If you make 100k, then the next step is to figure out what exactly you should do with your money. So, read here to find out some of our recommendations on what to do with your money if you make 100k.
This Is How Much You Should Be Saving A Month If You Make Over 100K
Having a plan is especially important. You need to decide what you want to do with your money. How much do you want to earn?
How much do you want to spend? Do you want to invest? What about saving? This is very subjective, and everyone has different needs. But having a plan will help you stay on track.
Be Smart With Your Money
If you are earning over 100k, then you are going to want to be especially sensible where budgeting your money is concerned.
In fact, experts agree that sticking to a strict budget is key to keeping yourself out of debt – just because you earn over 100k does not mean that you are free from falling into debt.
In fact, you should really remember to prioritize your savings while growing your money. It is important that you don’t spend more than you earn!
Save some of your money every time you receive a paycheck, and this will allow you to build up your savings account.
Live In The Present And Start Planning For The Future
You should always have savings in case of emergencies. Saving may seem difficult because of unexpected costs. But starting early and building up a large amount of savings makes it easy to deal with unexpected events.
It is true that a six figure salary isn’t always enough to cover the cost of living in every city.
Housing and other fixed costs might eat up most of your paycheck, so you need to consider these expenses before deciding whether to move to a different city.
There is one common mistake amongst individuals who earn over 100k. Big earners tend to spend more money than they earn because they get used to spending money.
Spending too much money is dangerous, but saving money is safe. Always remember this simple rule of thumb: if you spend more than you earn, you will go broke, no matter your annual income.
Save Some Of Your Earnings For Retirement
Here’s the thing, saving for retirement should be a top priority for everyone. If you’ve already contributed a lot to your retirement accounts, then you’ll want to continue to put more money into them.
When it comes to deciding how much you want to save for your retirement, you’ll want to pick an amount that fits within your budget and makes sense for your situation.
Investment Choices
If you earn over 100k, then you might want to put some of your money into investing. Here we have four different investment choices for you to think about.
Index Funds, Mutual Funds And ETFs
Investing is very easy if you use an ETF. You buy shares in a fund that invests in many different types of companies. These funds are called Exchange Traded Funds because they are traded like other securities.
There are lots of them out there. Some of these funds are managed by professional investment managers, whereas others are managed by computer programs. A few even manage themselves!
ETFs are similar to mutual funds in that they are low-cost investment vehicles that help investors gain exposure to various markets. They are often used by people looking for diversification in their portfolios.
Individual Company Stocks
Investing in stocks requires lots of research and understanding of how businesses work. It takes time and effort to get up to speed.
People who trade individual stocks are usually doing it because they want quick results. This means that there is a chance of losing a lot of money. However, if done right, it can make a lot of money too.
Real Estate
Real Estate investment funds are a great way to get on the property ladder – and if you are someone who earns over 100k, then you are certainly in the position to consider joining the property market.
Savings Accounts, MMAs And CDs
Savings accounts are usually safe options to put your money into. This is not favored by a lot of people, because the interest rates are pretty low. But, some money back is still better than nothing.
Money markets are also a great place to put your money because they are safer than regular savings accounts and certificates of deposits are safe places to park your money.
You can withdraw your cash anytime, but you’ll lose some of the interest earned.
What House Can I Afford If I Make $100,000 Per Year?
You should start by looking at homes that cost less than $100k. With your $100k annual income, you’ll qualify for a lower interest rate.
To get the biggest loan amount, you’ll need a strong credit score and low debt. In order to qualify for the lowest interest rate, you’ll need a solid down payment.
A person making $100,000 per annum should indeed be able to buy a house worth up to $120,000 if they have a solid credit score, low debt, and high savings.
The higher the income, the larger the mortgage payment will be. For example, someone earning $150,000 per annum would pay around $1,500 per month for a $300,000 home.
The following tips will help you find a home that fits within your budget:
Calculate Your Monthly Expenses
Include all bills such as rent, utilities, insurance, food, etc. Also include any other costs such as child care, car payments, student loans, etc.
Once you’ve calculated your monthly expenses, divide it by 12. This gives you your average monthly expense.
Determine Your Current Income
Look back at your last two years’ W2s (Wage & Tax Statement). Add together all of your earnings from each job. Divide this number by 52 weeks. This is your yearly gross income.
Find Your Net Income
Subtract your total taxes from your yearly gross income. Divide this figure by 52 weeks. This gives you your yearly net income.
Look At Your Available Credit
Your credit score determines how much you can borrow. Use the three major credit bureaus – Experian, Equifax, TransUnion – to check your credit report. Review your reports carefully.
If there are errors on your credit report, contact the credit bureau and dispute the information.
Estimating Your Down Payment
The larger your down payment, the smaller your monthly mortgage payment will be. There are many different ways to finance a home.
One way is through an FHA loan. Another option is to use a conventional loan with a 20% down payment.
Still another option is to use a VA loan. If you want to avoid paying private mortgage insurance, consider using a fixed-rate mortgage.
Consider Your Future Plans
Will you stay in one location for the rest of your life? Are you planning to move frequently? How soon do you plan to retire? All of these questions affect what type of home you should buy.
Decide Where You’d Like To Live
Is it important for you to live near family members? Or would you prefer to live far away from them? Would you rather live in a city or a suburb? What’s your preference regarding schools?
Choosing Your Ideal Property Type
Some properties are more expensive than others. But some types of houses are better suited for certain lifestyles.
For instance, single-family homes are generally cheaper than townhouses or condos. However, they’re also typically not as flexible when it comes to moving.
In Conclusion
Overall, earning a high salary can seem overwhelming in terms of knowing how to spend, save, or invest your money.
But, here, we have tried to break down a number of different options that will help you work out what exactly to do with your hard-earned cash.
Financial Disclaimer
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