Almost nothing can be done without money these days. Whether you need a roof over your head, clothes to cover your body, or food to keep yourself alive, everything requires money. When you need money for even basic survival needs, it is obvious that you need more money to fulfil your wants and live a comfortable life.
It is very difficult for many people to decide how much money is necessary for them to live comfortably and lead a balanced life. As a result, they fall prey to the so-called ‘trends’. Many people go around being pompous and boasting about how much money they make. You may hear them proudly claiming that they have a 6-figure income. Let us look at what is 6 figures in money.
Read What is 6 Figures ?
Figure here means the number of digits. For e.g., $1000 is a 4-figure number as it has 4 digits. Similarly, $364,788 is a 6-figure number because it contains 6 digits. It is important to note here that digits after the decimal place are not counted while calculating figures. For e.g., $399.17 is a 3-figure number and not a 5-figure number.
When it comes to income, what is 6 figure means an income when your annual earnings are 6 digits. It can be anywhere in the range of $100,00-$999,999. This is a fairly wide range, hence many people prefer to divide it further into 3 ranges:
- Low-Six Figure: It has a range of $100,000-$399,999.
- Mid-Six Figure: It has a range of $400,000-$699,999.
- High-Six Figure: It ranges between $700,000-$999,999.
After understanding in detail what is 6 figures, let us see how to calculate it in different scenarios.
For individuals, this 6-figure income is calculated on the income before taxes. This is a point to be aware of, especially when your earning is somewhere around $100,000.
Suppose you earn $103,500. After taxes, your net income is likely to drop to a 5-figure number. Still, you can claim that you have an income of 6-figures.
In the case of businesses, you will have to consider the profit before tax instead of revenue. So if an entrepreneur says his revenue was $200,000 last year, but his costs were $150,000, then his income will be considered to be only $50,000 which is a 5-figure number.
A key point to note here is that because the range for 6-figure income is so wide, there can be huge differences between two people earning in 6-figures.
How can you Have an Earning What is 6-figures?
On having such a detailed discussion about money, you must be intrigued to know how you can have an income of 6-figures for yourself. Here is the answer to your question.
A common saying among rich people is, “your level of income depends upon the level of value you create in the society”. This does not indicate in any way that one profession is better than the other, but it means how much you give back to society.
There are 3 three categories of income sources that can help you make a 6-figure income. Let us look at them one by one:
- Jobs: There are a lot of jobs where you can make a decent income. These jobs span from conventional jobs like Doctors, Lawyers, to modern jobs like Software Engineers.
- Conventional Jobs: Jobs like Doctor, Mechanical Engineer, Lawyer, Psychiatrist, Accountant, along with conventional businesses like Logistics and Transports, can be termed conventional jobs. These jobs demand a lot of time and effort, and in most cases, a College Degree. But once they start paying, you can sit in the back seat and enjoy a secure income.
- Modern Jobs: These days, many new jobs are emerging such as Web Developer, Digital Marketer, Coder, Modern Life Coach, Analyst, Blogger, YouTuber, etc. These jobs may take some time to prepare for, but they do not require a professional degree in most cases. However, these jobs are not so secure as mostly you work independently.This means the day you stop working, your income will also stop.
- Passive Income: Passive income, to put it into simple words, is when you make money while you sleep. Or in other words, when your money works for you to earn you more money. This may sound amazing to you and honestly, it actually is. This type of income is not new, but these days it is becoming more popular due to its obvious benefits. Examples of passive income include writing a book, writing blogs with affiliate links that are not time-specific, giving property on rent, investing in stocks, etc.
- Passive income along with Job: This is the most common method of making a 6-figure income. The basics of Financial Management say that never depend on a single source of income. So if you stick to either a job or a passive income to help you make money, then it is a riskier and slower idea as well. Most people these days go to their job every day, while they give their property on rent or write blogs or books on weekends, which then gives them a passive income in addition to their salary.
Note: While a number like $1,250.56 might have 6-figures in it, this is not a “6-figure salary.” This example shows numbers in the “cents” category where salary is only referenced in dollars. So in the example here, it’s only 4-figures.
How to Decide If That Is Enough?
The obvious question that arises is what amount of income is enough for you. To answer this question, we will have to look at the factors which affect your expenses, i.e., your needs and wants:
- Place where you live: The place where you live has a huge impact on the level of your daily expenses. Living in a high-class area such as Manhattan or San Francisco means an income of $200,000 will be just enough for survival. At the same time, the same income will be enough for a comfortable life if you live in Cincinnati or Minnesota. Similarly, the cost of living in the centre of a town is much higher than living in the suburbs or a village.
- Family: If you are single and you live alone somewhere in a flat, then probably a couple of thousand dollars will be enough for all your needs. This changes if you are married, have kids and old parents to look after. Thus, the size of your family greatly affects your expenses.
- Standard of living: If you are someone who needs only egg and bread for breakfast, can go to office by bus, and sleep in a small flat, then maybe you don’t even need a six-figure income. However, if you are someone who needs imported vegetables for salad, drives your way to work in a Lexus, and sleeps comfortably in a Villa, then you do need some decent amount of money.
After considering all these factors, you can decide how much and what is 6-figure income is enough for you. The thing to keep in mind is that it is not at all healthy if you want to make more and more money just because someone else is making it. You need to look into your own life, your needs, and then decide the level of income you want for yourself.
Is This the End?
On the ladder of incomes, 6-figure is just a rung. For many people, even earning in high-six figures is not enough to fulfil their dreams and goals. They have aspirations to grow more. Probably they want to make a big difference in the world, for which they need money.
They strive harder and go on to make 7-figure, 8-figure, 9-figure or sometimes even 10 or 11-figure incomes as well. There are certain jobs like CEO, CTO, President of a company, Investment Banker, Consultancy Services, Start-ups, etc. which can pay you unbelievable amounts of money. Of course, these jobs are not easy to get around with. You need to dedicate a lot of time and effort, combined with extraordinary skills, to get one of these jobs.
The Bottom Line
Thus, we have seen what is 6 figures in money. For individuals, the income being discussed here means the income before paying any tax. For businesses, income means gross profit, that is net profit before taxes. There are a lot of methods using which you can make a 6-figure income. These methods include conventional jobs, modern jobs, passive income, or a combination of some of these. Jobs like Doctor, Lawyer, Accountant, etc. are known as conventional jobs. Modern jobs include Web Development, Digital Marketer, Blogger, etc. Your income is said to be passive when you do not have to work all the time for money, i.e., you can make money even when you are not working.
Passive income sources include writing Books and renting properties. There are a number of factors that determine the amount of money you need to make for yourself. If these factors and your personal aspirations command you to make more money, then 6-figure is not the end. There are jobs which will allow you to make as much money as you want.
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