Do You Really Need $150,000 a Year to Live Comfortably?

Can you afford the basics? What are the basics, anyway? According to a recent article in USA Today, it takes about $150,000 a year in order to cover the basics, set aside money in savings, and enjoy a few extras. If you make less than $150,000 a year, the implication is that you are going to be just scraping by.

The results come from a WSL/Strategic Retail survey that looked at shopping habits in America, and found that those with incomes of between $100,000 and $150,000 a year were experience higher rates of financial struggle. I found this interesting, since it comes less than two years after a study pinpointed $75,000 a year as the ideal salary for happiness.

All of this begs the question: Do you really need that much money to live comfortably?

What is Comfortable?

What are you buying that $150,000 is the bare minimum for comfortable living? While there are some places where the cost of living is high enough that $150,000 wouldn’t go very far, for many people it seems as though a comfortable life should be available for much less than $150,000 a year. Part of the problem might be what we consider “comfortable” these days:

  • Home with a room for each of the kids
  • At least two cars
  • Big screen TV
  • Pre-packaged foods
  • Going out to eat for multiple meals in a week
  • Cable/satellite TV
  • High speed Internet
  • A profusion of gadgets, including smart phones, tablets, laptops, game consoles, and more
  • Vacations to expensive destinations every year or two
  • Involvement in kids’ extracurricular activities
Many of these things that we consider “needs” for a “comfortable” lifestyle were luxuries just a few years ago. And, if you are really honest, you might come to the realization that many of these items are actually money leaks, resulting in the waste of 10% to 15% of your income each month. And, if you look at some of the items on the list, you might see that, if you consider these items “basics” adding “extra” and savings (but let’s be honest: the emergency fund is probably disregarded), it is a little easier to see how $150,000 might be required.

Expectations that Come with Income

Many people feel that a higher income also comes with higher spending expectations. If you are making six figures, you are “supposed” to have a bigger house, nicer car, more expensive clothes, and spend money on various other items. In some cases, expectations (either those you put on yourself, or those you feel others place on you) might include private school, or expensive gym memberships.

When you do a break down of expenses, suddenly it seems as though a six-figure income might not really be enough to live on. $100,000 doesn’t go very far if you live in an area with a high cost of living, or if you feel as though you “need” a number of higher-priced amenities. Because a six-figure income has such a psychological impact on those of us in the middle class, it seems as though you should be able to “afford” — or even that you “deserve” — certain things.

Lifestyle inflation is reality as you earn more money. You earn more, so you spend more. That’s probably why the survey showed that financial stress was higher than average for those with incomes between $100,000 and $150,000 (although it would also be interesting to see where they live, since that could also be a factor). It’s hard to say what, exactly, constitutes “rich,” but it looks like, increasingly, what we used to think of as rich is now being viewed as only enough to cover the basics.

Living on Less than $150,000 a Year

I’m not a penny-pincher by any stretch of the imagination, but we live on less than $150,000 a year, and count ourselves comfortable. We have savings, and contribute to retirement each month. We still have some debt (mostly student loans and cars), and we like to spend money. However, we are careful about what we spend our money on. Our home is modest, and we have a garden, and try to eat at home.

In order to live within our means, we prioritize our spending so that the things we find most important are taken care of first. We don’t spend money on things that aren’t important to us. We forgo a lot of “normal” things that our neighbors have because we want to have the money to do what we like. So we’re comfortable, even though we have less than $150,00 a year.

What about you? Can you live comfortably on less than $150,000 a year?

About the Author

By , on May 20, 2012
Miranda Marquit
Miranda is a professional personal finance journalist. She is a contributor for several personal finance web sites. Her work has been mentioned in and linked to from, USA Today, The Huffington Post, The San Francisco Chronicle, The New York Times, The Wall Street Journal, and other publications. She also has her own personal finance blog: Planting Money Seeds.

Leave Your Comment (13 Comments)

  1. Bryan says:

    Yea, this is a “it depends” type thing. In smaller towns in the midwest, you don’t need nearly that much.

  2. @pfinMario says:

    It’s just so dependent on where you live, but even more dependent on how you define “comfortably.” If it weren’t for the debt service, I would have lived a pretty great lifestyle when I made $40,000…and this was in DC — not exactly the cheapest place

  3. Alan Nuzum says:

    I think you nailed it with the cost of living in your area. I’m pretty successful in my career, make $150,000 on my own. My wife stays at home to take care of the kids. We live in a very modest home, never really splurge, but take a nice vacation every 3 years. We are a 1 car family and at the end of the day are very frugal, watch every penny, save a lot of money and we can be considered middle class in our area. We are def comfortable, but I wouldn’t say we are “rich”. Just smart. We live in Chicago.

  4. Sun says:

    I think $75k per person per year before taxes is more than enough.

    We are constantly marketed to confusing us between what is a want versus a need. You only need food, clothing, shelter, and maybe transportation. Anything else is just nicer versions of needs or wants.

    Bill – I lived in San Francisco for many years and in different neighborhoods. One can live on less than a $1,000 a month for rent, even by yourself. Where do you live? In the Marina district? San Francisco city & county also provides universal healthcare which means you are entitled to care as a resident. You can live on a lot less $120k a year. I sure did. I also know entire districts in San Francisco that live on much less than that.

  5. Jeff Umbach says:

    This article should be titled “Does a Married Couple Really Need $150,000…” A single person shouldn’t need half that much to get by comfortably.

  6. Bill P says:

    In San Francisco, you can live in a room for $1000 a month. We are talking about a tiny room!

    Or you can have your own studio / 1 bedroom from about $1500-$3500 (depends on the area). If you want to live close to your work, without flatmates, it will cost you $2500-$3000.
    That’s about $30.000 a year, only for rent. If you have a family, it’s even higher.

    So even if you earn $100.000, when you deduct the taxes and the rent, (plus the food, commuting, etc etc), you won’t go too far. In San Francisco you have to earn at least

    $120.000 a year to survive. You won’t be a millionaire, but that’s the bare minimum.

    Of course you can go for jobs for less than $120.000, but then sooner or later you will find yourself in trouble, as you are trying to sell drugs or in worst case your body or both in clubs to fill the gap and be able to afford the lifestyle and paid the rent and trips like all your friends enjoying.

    Once you are get into a car accident, you will sell your living ass on the street once you are out from the hospital to pay the bills or you will end up on market street like that mass amount of lunatic homeless people who are already finished their carrier there.

    You just can’t survive in dignity below $120.000 a year in San Francisco.

  7. Buck says:

    A phrase I find myself using a lot:

    “Your income does not determine how successful you are – your choices and priorities do.”

    I think you could reasonably substitute the word “comfortable” for successful there. As Miranda astutely pointed out, it comes down to what your priorities are in life. If your aren’t comfortable unless you have a pile of material possessions, then yeah, it’s going to take a lot of money to make you “comfortable.”

  8. Carol Haralson says:

    Insurance was not listed in the equation here. When we add up health insurance (at 12K per year for two self-employed persons), car insurance, home insurance, professional insurance, and life insurance (we’re about to drop that because it’s skyrocketing with age), I am shocked to see that it tallies about what I thought I might be making at this point in my in life when I was younger. And we don’t have long-term care insurance.

    Add to that self-employment taxes (15.3%), property taxes, state and federal taxes, consumer goods taxes on most purchases, moderate donations to charities, and home mortgage payments — and it is easy to see why $150 is necessary.

    We don’t eat out, by the way. Or travel abroad.

  9. Median household income in Monroe MI is about $55k. We’re a small city between the metro areas of Detroit, Toledo and Ann Arbor.
    I have done a household expense analysis for my blog based on that median income and our cost of living.
    The theoretical budget I wrote up shows median income is do-able with financial resourcefulness such as frugal grocery tricks and making payments on only one vehicle at a time. That lifestyle also includes one date night a month for the parents; and one family trip a year to northern Michigan in keeping with local customs.
    Public schools are acceptable in my area and we also have charter schools, so I didn’t need to include private school tuition in that writeup.
    Based on that research, my guess is that “comfortable” range with the lifestyle that is described in your post could be reached in Monroe at $100k.
    By the way, kids’ sports and extracurriculars are not considered luxury by families I know. Those activities are pursued to whatever extent possible in all income brackets, even if that means city rec leagues rather than travel teams.
    It’s also more common for a southeast Michigan family to have relatively expensive vehicles or multiple vehicles. Part of that is need, because our public transit districts don’t mesh well with out-of-town commutes and many of our roads are in poor condition.
    But the other local quirk is that a lot of southeast Michigan people qualify for automotive employee, family member, or supplier discount on vehicles. It’s common to use a discount to get the nicest car possible for the money you have available to spend, rather than pocket the difference on a car you otherwise would afford.

  10. Kris says:

    I’m sure someone in rural America can live on a lot less than I can in Connecticut. Of course, across the world the vast majority of people live on a lot less than we consider poverty level. So it is definitely relative.

  11. krantcents says:

    I can live on a lot less than $150K, but my kids are grown and zI have no debt except for a small mortgage.

  12. Squeezer says:

    A lot of it is relative. $150,000 may be poor in Los Angeles and a McMansion owner in Dallas. Depending upon the area, there are other considerations such as higher taxes and poor urban schools requiring kids to be sent to private school.

  13. Mr. CBB says:

    We don’t need 150k to live a happy life and that’s ok because I doubt we will ever make that amount. We live comfortably, and with-in our means. It’s not about how much money you make it’s how you save it, full stop. Everyone should have a budget no matter if they live on commission or 150k or more a year.. money is money and money needs to be budgeted. If it is not, we spend more than we earn without even thinking about it.

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