I Make Six Figures: These Factors Are Keeping Me Living Paycheck to Paycheck

dem10 / iStock.com

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

When Emily Morrow, a 36 year-old video producer, crossed over into the six-figure salary bracket, she thought all her financial troubles were finally behind her.

“I absolutely thought life would be so much easier once I started making six figures,” Morrow told GOBankingRates. “I’m in a line of work that is often compensated at a very low rate, especially right now where work has been scarcer thanks to the strikes as well as the tech industry layoffs, which have gutted marketing budgets and have resulted in less corporate/commercial work that helps to pay the bills, so six figures seemed like an absolute dream to me.” 

But Morrow, who resides with her partner in California’s Bay Area, finds that the location has become too outrageously expensive for their well-above-average earnings. 

In California, Six Figures Can Feel Barely Middle Class 

“You have to be making six figures to really even qualify as middle class, which just seems insane to me,” Morrow said. “How is it possible that six figures is middle class? If I were making this money while still living in the Pacific Northwest or the Southeast, I think I’d feel wealthy.”

Morrow’s steepest expenses include: 

• Rent: $3,025 plus utilities
• Auto insurance: Nearly double what it was in Washington state
• Health insurance: “Through the roof. My partner is going through the marketplace and paying more than $400/month for the most basic plan since he makes more than $100,000, too.” 

Abigail Grimm, a 36-year-old professional in the entertainment industry, is in a similar situation. Like Morrow, she and her partner are both pulling in six-figure salaries, but they’re struggling with the staggeringly high costs of living in Southern California.  In Grimm’s case, childcare costs also have a significant impact. 

“Having children is so expensive,” Grimm told GOBankingRates. “Preschool costs more than rent in some places.”

Factors Driving Financial Insecurity for Six-Figure Earners 

Though neither Morrow nor Grimm are in dire straits, they do live with a level of insecurity despite making six figures. Steep rent and towering healthcare costs aren’t the only factors contributing to their financial insecurity. These factors also play a role:

• Job uncertainty. “I was laid off in early 2023 and was unemployed for seven months before my current position, which is a temporary contract, likely to end in April,” Morrow said. “So that puts a lot of pressure on things because we can’t plan too far in the future and need to be thinking about putting money away for potential months where I’m not working. And catching up from seven months of unemployment takes time, so I haven’t been able to save as much as I’d like with my current position.” 
• Student loans. “I’m fortunate that I have less than $100,000 worth of loans for a Bachelor’s and a Masters degree, but it’s the eternal albatross hanging around my neck. I make monthly payments, but I do wonder how long it’s going to take me to pay them off,” Morrow said.  
• Childcare. “Preschools [in Los Angeles] range from $1,500 to $2,200 [a month] for a decent or good/safe place to take your kids,” Grimm said. “Formula costs $200 a month. Nannies are super expensive; they deserve a working wage but let’s face it, how many can afford to pay out a salary of $20 to $30 an hour?”
• Pets. “Yes, having pets can add to the financial burden,” Grimm said. “We have a small dog and two cats.”
• The rising costs of food. “Inflation blew my grocery budget out of the water,” Grimm said.

Tips for Those Living Paycheck to Paycheck

Relocate to a More Affordable Area 

Though struggling to live comfortably even on a six-figure salary may not be easy, there are certain moves you can make. For example, you might relocate to a cheaper area – something Grimm and her family are doing this year. 

Steven Crews of Golden Road Reborn suggested considering locations with lower housing costs and lower tax rates, as well as looking into downsizing.  

Budget For Your Pets 

Not only must we be mindful about how we budget money for ourselves and our kids, we also need to be conscious and proactive about saving when it comes to our pets. 

“Buy pet food and supplies in bulk when on sale,” Crew said. “Consider lower cost pets like cats instead of dogs.”

Crews also suggests creating an emergency fund specifically for your pets. 

If Caring for Elderly Parents, Look into Government Assistance Programs 

If you’re a high earner who is carrying the financial weight of caring for an elderly parent, you can possibly stretch your money by applying for government assistance. 

“Research any government elderly assistance programs they may qualify for,” Crews said. “Have them move in with you if it makes financial sense or you can provide care.”

Get A Reliable Used Car 

The cost of car ownership is getting even more expensive. So, you may want to look into saving more aggressively in that department, too. Not only should you use public transportation or walk when possible, but you should also take good care of the car you do have. If you’re car shopping, consider Crews’s recommendation to buy used, reliable vehicles outright, if possible, instead of financing.

Shop for Food with Financial Discipline 

“Meal plan around sales circulars and use coupons,” Crews said. “Cook most meals at home and pack lunches. Buy generic brands instead of name brands. Shop discount grocers.”

Change Your Attitude Toward Money 

Living paycheck to paycheck — even when you’re earning six-figures — can bring on a lot of stress. It’s important to take a step back and figure out if thinking about money in a different light can help you. 

“Not only do you need to change physical habits when cutting back, but it’s important to change mental habits as well,” said Jessica McDonald, founding advisor at Southern Wealth Builders. “Thinking differently about how money is viewed is key to lasting change.

“Is this a rut that you’re in with your job? Is it time for a better job, or time to finish your degree?” McDonald said. “Though that may cost time and money, there are grants, scholarships and tax cuts available when you take the leap to accomplish completing your degree.”

You can also better use your time, perhaps, to minimize spending. 

“Many times, an evaluation of your time is needed as well,” McDonald said. “If you have a goal to spend less on impulse buying, then spend less time on social media. Replace that time with a free activity like walking in the park or checking a book out from the library. Instead of thinking of cutting back as an unreachable task, think of small but consistent ways that will not only save money, but will also improve your well-being.”

Share This Article: