How much money do you make? Or maybe a better question–how much money do you want to make? People often debate how much money is enough money to live a comfortable life and find financial freedom. For many, the answer is in the six-figure range. So how much is that, and what does that even mean?
Making Sense of Salary Numbers and Terms
Before diving into why the term “six-figure income” has become so iconic in our society, we should define exactly what we’re talking about.
What is a Figure?
In this case, the word figure simply means digits. If you’re bringing home $50 a year, you’re pulling an impressive two-figure salary. Congratulations! The day you make it to $100 or more, you’ve crossed the line into–you guessed it–three figures! The world is your oyster now!
Generally, when people use this term, they are referring to their pre-tax salary for a year. Of course, you can describe the money you make in many different ways. You can talk about after-tax income or take-home pay, or you can talk about weekly, biweekly, or monthly paychecks.
But when people describe their money in terms of figures, you can bet they mean their annual earnings.
What Does It Mean to Make 6 Figures?
What constitutes a six-figure income? You would have to make anywhere between $100,000 and $999,999 to be making six figures.
This is an extremely broad range of money-making potential. As a result, many people choose more descriptive terms, like “low six-figure income” or “high six-figure salary.” There’s no precise definition of these, but the idea is clear.
Not many people make this much money. For reference, only the top ten percent of earners in the US make more than $158,002. The numbers thin out even further beyond that level–just five percent of earners make more than $309,348, and only one percent make more than $737,697.
So when you hear “the top one percent” described in the news, they are discussing people who earn well over $700,000 every year.
What is a Five-Figure Income?
If six-figure salaries are above $100,000, five-figure incomes are below that. They range from $10,000 to $99,999.
This is the range that most Americans fall in. For reference, the federal poverty level for a single-person household in the United States is defined as $12,880 in 2021. The average US salary shifts around year-to-year, but it is usually somewhere near $50,000.
What about Seven? Eight? Nine?
Now that you get the basic idea of how income levels work, it’s pretty easy to figure out more figures.
For example, a seven-figure income would mean the person makes $1,000,000 to $9,999,999. They are a millionaire. In the US, the top 0.1 percent of earners make more than $2,808,104.
If a person makes eight figures, they make tens of millions of dollars every year.
A nine-figure income makes hundreds of millions of dollars, all the way up to $999,999,999.
A person making ten figures is a billionaire.
Why Use Figures To Talk About Pay?
What’s the purpose of describing pay in this manner? Why don’t people just say, “I made $460,000 last year?” There are many reasons, but confidentiality in pay is as old as time itself. Businesses generally don’t like their employees to know how much each other are being paid.
At hiring, some employees may be offered more money to get them on the team, while others start at lower salaries because they have less experience. The reasons may make sense to the boss and the human resources departments that set the pay rates, but individual employees may not see it that way.
To avoid conflict, most employees like to keep their actual salaries to themselves. There’s seldom a good reason to brag about how much you make. Doing so can look unprofessional and braggadocious.
Talking about your income in terms of “figures” is a subtle way to frame what you are saying without making it about you and what you make.
Salaries Versus Wages Versus Earnings
You can describe the money you bring home to put food on the table in a number of different ways. When describing money from jobs, employers might pay hourly wages or annual salaries.
When it comes to earnings, money comes from many different sources. When you reach the level of being a top earner, it’s not uncommon to have more than one source of income.
Money that you get from your employer in the form of a paycheck is known as earned income. Earned income is often discussed in terms of your gross salary, which is what jobs advertise when looking for employees. Of course, your take-home pay is lower because taxes are withheld from your paycheck.
But wealthy people seldom work for a majority of their money. More often than not, a large portion of their income comes from investments, either in the stock market, businesses, or real estate holdings. This type of money is known as portfolio income and is taxed differently.
Why Do People Talk About Incomes of 6 Figures or More?
One reason this level of income pops up so often is that it’s a general term that includes the idea of being in the top ten percent of earners. Making a six-figure income is good–it’s a sign of being a member of the upper class and having significant wealth. It’s a way of saying all of that, but without actually saying it.
What Sort of Lifestyle Can You Live Making Six Figures?
Obviously, if most six-figure earners are in the top ten percent of the economic scale, their lifestyles could be pretty lavish. The amount of money you make every year affects everything about how you live, from the location and type of home you have to the type of car you drive and the amount of stuff that keeps you comfortable.
A person earning a six-figure income can live comfortably anywhere they want. But everyone has different financial habits, and this amount of earnings does not necessarily indicate a lavish lifestyle full of yachts or private jets.
Truthfully, the real power of earning six figures or more is the ability to save for the future. High earners can put more money towards retirement and into investments like the stock market, enabling them to increase their savings rapidly. It takes money to make money, as they say.
The bottom line is that a six-figure income is a worthy ambition no matter what your life goals include. Earning at this level means you can take dream vacations, buy the best products, buy a house wherever you like, pay off all of your debts, and maybe even retire early.
Income at this level means you have an excellent chance at financial freedom, a goal of many that few achieve. It means you can quit jobs you hate, have money in the bank for a rainy day, and never be worried about going broke.
How Do You Make 6 Figures?
So being a top earner is a great goal, but how do you go about getting a job that pays this well?
A majority of the jobs that pay at this level require a college degree. And even still, most jobs do not start at such a high level of pay. You usually need to work in an industry for a few years before you can break the $100,000 mark.
According to USA Today, there are 77 US occupations that make more than $100,000. Here are just a few of them.
- Some college professors, espcially in the fields of law, business, or medicine
- Airline pilots and air traffic controllers
- Medical professionals including doctors, surgeons, dentists, physician assistants, pharmacists, and nurses
- Health services managers
- Scientists like biochemists, astronomers, or physicists
- Engineer in fields like electronics, nuclean energy, chemical, aerospace
- Computer professionals like software developers, information system managers, and network engineers
- Legal professionals like lawyers and judges
- Financial professionals like financial advisors
- General business managers like CEOs, human resources benefits managers, and advertising managers
How much is enough? Everyone’s lifestyle and goals are different, so there’s no correct answer for everyone. What seems like a lot of money to some people won’t be enough for others.
But many people agree that having enough money to live comfortably–enough to not worry about having enough money all the time–is a significant contributor to a person’s happiness. How much is that to you? Is it five figures, six, seven, or more?