Is 150k a good salary? It’s better than you think
It’s not how much you make; it’s how much you keep. Or, as we say in the FIRE community, it’s how much you cash flow! A $150,000 salary is a solid wage. It’s enough to live a remarkable life in America. It’s enough to reach financial independence with simple money habits.
A $150,000 salary will net you around $8500 per month in after-tax income in most states. Of course, state income rates and other pretax considerations will swing this up or down, but it’s a good approximation.
If you’re earning this salary and lucky enough to live in a lost-cost city, you can save a big chunk of income every year.
Hell, a $150,000 income means you make more money than 92% of Americans! If that’s not good, I don’t know what is.
150k is not too little and not too much
Is 150k a good salary? Yes. Is it an excellent salary? Maybe. It’s easy to think earning more is always better. But 150k is close to a sweet spot of making good money and still having a life to enjoy your money. I know many high-income professionals that have crazy lives. Insane work hours every week, and we always talk about it not being worth it. What’s the point of being rich if you don’t have any time to enjoy your life? You need to optimize your pay suck ratio. How much you get paid and how much your work sucks.
Here’s a truth bomb few executives will admit. The process is NOT scientific when it’s time to cut costs and reduce headcount. I’ve seen some scary stuff when it comes to configuring layoffs and rolling heads on an annual basis. When executives look to make cuts, they focus on the high earnings that haven’t done much for me lately. They look for the $200 – $400k works that aren’t worth it anymore.
When you start making big dollars, you get big expectations and a short lease come crunch time. The execs only need to chop a few higher earnings to save over a million dollars in operating expenses.
Are you only earning 150k? Then, you might be safe because they don’t save enough money to fire you. Crazy, but that’s how the cookie crumbles.
Is 150k a good salary for a single person?
A single young professional with a $150,000 salary can have a wonderful financial life. Be clever with your spending and invest a lot of money when it’s only you. As your family expands, you’ll be happy you planned. Your partner will also be glad you did this.
I remember getting excited when my income crossed into six figures. But once your salary clears $150,000, you get extra capital to fund your portfolio. That’s when I started to notice the increased impact of saving and investing more and more each month.
Is 150k a good salary in new york?
Yes, it’s still good even though NYC is expensive as hell. You may know many people that make way more than 150k in NYC, but it’s still a good salary. There is a lot of wealth in NYC. According to this 2019 study, there were one million millionaires in New York City! Amazing.
If you work in the technology or advertising industries in NYC. You’ll know lots of people that make way more than 150k. The job market is so competitive. $150k can be a starting salary for entry-level jobs!
How many people make over 150k?
A pretax gross income of 150k per year puts you in the top 8% of American workers. That’s pretty good! Data from Statista shows approximately 130 million full-time workers in the American economy. So there are about 10.4 million people in America who earn more than $150k per year in income.
150k a year is how much an hour?
IIf your job pays a 150k salary, you’re likely in a competitive role. So it’s reasonable you’re working more than the standard 40 hours per week. 50 or 60 hours per week is typical for most jobs that pay this much.
Let’s do some simple math at 40, 50, and 60 hours per week spent working for your W2 job.
40 hours per week
Let’s assume you have two weeks of paid vacation per year. Since you’re on a salary, those paychecks still roll in as you hit the ski slopes or veg out poolside. Two weeks is definitely on the smaller PTO side these days. Three or four weeks might be even more common.
Two weeks PTO = 50 weeks per year worked at 40 hours per week = 2000 hours per year.
150,000 / 2000 = 75 dollars per hour
That’s your pretax wage and doesn’t include things like 401k matching, health care, or other benefits.
50 hours per week
150,000 / 2500 = 60 dollars per hour
60 hours per week
150,000 / 3000 = 50 dollars per hour
Yikes! Putting in those extra 20 hours per week lowers net hourly wage by 33%! It’s time to take stock of where you’re spending your time. Being busy is not the point of work. Being productive and creating value is the point! I’m 100% sure you’re wasting 10 or 20 hours a week on bullshit that doesn’t need to happen. Figure that out, and you’ll save yourself a lot of time and stress.
20 percent of 150000
20% * $150,000 = $30,000
You should view this number, $30,000, or 20% of your gross income, as your bare minimum savings rate. After taxes, saving $30,000 will be close to 30% of your tax home pay. Saving 20% needs to be your base case if you’re a single young professional. You’re not rich, don’t act like it. Save at least this amount of money each money and invest it like clockwork. That’s the road to financial independence.
Is 150k a Year Middle Class?
No, you’re not middle class. You’re doing way better than average. You’re in the top 8% of American earnings. There are only a few high cost of living cities where 150k makes you middle class. I know it’s hard to imagine, but here they are!
Eight cities where $150,000 makes you middle class:
- Oakland, Calif.
- Washington, DC
- Newton, Mass.
- San Francisco, Calif.
- New York City, NY
- Bronxville, NY
- Stamford, Conn.
- San Jose, Calif.
What are some $150k jobs?
Here’s a shortlist of job titles that have high average national salaries. Doctors in various roles and lawyers are clear and well-known options. These days, technical and product roles are also high-paying options. It’s also way easier and faster to land these technical positions.
Learning CS and product management skills take a few years. Not a decade-plus like being a doctor or a lawyer. I became a millionaire before my lawyer friends paid off their student loans. You got options these days to get a job that pays 150k or more.
Here are 10 jobs that pay 150k or more:
- Data Scientist
- Data warehouse architect
- Software Engineer
- Technical program manager
- Senior product manager
- Corporate Controller (Accounting)
- Corporate Counsel (Lawyer)
- Senior mortgage broker
For more information, check out this post from indeed: 25 Jobs That Pay 150k or More.
How to build wealth on a 150k salary
We saved the best for last, the how-to. So you’ve landed a job that’s paying you 150k. You read my rant about how it’s a good salary. Here’s how you go from today to riding the highway towards financial independence.
Save at least 30% of your paycheck
Take 30% of your take-home pay and invest it. If you’re contributing to a 401(k) and getting an employer match. Great, keep doing that! Set up a recurring transfer from your checking account to your brokerage account. Once it’s automatic, you’ll never see the money or miss it. Spend what’s leftover.
I have a second direct deposit with my employer, so the money goes straight into my brokerage account. It never hits my checking account, so I don’t even get the chance to spend it or change my mind.
Set a stretch goal to save 50% of your paycheck. You can focus on spending less or earning more. When you get to a 50% savings rate for every year you work. You take one year off your working career. Early retirement, here we come!
Your not rich, don’t act like it
If you’re a young high achiever landing a job with a 150k salary is a fantastic achievement. You may feel flush with cash when those first few paychecks start rolling in. I get it, but you need to fight these feelings. You’re not rich; you have an above-average income. There’s even a term for this, HENRY. High earning not rich yet. You need to turn that income into capital by saving and investing until it hurts! Master the repetition of saving and investing every month. It’s only a matter of time before you’re rich.
It’s essential to keep your expenses sensible and in line with things that bring you value. You can’t let lifestyle creep take over at any stage of your life. The big-ticket items, housing, cars/transportation, and food will chew up most of your expenses. Don’t go overboard. Don’t rent an apartment that’s most of your paycheck. Don’t buy a fancy new BMW because the monthly payments aren’t that bad. And don’t go out to eat every other night because you work hard and deserve it. All these temptations will trap you in the endless hamster wheel of consumerism.
Every time you want to splurge, remind yourself, you’re not rich, so don’t act like it. Save your money, invest your money, and one day you’ll be rich. Then we can talk about strategic splurges 😉
Don’t become house poor
It’s all too common to see high earners become house poor for no good reason. It doesn’t matter if you rent or buy. You can still become house poor. The high you get renting a luxury apartment fades quickly. If you’re working long hours, you’re probably barely home anyway. Do you want to burn 3k or 4k a month on a place you only use to sleep? That’s bananas.
My advice for young high achievers, rent an apartment, don’t buy. Save and invest your money. Rent the best-value apartment you can find. Look for apartments a few notches up from average but still not a luxury building. Find a place that’s clean and safe. And close-ish to work. Use your apartment for what it is. A clean haven to unwind after working long days. Finally, don’t try to impress people with how fabulous your apartment is. It’s more impressive to have an above-average savings rate as you build stealth wealth. Play the long game for you and no one else.
Your time is an asset; don’t waste it on long commutes. On the other end of the spectrum, don’t live too close to work. A 30 to 45-minute commute gives you time and space to declutter your mind too and from work. You can also crush a few audiobooks per week if you’re feeling ambitious and productive. Or you can do the more tedious work thing and send emails or slack during your ride. Just don’t overdo it. Being too available is a slippery slope to giving your entire life to your job.
Automate the basics
You’ve locked in a solid income and found yourself a deal on a good apartment. You’re managing your excitement by reminding yourself you’re not rich. You’ve read my simple money habits and know that you need to track your expenses by category.
Now it’s time to automate your savings, investing, and bill pay. Try and automate every aspect of your cash flow. Cash in, cash out, cash invested, and cash used to pay all your bills. Once you get it all set up and cranking, you can focus on your life.
Spend your money on what matters most and find a level of spending that feels right for you. Not too low, so you feel like you’re starving and have no fun. And not too high, so you’re not investing enough to build your financial freedom snowball. It will take trial and error but keep aiming for a good balance of investing a lot without feeling deprived.
Once you automate your system. You can focus on the real shortcut to financial freedom. Exponentially growing your income.
Focus on doubling your income
If you’re in a job with a 150k salary, I’ll let you in on a bit of secret. You can make 300k. You need to understand your business, company, the key stakeholders.
This topic is too big to cover in this post. So I’ll give you the short version. There are two key levers to pull to double your income.
- Performance compensation: based on upside created for the business
- Equity compensation: based on achievements for the business.
Performance compensation is the more approachable first option. It’s an easier sell and less risk for the business owners. Easier said than done, but it goes something like this. Find a project that can create profit for the business. Ask for a % of that profit if you can pull it off. Then work like hell to make it rain. It can be a new business line or the growth of an existing business. Learn your business inside and out to make this possible.
My biggest mistake is not asking for a more significant % of my projects over the years. Life and learn.
The second piece, equity compensation, is the pot of gold approach. Sometimes you get lucky and join a company on the ground floor. It’s common to get equity compensation as part of the initial offer letter. It’s common for tech companies to offer a few hundred basis points to join the team. Ride the wave to a billion-dollar IPO, and you’ll be swimming in cash. Well, the government will take half because that’s what they do. But a few million bucks is still pretty good.
If you’re not lucky to join the squad with a standard slug, you’ll need to negotiate for it. It’s a long road and one that requires that you act like a business owner. You need to “be” a business owner way before you approach one seeking a piece of their pie.
It can be a good trade for an owner to give up a piece of their company if you create enough value. You’re selling the owner on the idea that you’re a key part of making the business bigger and them rich. That’s the big sell. Give me 1% of your business, and I’ll make you more money than if you keep that for yourself.
Make sure you know the company inside and out. Learn how the key stakeholders think and operate. Learn how they process communications. Learn the best time and medium to connect. Solve that puzzle, and you’ll land yourself in elite company. Most people aren’t even brave enough to ask for an equity stake in their company.
Earning a six-figure salary makes building financial wealth easier. Earning 150k or more gives you more leverage to build that wealth faster. You can settle in with 150k and enjoy a great work-life balance on your FIRE road. Or you can shoot for the starts and level up your income to retire even early. It’s up to you. Have fun!
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