This Is the Ideal Budget for a $100,000 Salary

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Earning six figures is the dream. But just because you’re making that much doesn’t mean you’re living large.

Nearly half (48%) of all people earning at least $100,000 a year are living paycheck to paycheck, as per PYMNTS Intelligence data. What this essentially means is that even high earners can still experience financial struggles.

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If you don’t want to worry about your finances, you’ll need to set a budget. As to what that budget should entail, here’s what Cynthia Campos Delgado, financial advisor and founder of Campos Wealth Management, had to say.

Also if you are earning a less, here is the ideal budget for a $50,000 salary.

There are all sorts of budgeting rules out there. But one of the best ones for those living on a $100,000 salary is the 70-10-10-10 rule.

“I am a fan of the 70-10-10-10 guideline,” Delgado said. “Try to live within 70% of your paycheck to cover living expenses. Allocate 10% to savings. The goal is to have emergency or fast cash funds to cover 12 months’ worth of expenses. Then, spend only up to 10% on frivolous spending. Finally, contribute at least 10% to retirement accounts to help fund your future self.”

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Breaking this down further, here’s an example of this budgeting rule in action:

First, 70%: $70,000 should go toward all expenses, like housing payments, utilities, car payments, debts and groceries. Ideally, you’ll also be able to cover taxes, health care and other necessities within this amount.
Second, 10%: $10,000 should go straight into savings or an emergency fund.
Third, 10%: $10,000 goes toward things you want rather than need and should be considered guilt-free spending. It’s your choice how to allocate this, but try to split it across things like dining out, gifts and charitable donations. Some of this money can also go towards helping out your loved ones financially.
Fourth, 10%: The final $10,000 should be invested to help with retirement. If your income increases later or your expenses are low, you can always boost this number to fast-track your retirement savings.

It’s all too easy to overspend or end up financially strapped. In some parts of the country, $100,000 isn’t enough to cover all major expenses, especially not if you can only use $70,000 for necessities.