{"id":270,"date":"2021-09-01T12:00:00","date_gmt":"2021-09-01T12:00:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/is-100000year-still-a-lot-of-money\/"},"modified":"2025-09-05T16:57:46","modified_gmt":"2025-09-05T16:57:46","slug":"is-100000year-still-a-lot-of-money","status":"publish","type":"post","link":"https:\/\/moneywithkatie.com\/is-100000year-still-a-lot-of-money\/","title":{"rendered":"Is $100,000\/Year Still a Lot of Money?"},"content":{"rendered":"<div class=\"sqs-html-content\" data-sqsp-text-block-content>\n<p class=\"\" style=\"white-space:pre-wrap;\">For some reason, the six-figure salary has always held this sort of sparkly allure for me: Almost as if once I hit that illustrious $100,000 benchmark, I\u2019d know I had really <em>made <\/em>it. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">I\u2019m not sure if it\u2019s just because \u201csix figures\u201d really rolls off the tongue or if there\u2019s something else at work here (pre-tax, $100,000 per year equates to about $8,333 per month), but I always figured people who earned $100,000 were firmly in the, \u201cI don\u2019t have to worry about money anymore!\u201d camp.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">So you can imagine my surprise when I read the spicy Business Insider headline, \u201c<a href=\"https:\/\/www.businessinsider.com\/high-earning-henry-millennials-six-figure-salaries-feel-broke-2021-6\" target=\"_blank\">60% of millennials earning over $100,000 say they\u2019re living paycheck to paycheck.<\/a>\u201d<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">To be fair, Business Insider is famous for headlines like these \u2013&nbsp;combining two counterintuitive ideas for a sensationalist and click-worthy result. I tip my hat to you, Insider.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">The image for the article features a young, attractive Asian woman with loud, statement diamond earrings, a puffy-sleeved blouse, and a quilted handbag a la Chanel tucked under her arm, as if to scream, \u201cThis millennial likes living the high life and she ain\u2019t afraid to swipe for it!\u201d<\/p>\n<h2 style=\"white-space:pre-wrap;\">Are Millennials just rowdy over-spenders with champagne taste on a craft beer budget?<\/h2>\n<p class=\"\" style=\"white-space:pre-wrap;\">Could it be that simple?<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Or \u2013&nbsp;as I suspect \u2013&nbsp;is something a little more complex at play?<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">After you wade through the implications in the beginning of the article that Millennials are simply too interested in an expensive, luxurious lifestyle to save, you stumble upon a less convenient (but probably more telling) truth: <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Income increases haven\u2019t kept up with an exponential increase in the cost of living. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">A <a href=\"https:\/\/www.supermoney.com\/average-millennial-income\/\" target=\"_blank\">SuperMoney analysis<\/a> found something surprising: \u201cYoung adults ages 25 and 34 saw an increase of only $29 in their incomes since 1974 [when adjusted for inflation].\u201d <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">That\u2019s \u2013 for all intents and purposes \u2013 flat.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">When you account for inflation, the amount of money a Millennial would have made in the year 1974 (assuming they were around and \u201cMillennial-aged\u201d back then) and the amount they make today is the same.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Unfortunately, everything else young people want (or need) to buy \u2013&nbsp;namely education, housing, and healthcare \u2013&nbsp;has risen in price dramatically. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Taking inflation into account, home prices have increased by about 39% in the last 45 years, and the national health expenditure per person has risen by $9,000 since 1970. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">And as anyone who\u2019s ever gone to college can probably guess, the cost of education has <em>literally<\/em> doubled.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">So is some of the paycheck-to-paycheck syndrome the result of too many boozy brunches and boutique fitness classes? In part, sure. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">But to make a sweeping generalization that Millennials are simply \u201cspendier\u201d than previous generations ignores a major truth: The cost of living has risen a lot faster than income has.<\/p>\n<h2 style=\"white-space:pre-wrap;\">What\u2019s middle class in America today?<\/h2>\n<p class=\"\" style=\"white-space:pre-wrap;\">To determine whether or not my perception of $100,000 being \u201ca lot of money\u201d was off or not, I tried to think back to the idea\u2019s origins. I remember when my mom quit working in the year 2000 that she and my dad were making between $150,000-$200,000 together, which (I assume) was quite a bit of money back then, considering we lived in rural Kentucky. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">After we dropped down to one income, the spreadsheet (or \u201cSS,\u201d as we called it, bearing an appropriate namesake resemblance to police in Nazi Germany) was born: That\u2019s where mom would track every dollar that came in and out. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">So let\u2019s assume the idea that \u201c$100,000 = making it\u201d was an idea that found its genesis in my psyche in the year 2000 (I was six years old, so it\u2019s unlikely \u2013 but I think that\u2019s when the seed was planted). In other words, I anchored to that number and only later understood what it meant.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Of course, it stands to reason that inflation would have eaten away at $100,000 over the last 20 years \u2013&nbsp;meaning what seemed like a ton of money to me in 2000 would be decidedly less so today, in 2021. But by how much?<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Consider that in 2018, <a href=\"https:\/\/www.pewresearch.org\/fact-tank\/2020\/07\/23\/are-you-in-the-american-middle-class\/\" target=\"_blank\">household income up to $145,500 is considered \u201cmiddle class\u201d in America<\/a>, according to Pew Research. Despite my fervent Googling, I couldn\u2019t find updated numbers for 2021.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">That alone is pretty surprising (I would\u2019ve thought anything that far north of $100,000 would certainly be considered <em>at least<\/em> lower-upper class!), but what was more surprising was the fact that \u2013 <strong><em>in the year 2000<\/em><\/strong> \u2013&nbsp;<a href=\"https:\/\/www.cnn.com\/2018\/09\/11\/us\/middle-class-income\/index.html\" target=\"_blank\">the median income for middle class families was $78,056<\/a>. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">The median income for middle class families in 2016? $78,442.<\/p>\n<h3 style=\"white-space:pre-wrap;\">When you adjust for inflation, that means the average income for the middle class actually went <em>down<\/em> between 2000 and 2016.<\/h3>\n<p class=\"\" style=\"white-space:pre-wrap;\">Of course, we\u2019re conflating two things here: The value of $100,000 today vs. when its inception in my peanut brain as \u201ca lot of money,\u201d and the average income of a middle class family. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">But they\u2019re related: $100,000 may have been a lot of money back in 2000 \u2013&nbsp;and I suppose you could argue that it still would be, considering the median income has totally stagnated \u2013&nbsp;but since the price of everything else in that time has risen, it\u2019s just not what it used to be.<\/p>\n<h2 style=\"white-space:pre-wrap;\">So how much more expensive has shit really gotten?<\/h2>\n<h3 style=\"white-space:pre-wrap;\">Housing<\/h3>\n<p class=\"\" style=\"white-space:pre-wrap;\">In the year 2000 (when we\u2019re presuming my $100,000\/year pipe dream was born), <a href=\"http:\/\/www.demographia.com\/db-statehouse$2000.htm\" target=\"_blank\">the average home price in Colorado was $166,600<\/a> (using Colorado, as that\u2019s where I live). That means if you earned $100,000 per year, you could <em>theoretically<\/em> save up a 20% down payment for the average home in a single year if you saved just 33% of your income.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">In the year 2021, <a href=\"https:\/\/www.zillow.com\/co\/home-values\/\" target=\"_blank\">the average home price in Colorado is $490,000<\/a>. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Obviously, I\u2019m using my own state as a proxy here \u2013&nbsp;but nationwide averages tend to be so generic that they\u2019re almost unhelpful (to be fair, Colorado is on par with California now for cost of living, so it\u2019s an extreme example).<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">That means the (average) cost of a house in Colorado over 20 years has tripled. <\/p>\n<h3 style=\"white-space:pre-wrap;\">College<\/h3>\n<p class=\"\" style=\"white-space:pre-wrap;\">What about college?<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Again, I\u2019ll be selfish and use my own college as an example.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">In the year 2000, the out of state tuition for the University of Alabama was $7,722. A single earner making $100,000 could easily afford to send their child to Alabama on just 7.7% of their salary. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">The tuition for an out-of-state kid who wants to go to Alabama in 2021? $31,090.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">That\u2019s four times as much.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">So the cost of a house in my state has tripled, the cost of education at my college has quadrupled\u2026 how about healthcare?<\/p>\n<h3 style=\"white-space:pre-wrap;\">Healthcare<\/h3>\n<p class=\"\" style=\"white-space:pre-wrap;\">In 2000, the average cost per person in the U.S. for healthcare was <a href=\"https:\/\/www.thebalance.com\/causes-of-rising-healthcare-costs-4064878\" target=\"_blank\">$4,857<\/a> (to be fair, I\u2019m pretty sure this data is referring to how much the average taxpayer subsidized government healthcare). <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Regardless, the average cost per person in 2018 was $11,172.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">2.3x as much.<\/p>\n<h2 style=\"white-space:pre-wrap;\">If housing has tripled (in Colorado), education has quadrupled (in Alabama), and healthcare has doubled (nationwide), what does that mean for our $100,000?<\/h2>\n<p class=\"\" style=\"white-space:pre-wrap;\">Obviously, I\u2019m cherrypicking the shit out of this data \u2013&nbsp;it\u2019s not like I\u2019m using nationwide averages (partially because I couldn\u2019t really find them), so bear that in mind. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">People in San Francisco will feel this more dramatically than people in Louisville, Kentucky, I\u2019m sure. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">But for me, Katie Gatti, living in Colorado in the year 2021 after 21 years of believing that a $100,000 income was the golden ticket, I\u2019m met with an unfortunate reality. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">The three things that most people have to buy at some point in their lives (a house, education, and healthcare) have tripled, quadrupled, and doubled, respectively (in my example).<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">So if we were to take the average increase \u2013&nbsp;tripling \u2013 and apply it to income, would it be fair to say that $100,000 in 2000 would have to be $300,000 today to have the same buying power?<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">While the inflation index would say no (\u201cIt\u2019s just 3% YoY!\u201d), I have to wonder: How is the inflation index taking any of this into account? It doesn\u2019t seem like it is. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Sure, commodities may be rising by 3% per year \u2013&nbsp;it\u2019s not like the cost of bacon has quadrupled since the year 2000 (I looked it up \u2013&nbsp;it\u2019s gone up from $3.03 to $5.83, so not quite doubling). <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">But houses? Education? <em>Healthcare<\/em>? I\u2019d consider these pretty necessary landmarks of becoming a young adult, and they\u2019re becoming prohibitively expensive.<\/p>\n<h2 style=\"white-space:pre-wrap;\">My conclusion?<\/h2>\n<p class=\"\" style=\"white-space:pre-wrap;\">$100,000 ain\u2019t what it used to be, and income doesn\u2019t show any signs of rising with the cost of these in-demand goods. I won\u2019t even attempt to dig into the economic factors (both real and artificial) that are driving the costs of housing and education through the roof.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">This is why I relentlessly hoard the majority of my income and shovel it into the one thing that <em>has<\/em> been able to keep up: The stock market.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">If you had invested $100 in the year 2000, you\u2019d have about $394 in 2021 \u2013&nbsp;quadrupling your money. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">The moral of the story is: It\u2019s almost impossible to <em>earn<\/em> your way to wealth. The only shot we have that our money will grow in lockstep with the cost of living is investing.<\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">And how do you know how much you can invest every month? Well, you need a plan.<\/p>\n<h2 style=\"white-space:pre-wrap;\">Things we can do to help offset the headwinds<\/h2>\n<p class=\"\" style=\"white-space:pre-wrap;\">I use my Wealth Planner to make a game plan for my income so all of the factors working against me don\u2019t totally obliterate my future. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">You can purchase the same Planner I use for $25 or $30 <a href=\"https:\/\/www.moneywithkatie.com\/wealth-planners-breakdown\" target=\"_blank\">here<\/a> \u2013&nbsp;or, if you feel like you need a little more personalized attention, check out my <a href=\"https:\/\/www.moneywithkatie.com\/services\" target=\"_blank\">Custom Plan offering<\/a> that launched last month. <\/p>\n<p class=\"\" style=\"white-space:pre-wrap;\">Regardless, start investing ASAP \u2013&nbsp;it\u2019s one of the only hopes we have against the wonky-ass economic situation we (Millennials) are in.<\/p>\n<\/div>\n<hr \/>\n<div class=\"sqs-html-content\" data-sqsp-text-block-content>\n<h2 style=\"white-space:pre-wrap;\">You may also like these posts:<\/h2>\n<ol data-rte-list=\"default\">\n<li>\n<p class=\"\" style=\"white-space:pre-wrap;\"><a href=\"https:\/\/www.moneywithkatie.com\/blog\/is-being-rich-a-curse-the-trap-of-extreme-wealth\" target=\"_blank\">The Trap of Extreme Wealth<\/a><\/p>\n<\/li>\n<li>\n<p class=\"\" style=\"white-space:pre-wrap;\"><a href=\"https:\/\/www.moneywithkatie.com\/blog\/overcoming-the-worst-economic-odds-millennial-generation-101?rq=millennial\" target=\"_blank\">Overcoming the Worst Economic Odds: Millennials<\/a><\/p>\n<\/li>\n<li>\n<p class=\"\" style=\"white-space:pre-wrap;\"><a href=\"https:\/\/moneywithkatie.com\/blog\/how-much-is-enough\" target=\"_blank\">How Much is Enough?<\/a><\/p>\n<\/li>\n<li>\n<p class=\"\" style=\"white-space:pre-wrap;\"><a href=\"https:\/\/moneywithkatie.com\/blog\/shifting-your-money-mindset-from-scarcity-to-abundance\" target=\"_blank\">Shifting Your Money Mindset from Scarcity to Abundance<\/a><\/p>\n<\/li>\n<\/ol>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>For some reason, the six-figure salary has always held this sort of sparkly allure for me: Almost as if once I hit that illustrious $100,000 benchmark, I\u2019d know I had really made it. I\u2019m not sure if it\u2019s just because \u201csix figures\u201d really rolls off the tongue or if there\u2019s something else at work here [&hellip;]<\/p>\n","protected":false},"author":178814,"featured_media":2467,"comment_status":"closed","ping_status":"open","sticky":false,"template":"si-template-single-post-income.php","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[40],"class_list":["post-270","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-spending-and-saving","tag-income"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Is $100,000\/Year Still a Lot of Money? - Money with Katie<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/moneywithkatie.com\/is-100000year-still-a-lot-of-money\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is $100,000\/Year Still a Lot of Money? - Money with Katie\" \/>\n<meta property=\"og:description\" content=\"For some reason, the six-figure salary has always held this sort of sparkly allure for me: Almost as if once I hit that illustrious $100,000 benchmark, I\u2019d know I had really made it. 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