardian, many six-figure earners spend money so they can keep up with their neighbors and friends. And they typically don’t distinguish between wants and needs. “A wife says, ‘I understand my husband works really hard and I am home taking care of the kids, but our friends across the street have similar jobs and they go to Hawaii every year. Why can’t we? They got a really nice car. Why can’t we have a really nice car? We are the same people.’ It’s monkey see, monkey do,” said James J Burns, CEO and president of JJ Burns & Company.

Next: Millennials and money

8. Six-figure earning millennials might spend the most

Group of intercultural friends having Thanksgiving dinner

High-earning millennials sometimes have money problems. | Shironosov/Getty Images

Living from paycheck to paycheck — and making a six-figure income — is a big problem among millennials, according to The Guardian. In fact, 44% of millennials who earn between $100,000 to $149,000 live paycheck to paycheck — and only 33.5% of those who make between $50,000 to $75,000 live that way. Financial advisers say this might be because millennials aren’t accustomed to making that much money and they often give in to expensive spending urges.

Read more: A $147,000 Salary and 10 Other Crazy Things the Average American Thinks You Need to ‘Make It’

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