Over the course of the past few years, many Americans have seen their income impacted in the aftermath of the COVID-19 pandemic. Despite this, there is still one greater threat to Americans’ finances that has changed the way consumers spend, save, and altered their idea of what they feel they need to get by.
A recent survey by CNBC Make It, in partnership with Momentive, found that across age groups, racial groups, and incomes levels, inflation remains a top concern for most Americans.
What Americans need to feel rich vs. financially secure
So what’s the ideal income during these tough economic times? For most Americans (80%), the sweet spot for feeling “rich” sits at about $100,000 per year. A little over 20% of those respondents say they’d need to earn at least $1 million to feel rich and 11% say they’d feel rich earning upwards of $50,000, but less than $100,000 a year while 6% would feel rich earning less than $50,000.
Of those surveyed, higher-earning households reported needing more money to feel rich.
For households earning $100,000, the amount they’d need to earn to feel rich was at least $1 million a year, while 19% of those in households earning between $50,000 and $100,000 and 18% of those earning less than $50,000 say the same
Financial comfort is another matter altogether.
While a small percentage (3%) reported that they’d need to earn at least $1 million to feel comfortable, more than half (54%) say they’d be just fine living off of less than $100,000 annually, with 1 in 5 (18%) saying that they’d be financially comfortable earning less than $50,000 a year.
4 ways to generate a more comfortable income
Earning enough to live comfortably now and in the future requires you to take a hard look at what your current financial situation is and make moves now to set yourself up for a more fruitful future. A few ways you can boost your earnings and make your money go the extra mile:
- Ask for a raise: The easiest and fastest way to increase your income is to ask your employer for a raise. According to data from Payscale, the odds of getting one are in your favor—70% of employees who ask for a raise receive one and 39% of those who asked for a raise received the amount they asked for. Take some time to do some market research and determine what your value is based on your skills and experience. Then set up some time with your employer and make your case. If their answer is still “no,” set up some time to revisit this conversation in six months to a year.
- Explore income-earning investments: A recent survey conducted by the investment platform Magnifi found that 49% of Americans invest to earn additional income. Assets like dividend-paying stocks, bonds, and real estate all pose varying degrees of risk, but can all generate income to give your budget some breathing room. And, even if you don’t have a ton of income to start with, sometimes all it takes is a few dollars.
- Free up room in your budget: If you’re having a hard time boosting your income, you might want to consider ways to use the income you have more strategically. If you don’t already have a budget, consider laying out all of your spending and saving in black and white to determine if there are any line items you could consider cutting back on or eliminating altogether. You might be surprised to find out which categories you’re overspending on that you could easily tweak. Budgeting strategies like the 50/20/30 and zero-based budgeting method can help you figure out where all of your dollars are going and how to make them go even further.
- Make a long-term plan for your future: The “right” amount of income will vary depending on your lifestyle, and it will likely fluctuate as you age and your expenses change. Still, looking for ways to generate lasting income is crucial. “Researchers say the biggest financial threat retirees face is that they will outlive their money. It’s called longevity risk. Think about it: You can’t just consider what you have in your bank account and predict whether that’ll be enough,” says Yanelys Benham, wealth management advisor at TIAA. “You need to make sure you have lifetime income. There are three sources: One is Social Security, but that’s often not enough by itself. Another is pensions, but those are becoming increasingly rare. The third is annuities, which a growing number of workplace retirement plans are including as an investment option.”
Your financial circumstances will change throughout your life and, as a result, your definition of what you can comfortably live off will likely change too. Make it a priority to monitor your finances regularly and look for ways to increase your income, even if only by a small percentage. Whether it’s cutting down on your spending by a few dollars and redirecting that money toward a lucrative savings account or investing a few dollars each month, those small increases can make a huge difference for your financial comfort long-term.
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