Is a $250K Salary Good?

If you asked any middle-class earner whether they’d like to make $250k a year, I’m sure the answer would be a resounding YES! However, the definition of a good or bad income varies based on several factors. Therefore, it is still worth asking, “Is a $250k salary good?”. Well, let’s find out.

Is a $250K Salary Good?

Yes, a $250k salary is good. It’s more than double the median household income in the United States and should enable you to enjoy a comfortable lifestyle, depending on your expenses, such as housing, children’s education, etc.

A woman counting US dollar bills at the white table

Furthermore, this annual income puts you firmly into the top 10% of earners in the country, or at least the upper middle class. It also signals good job security and career prospects, as salaries of this size are usually only found in well-paid professions such as medicine.

Factors That Will Determine if $250K Is a Good Salary

I know. I just said $250,000 a year is a better-than-average salary. However,  that doesn’t mean it’s a good income level for everyone. You will need to look beyond the numbers to understand if this income will enable you to fulfill your financial goals and live comfortably.

Specifically, you will need to look at the following:

  • The cost of living in your area
  • Your lifestyle
  • Your financial goals
  • Taxes
  • Your current financial situation

The Cost of Living in Your Area

The cost of living can vary drastically across the country. Generally, the area you live in will affect things like mortgage payments, health insurance, taxes, and your social class (That is, lower class, middle class, or upper class).

Generally, this salary will allow you to pay bills in most high-cost areas U.S. comfortably. For instance, the estimated cost of living for a middle-class family of four in NYC is $109,872 (without rent), according to Expatistan.  The average monthly rent for a 3-bedroom apartment in the city center is about $7,094.09 or  $85,128 per month.

If you add rent and general expenses, you get an average of $195k, which is way less than a $250k salary. This means you can comfortably live in NYC with a $250k salary even if you have a family. It also goes without saying that you can live in most U.S. cities since NYC is the most expensive city in America.

Your Lifestyle

A $250k income limit can afford you an upper-middle-class lifestyle at best. However, if you spend beyond your means, you will have little left for things like car payments or child care. Let’s say you want the best in life and decide to live in high-cost areas of NYC like Hudson Yards, where the average cost of a 3-bedroom house is $11,987 per month.

You will spend $143,987 yearly (more than half your salary) on rent alone. Top this up with an expensive lifestyle such as traveling, eating out frequently, taking your children to expensive private schools, and going on shopping sprees, and you might not survive even on such a high-income level.

So, you need to understand what your ideal lifestyle looks like so that you can determine whether $250k a year is enough money to support it. Otherwise, unless you have a rich family to fall back on, you might want to stick to a middle-class lifestyle.

Your Financial Goals

It’s important to have financial goals, such as saving enough money for retirement, paying for law school, or paying off debt. However, these goals will inform whether your salary is good or not.

Let’s say you live in San Francisco and plan to buy a home. According to, the average sale price for a home here is $1.2M. Consequently, according to reports by the real estate news site The Real Deal, you need to earn at least $350k per year to afford a house in San Francisco comfortably.

This means that a $250k salary might not be good for you if you aspire to buy a house in this city where the mortgage payment is quite high.

A person holding US dollar bills and a ballpen uses a blue calculator placed on a brown table


Tax deductions can have a major impact on your income. Depending on where you live (And your income tax bracket and the marginal rate ), taxes can take up over 30% of your salary, leaving you with little disposable income. I am talking about:

  • Income taxes
  • Property taxes
  • Sales tax (if you also run a business)

The 2022-2023 federal tax rate for single filers with a $250k salary is 35%, according to data by NerdWallet.  Typically, you pay $49,335.50 plus 35% on any amount above $215,950., which is around $11,917.5 for a $250k income.

This means you will be paying a high tax of up to $61,253 per year. The take-home pay of over $188k will still afford you a good life in most middle-class and lower-middle-class cities in America.

How to Make the Most of a $250K Salary

According to a June 2022 report by financial site, 36% of Americans making more than $250k live paycheck–to–paycheck. This means that despite the high income, few people know how to make the most of it.

How do you ensure that $250,000 yearly is a good income level for your specific situation? I recommend doing a number of things:

  • Move to an affordable city
  • Start investing
  • Create a budget
  • Come up with a savings plan
  • Learn financial management

Move to an Affordable City

If your job allows it, consider moving to an area with a lower cost of living, so you don’t have to pay higher prices on more stuff. This will enable you to put more money towards savings or investments instead of rent and other monthly expenses.

Otherwise, if you have more than average expenses and stay in high-cost areas like New York City, you will have to work two jobs, negotiate a higher salary or create a passive income source to afford the high cost of living.

Start Investing

Investing is key if you want to make the most of your income, especially if you are not guaranteed job security. However, if you are battling a high cost of living and other expenses, such as paying for your child’s private school, you can start small by investing in mutual funds or exchange-traded funds (ETFs).

Experts recommend investing at least 15% of your pre-tax income. So, if you earn $250k a year, you should invest at least $37,500 per year.

Create a Budget

Creating a budget is essential if you want to cultivate healthy spending habits. You need to know where your money is being spent so that you can make sure that the income is going towards investments and savings instead of frivolous spending.

Without a good budget, you will most likely be living paycheck to paycheck and struggling to save money or pay off things like student loan debt.

One great way to create the 50/30/20 budget rule, which recommends putting 50% of your pre-tax income toward needs, 30% toward wants, and 20% towards savings or loan repayment. Here is a sample budget for someone who earns $20,833 per month ($250k per year).

  1. 50% for Needs: $10,416.5
    • Rent/mortgage: $5,000
    • Utilities (electricity, water, gas, internet, etc.): $1,000
    • Groceries: $1,500
    • Transportation (car payment, gas, insurance, etc.): $1,000
    • Health insurance: $500
    • Other necessary expenses: $1,400
    • Total: $10,400
  2. 30% for Wants: $6,249.9
    • Dining out and entertainment: $2,500
    • Travel: $1,500
    • Clothing and personal care: $1,200
    • Hobbies and leisure activities: $1,000
    • Total: $6,200
  3. 20% for Savings and Debt Repayment: $4,166.6
    • Emergency fund: $1,300
    • Retirement savings: $1,500
    • Debt repayment (credit cards, student loan debt, etc.): $1,300
    • Total: $4,100

This is just a sample budget, and your financial situation might differ. You should, therefore, adjust your budget based on your individual circumstances, such as your location, family size, and lifestyle.

A person in black long sleeves counting US dollar bills placed on a brown table

Come Up With a Savings Plan

It’s important to have an emergency fund. However, don’t forget to save money for long-term goals such as retirement or buying a house.

Consider setting up automatic transfers from your paycheck into savings so that you can make sure you’re consistently saving money.

Based on the 50/30/20 rule I discussed above, you should save at least $4,166.6 per month if you earn $250,000 a year.

Related Questions

How Many People Make $250,000 a Year in the U.S.?

According to data from Statista, about 10.1% of households fall in the $250,000 a year income range. However, it is tricky to get the exact number since all incomes might not be reported efficiently.

Will Making $250,000 a Year Make You Rich?

It is possible to be rich if you make $250k annual income. However, this depends on your current financial goals, lifestyle, and cost of living. A $250k average salary can make you feel rich if you use it wisely and invest or save more money instead of spending recklessly.


Whether or not $250,000 a year is a good income level depends on your lifestyle, financial goals, and current financial situation. To make the most of this money you need to move to an area with a low cost of living, start investing, create a budget, develop a savings plan, and learn about financial management.

Jared Bauman is the owner and editor of He has started and sold several companies, along with owning several investment properties. His interest in personal finance started as a young kid, developed through his entrepreneurial ventures and real estate investments, and continue through his conversations with friends and colleagues.

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