When you are on a salary it could be argued that more is always better. However, this isn’t always realistic. It’s also good to be able to set goals. In most cases, 180k is a very clear goal for most people in their careers, but it’s a salary level that’s only achieved by very few.
The question we will answer here is whether 180k is enough for most people to live the life they want to, and under which situations it would be problematic. We’ll also look at ways that you can maximize your take-home pay if you do happen to be earning 180k per year.
Is 180K a good household income?
This question could have many different answers depending on how you approach it. In the Us, the median household income is $67,521. Based on this, 180K is clearly very good.
Having said that, comparing the median household income isn’t necessarily the best measure. What we want to do is work out whether 180k would lead to YOU having a good life.
To answer this question things get a little more complicated. In order to do this, we would need to look at where you are living, what your monthly expenses are, how many members are in your household, and whether you have any debts or savings. As I’m sure you will understand, each of these items will have a significant impact on how much of your 180k salary you are left with at the end of the month.
If you have a few children and live in a relatively costly location, the median household income should actually be considered the minimum household income you should be aiming for. If we consider that the median household income in the US is currently $67,521, an annual household income of 180k clearly puts you well above the average.
If you are concerned with which bracket of ‘class’ a gross income of 180k would put you in, to many it would be considered upper middle class.
What is 180K per year as a monthly salary?
A basic calculation will tell you that an annual gross income of 180k equates to exactly $15,000 per month. However, this is before tax which, at this salary level, is considerably more than the median household income.
What is 180K a year as an hourly rate?
As an hourly rate, assuming a normal full-time working schedule, a 180k salary works out at around $92 per hour before tax.
How much tax will I pay on a 180k salary?
This is the first crucial calculation to make to determine how well off you will be on your 180k salary.
On your total $180,000 salary you should expect to pay around 31.9% in tax and other deductions. This means that from your $15,000 per month you should expect to take home just over $10k ($10,222).
This tax is divided between a list of different deductions. These include:
- FLI (Family Leave Insurance)
- SDI (State Disability Insurance)
- Medicare
- Social Security
- State Income Tax
- Federal Income Tax
what’s more, because this salary puts you in the higher tax brackets, it also means that any income you might earn from other sources or side hustles is likely to be taxed at this higher rate.
What jobs are likely to pay me 180K?
As you might expect, 180k jobs require both considerable specialist skill and experience. In most cases, you will need to have a career-specific career and 10+ years of experience in that field. These are unlikely to be jobs you can apply for straight after university and are jobs that will have significant competition associated with them.
How should I budget for a 180k salary?
Though 180k seems like a lot of money, it will quickly get eaten away if you aren’t careful with your living expenses.
There are two main factors that are likely to impact how much disposable income you have at the end of the month.
Family
Children cost money. Whether it’s school fees, clothes, or just feeding them, the more children you have, the more of your income will go on paying for them. There are also lots of secondary costs associated with having children. Housing is the biggest of these. Though it’s not a direct cost, moving into a larger house with a large garden for the children to play in is likely to increase your mortgage or rent considerably.
Location
The other factor that will severely impact how much you have in your bank account at the end of the month is where you choose to live.
If you decide to live in NYC, even if you don’t have any dependents, you are unlikely to have much left each month. Property, transport, food, and almost every other living expense costs significantly more in some cities in the US than most. Conversely, if you are able to earn 180k while living more rurally, you are likely to have a considerable level of disposable income each month.
Both these factors are likely to dictate what your monthly costs are. To effectively budget, so that you make the most of your salary, you should start by taking an average of the last 6 months.
This should highlight whether you are just making ends meet, or if you have a considerable surplus (or perhaps somewhere in between).
If it is the former, you should look at these expenses in greater detail. Any costs you can shave off are likely to have a significant impact on your monthly disposable income. Think of it like this: if you are currently spending $9,500 of your $10,222 monthly salary, that will only leave you with $722 per month in disposable income. Let’s also say that last month you spend $350 on subscriptions that you didn’t use (e.g. Netflix, Gym, etc.). If you were to just cancel them, you would have increased your disposable income by over 50%!
However, if it’s the latter, and you already have a surplus, you then need to look at how to manage that in the best way possible. At the 180k salary level, it’s likely that you will need to work hard. If that’s the case, retirement, and perhaps early retirement, are probably appealing. If you have a monthly surplus and are willing to make financial commitments to your future, you could take huge steps towards early retirement by investing that surplus in a sensible way.
Investing and Pensions
Investing in the right ways can have a dramatic impact on your financial future. Though it depends on so many factors, a relatively small amount of investment when you are earlier on in your career can add up to a significant investment portfolio or pension pot when you reach retirement age.
If you find yourself in the enviable position of having a 180k salary and personal financial circ*mstances (low living costs) which mean you have a significant amount of money left each month, you should strongly consider how you should invest that money.
Of course, you could go on more holidays, live in a nicer house and drive a sports car. However, will those things positively impact your life in the same way that retiring 10 or 15 years early would?
In terms of actually starting to invest in your future, how you do this, exactly, will depend on your own personal circ*mstances. For example, does your employer already pay into a pension for you? Do you have any knowledge of the financial markets and investment vehicles? Do you need your cash to be readily available?
The most common and likely scenario is that, on a 180k salary, your employer is likely to already be investing into a pension on your behalf. The first question to ask them is whether they would increase their contributions if you were to do the same. If the answer to this is ‘yes’, you should then find out the details of this, including how the pension fund they use has performed to date.
If you have some financial knowledge or are willing to learn, it’s likely that establishing a second, self-managed pension would be the most beneficial route for you. On average, company pension providers will deliver an average of 4-7% per month. Self-managed pensions will give you the option to improve on this by doing your own research and taking good financial advice. Please do be aware though, that investments in the stock market can go down in value just as easily as up. Nothing is guaranteed and, even with the best advice, you could still end up losing money.
How to achieve 180K per year
Most people work their whole careers to earn six figures. A 180k salary puts you firmly in that bracket with a median income that’s nearly three times the national US average. If you were going to set yourself a salary goal, then this is a really good one to aim for.
So, how could you go about it?
As we discussed previously, most of the jobs that will pay this sort of salary will require very specialized training, skills, and experience. Unless you are currently in college studying for a degree in an in-demand sector, upskilling to the point where you can command this level of salary might not be realistic in the next year or two. However, there are some other ways you can achieve this level of income.
Start a Side Hustle
Let’s say you are currently earning 90k per year. That’s a great salary, but it would definitely not give you the financial freedom that 180k would.
Side hustles are becoming more popular than ever. In your spare time, the right side hustle could mean that you are earning as much as your ‘day job’ in your spare time. The combination of the two might then mean you are reaching the magic number of 180k.
Work a Second Job
This is definitely not the preferred option, but it is an option. If your primary job brings in $150k for example, it might be feasible for you to get a second job that you either work at the weekends, or during the evenings. This option has a huge risk of negatively impacting your personal life and health. However, if the magic number of 180k is important to you, this could help get you there.
Start a Business
Though getting someone else to pay you a salary of 180k might be tricky without the right qualifications and experience, that doesn’t mean you aren’t worth it. The simplest solution to this is by giving yourself a job by starting a business. It’s not by chance that all of the richest people in the world are business owners. Starting and growing your own successful business is the quickest and most effective way to multiply your salary. It’s a risk, but if you have a good idea and are willing to work hard, you stand a good chance of making it work.
Is 180k a Good Salary – Conclusion
As we said at the start of this article, this is a rather subjective question. However, having said that, at almost three times the median household income level it would be difficult to argue that 180k was NOT a good salary. In all likelihood, a 180k salary will mean that you will be able to live a very comfortable life in most places in the US, even if you have a family to support. In most cases, you will also have money to spare to invest heavily into your future and have options such as early retirement open to you.
We also looked at a number of ways you could achieve this magic salary level even if you don’t have a specific and valuable degree. We are all very lucky in that, in the US specifically, with the right idea, work ethic, and personal circ*mstances, we’re able to create wealth ourselves rather than wait for that long-awaited promotion.
