Rachel Cruze: Is $186K Enough Money To Make You Financially Secure?

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In a recent YouTube video, Rachel Cruze stated that the average American believes they need to earn $186,000 a year to feel financially secure. This is more than double the average income of $79,209, as per U.S. Census Bureau data.

But why do Americans feel this way and what can they do to ensure they live comfortably? Here’s why Rachel Cruze believes Americans want more than a $180,000 salary to feel financially secure.

Why Do Americans Feel They Need To Earn $186K a Year?

According to Cruze, these are the main reasons why the typical American feels they need to make well into six figures just to feel financially secure.

• Costs are at an all-time high. Life has become significantly more expensive over the years. Whether it’s for food, gas, groceries, or going out to eat, the dollar doesn’t go nearly as far as it once did.
• Childcare is expensive. Parents are spending much more on childcare, too. The Census Bureau estimates that people spent between 8% and 19.3% of their median household income per child back in 2022. Prices are only increasing.
• Housing costs are way up. The average apartment rental goes for $1,739 in the U.S., according to RentCafe. With high interest rates, insurance, and taxes, mortgages are also through the roof.
• The debt load is high. Americans, said Cruze, don’t always make the best decisions with their money. According to her, 77% of Americans have some form of debt with an average debt load of $67,000.
• Lifestyle creep is a real thing. Expectations are high and many people want nicer — more expensive — things.

According to Cruze, many Americans feel it’s hard to get ahead and blame outside forces — like the economy. Some things are beyond individual control, but not everything.

5 Ways To Feel More Financially Secure

There’s no “magic number” that will make someone feel financially secure, said Rachel Cruze. But there are steps you can take to get back to a point of feeling in control. These are the main ones.

Consider Your Housing Situation

Many people end up being “house-poor,” meaning they spend too much on their housing expenses, often to the point of not having enough for other costs. According to Cruze, many people she’s spoken to say they spend between 45% and 50% of their income on housing (including a mortgage).

If half of your income is going toward housing costs, you’re “house-poor.” Cruze suggested dedicating no more than 25% of your income toward housing expenses. If that’s not feasible where you are right now, you may want to downsize or move. It’s not always easy, but it can be worth it in the long run.

Change Careers

Cruze also suggested looking at your current career and making a change if you’re not getting paid enough based on your qualifications. This might mean looking for a new job or company, one that offers the opportunity for growth. Or it might mean choosing a completely new career path. In either case, consider your options carefully before making any major changes.

Pay Off Your Debts

As Cruze put it, “Ditch your debt.”

The average new car payment is around $700 a month, according to LendingTree. For used cars, the typical payment is $525 a month. That’s a difference of thousands of dollars a year. This combined with other types of debts, like student loans, mortgages, personal loans, and credit cards can make it hard — if not impossible — to feel financially secure.

That’s why she suggested stepping back and making a budget to pay off your debts. Again, this might not be easy or instantaneous. But it can help.

Build an Emergency Fund

Chances are you already know how important it is to have some money set aside for unplanned expenses. But if you don’t have that money, it’s hard to feel secure.

Cruze suggested starting with a smaller fund if you don’t already have one. This could be $1,000 in a separate account that’s dedicated to those small, unexpected bills that come up — like a flat tire or sudden trip to the dentist.

Once you’ve got $1,000 and have paid off your debts, start allocating more of your income toward your emergency fund. You should ideally have three to six months’ worth of expenses set aside just in case.

Doing this “just gives you some breathing room that really is the cushion between you and life,” Cruze said.

Make a Personal Budget

Cruze’s final suggestion is to get on a household budget. This can give you a much clearer picture of how much you’re earning vs. how much you’re spending. It will also highlight the areas that you could potentially cut back.

If possible, make a budget on a monthly basis. Even though fixed expenses — like rent or a student loan payment — might not change, there are always variable ones that do. Plus, you might earn more or less in a given month. Or something unexpected might come up that you don’t normally pay for. Change your budget accordingly to keep on top of your finances.

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