Let me be honest here, it is not easy to say whether you are earning a good salary or not. However, I will do my best to help you understand if earning $90,000 per year will bring you the financial stability you have always wanted. So, is a $90k salary good?
Is a $90K Salary Good?
Yes, a $90k salary is a good salary. It is 27% higher than the median household income of $70,784, according to the United States Census Bureau. Earning $90k a year will give you some financial stability and provide you with enough money to save for retirement and other long-term goals.
However, since everyone is all different regarding finances, $90K might not be enough for everyone. For example, if you have large debts, huge tax obligation, live in an expensive city, or have a lot of other dependents, then it might be difficult to comfortably last through the month with a $90,000 annual salary.
Factors That Will Determine if $90,000 a Year Is a Good Salary or Not?
Undoubtedly, $90,000 a year is an average salary and way more than the average household income in the U.S. It can certainly help boost your net worth. However, the definition of a good salary is different for different people.
To understand whether earning $90,000 a year can provide you with the financial stability you are looking for, you will need to factor in the following:
- Your location
- Your lifestyle
- Family status (i.e., whether you are a single person or have a family)
- Taxes (Such as medicare tax and social security tax)
- Your current financial situation
The cost of living varies from place to place. Therefore, location plays a crucial role in deciding whether $90k a year is a good salary for you or not. It can affect things like tax obligations and housing.
If you live in expensive cities like San Francisco or Brooklyn, then the cost of living is going to be high, and it will take a larger chunk out of your annual salary. If you want a low cost of living, you should move to a more affordable area where you can live a comfortable life.
Some of the best cities that can accommodate you if you earn $90,000 a year include:
Your situation is the most significant determinant of whether $90,000 is a good salary or not.
In particular, your current lifestyle is a big factor when it comes to evaluating whether $90,000 a year is a good salary or not. For example, if you have expensive lifestyle desires like frequent oversee trips, you might need more income than someone who lives a simpler lifestyle.
So, if you want to grow your net worth and live that good life, you might have to create additional income streams, find another job with a higher minimum hourly wage or renegotiate your salary offer.
If you are married or have children, your expenses will likely increase and you will need more money to support your family. On the other hand, if you are a single person and do not have any dependents, then your bills can be much lower.
In that case, $90,000 a year should be an excellent salary to boost your net worth.
To give you an idea of what you should look at, the median household income in 2021 was $70,784, according to the United States Census Bureau. This is lower than $90k a year, which means that generally, you should be able to live comfortably, whether you are a single person or a family.
Taxes will inform how much take-home pay remains in your bank account at the end of every month. I am talking about federal taxes, state taxes, medicare tax, and others like social security tax.
Fundamentally, the amount of taxes you pay on your annual salary will inform whether $90,000 a year is a good salary. High tax rates will mean that you have less money available for living expenses and other bills. This might make it hard to live comfortably.
Usually, your tax bracket will determine how much you pay in federal income taxes. If you are paying a lot in taxes, you can work with a financial expert to try and reduce your tax burden.
Your Current Financial Situation
Do you have a lot of debt? Do you have any savings? Have you set up an emergency fund? All of these things can help you decide if your gross annual salary is good or not. Having a lot of debt can hinder achieving your financial goals even if you earn more than the average household income.
So, even if you make a good income of $90k a year, being in a bad financial position may make this salary range insufficient.
On the other hand, having some savings or an emergency fund with no significant debt will give you peace of mind. You know that should anything unexpected happen, you have some money to fall back on.
How to Effectively Manage a $90,000 Salary
All the factors discussed above will help you understand whether this is a good salary. However, when you really look at it, it all comes down to one thing; financial management. If you know how to manage your money and stay within a budget, then this can be a good salary for you.
Here are some tips on how to effectively manage your finances so that you make the most of a $90,000 salary.
- Learn the basics of personal finance management
- Create an emergency fund
- Work with a budget
- Move to a cheaper city
- Watch your spending
Learn Money Management Skills
If you are bad with money, no salary will ever be enough, even if it is a really good income. Learning the basics of money management will help you make the most of your salary and achieve your financial goals.
So, while we believe a $90,000 salary is a good income, you still need to be money-savvy and understand how things like federal income tax and pre-tax contributions like 401(k) plan work
Create an Emergency Fund
It’s always a good idea to have some savings tucked away for emergencies, even when your employer pays a good salary, like $90k a year. This way, you won’t be blindsided by any unexpected bills.
If you don’t save money, you will struggle to achieve your financial goals, whether you have a good salary or not. You should also save for things like a 403(b) retirement fund, college fund, and other future expectations.
Work With a Budget
Creating and sticking to a budget is the best way to make sure that you only spend on necessary expenses. When you create a budget, you know where your money is going and avoid unnecessary expenses.
Move to a Cheaper City
If you live in an expensive city with a high cost of living, consider moving somewhere more affordable if your job allows it. This way, you can save more money on a monthly basis and have a better chance of making your salary work for you.
Watch Your Spending
Finally, it’s essential to stay mindful of your spending habits so that you don’t get into unnecessary debt. Make sure you know where your money is going and if you can afford the things you’re buying.
Even with a good salary or a high hourly pay and living in an area with a low cost of living, it is easier to achieve financial freedom if you are a spendthrift.
For instance, instead of paying for recreation, you should consider some free activities that also offer valuable experience.
Here are some common questions I get from people wondering if $90k a year is a good salary.
Is $90,000 a Good Salary for a Recent Graduate?
Yes, a salary of $90,000 is good for recent graduates. It’s well above the median income for new college graduates, and it can provide a comfortable lifestyle depending on where you live and your other expenses.
Is $90k a Year Middle Class?
Yes, $90,000 a year is considered to be in the middle class. In fact, according to the Pew Research Center, households that make between $42,000 and $125,000 a year are part of the middle-income tier in America. This also means that 90k a year is a good income for households.
In conclusion, $90K a year is a great salary for some people and not for others, depending on their financial situation. If you make an effort to manage your money wisely and stay within a budget, this salary can help you achieve financial security. That said, it’s important to evaluate your lifestyle, family, and tax situation when determining if this salary is good for you.