What is considered a ‘good income’ in America? Dave Ramsey explains his answer and tells an Ohio woman that her $36K/year job doesn't pass the test. Does yours? (2024)
What is a “good income”? It’s always been an important question but in the current economy it’s perhaps more pertinent. If prices are rising rapidly, are you earning enough money to support yourself or your family?
Recently, a guest on “The Ramsey Show” raised this question. Kelly, a 23-year-old from Ohio, believes she makes “good” money because she's able to save a reasonable amount every month. However, she was disappointed to hear Dave Ramsey describe her income as “low” in previous episodes with other guests.
Ramsey had a simple clarification — income is relative.
Kelly earns $36,000 a year after taxes from her job at a professional screen printing and embroidery shop. She manages to save $1,100 a month towards a down payment for her eventual home purchase. She worked four jobs when she was studying at ministry school, and that allowed her to avoid any form of debt.
“Good income is not a moral statement,” Ramsey explained. “Good income is relative to the average household income in America, which is $78,000 right now.” Real median household income in the U.S. was $78,250 in 2019 and fell to $74,580 in 2022, according to the Census Bureau. "You're not a bad person. You're not a horrible income earner. You're not lazy. None of those are judgements when we say 'good income,'" he added.
According to the U.S. Bureau of Labor Statistics, the median individual salary for full-time wage and salary workers is $1,145 per week, which is roughly $59,540 a year. By this measure, Kelly’s annual salary is 39.5% lower.
However, Kelly is performing better in other areas of her finances. The U.S. personal savings rate is 3.8%, according to the Bureau of Economic Analysis. This is the percentage of people's incomes left after they pay taxes and spend money. That is just over $2,200 a year in savings on a median income.
By comparison, Kelly is saving significantly more every year. She also has no debt, which puts her in a much better position than the average American who has $21,800 in debt excluding mortgages, according to research by Northwestern Mutual.
Ramsey believes Kelly is clearly in a much stronger financial position than most Americans. “You’re doing a good job, you’re amazing,” he said. Nevertheless, he encouraged her to keep seeking out ways to boost her income further.
Future destination
Her annual income of $36,000 might be adequate to her now, but Kelly is just 23 years old. According to Ramsey, she needs to look ahead and have a plan to boost that income. “What do you want the 33-year-old version of you to look like?” he asked. “Anything that’s not growing is dying.”
Given the fact that Kelly wants to buy a home someday, this is important advice. The average sale price of houses sold in the U.S. surged from $334,400 at the end of 2013 to $492,300 at the end of 2023. That’s 47.2% higher in just 10 years.
Homes are likely to be more expensive by the time Kelly is 33 years old, so she will need to make enough to afford one comfortably.
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“Good income is not a moral statement,” Ramsey explained. “Good income is relative to the average household income in America, which is $78,000 right now.” Real median household income in the U.S. was $78,250 in 2019 and fell to $74,580 in 2022, according to the Census Bureau. "You're not a bad person.
A Smart Asset report based on MIT's Living Wage data found that the average salary required to live comfortably in the U.S. is $68,499 after taxes. This is nearly $10,000 higher than what the average salary currently is.
California's notoriously high cost of living is on display here, with just over $143,000 a year being needed to secure happiness. California's unemployment rate of 4.7% trails only Nevada in the study.
Based on that figure, an annual income of $500,000 or more would make you rich. The Economic Policy Institute uses a different baseline to determine who constitutes the top 1% and the top 5%. For 2021, you're in the top 1% if you earn $819,324 or more each year.
The average salary in Ohio is $72,310 per year or $34.76 per hour. Entry level positions start at $40,663 per year while most experienced workers make up to $131,115 per year.
An analysis of the living wage (as calculated in December 2022 and reflecting a compensation being offered to an individual in 2023), compiling geographically specific expenditure data for food, childcare, health care, housing, transportation, and other necessities, finds that: The living wage in the United States is ...
The median salary for ages 25-34 in the second quarter of 2023 is $54,184 per year. And the median salary for individuals ages 20-24 is $37,024 per year. You may notice that the BLS data shows a bigger jump in salary between these two age brackets than the other age ranges.
What is the highest-paying job within the USA in 2024? Being a Chief Executive Officer is the highest-paying- job in America. This position earns an average annual salary of USD 329,500, but their earnings can go as low as USD 276,500 and as high as USD 396,000.
To be considered in the highest 1% in Ohio, SmartAsset's findings say you have to earn roughly $494,700 while earning close to $214,000 to be in the top 5%. The state with the lowest threshold, according to SmartAsset's findings, was West Virginia, where you need to earn about $374,700 to be in the highest 1%.
Household wealth or net worth is the value of assets owned by every member of the household minus their debt. The terms are used interchangeably in this report. Assets include owned homes, vehicles, financial accounts, retirement accounts, stocks, bonds and mutual funds, and more.
According to the Ramsey Solutions post, the recommendation is to invest 15% of your household income for retirement. The article uses the example of a household income which is $80,000 annually. Based on these earnings, each year you need to invest $12,000 towards your retirement savings.
Do not subtract other amounts that may be withheld or automatically deducted, like health insurance or retirement contributions. Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.
According to the Pew Research Center report, the median 2022 household income for a three-person household is as follows for each income tier: Upper-class household: $256,920, a 78% increase from 1970. Middle-class household: $106,092, a 60% increase from 1970. Lower-class household: $35,318, a 55% increase from 1970.
Over one-third of American families earn $100,000 or more
The U.S. Census Bureau found that 37.1% of U.S. households earned at least $100,000 in 2022. Here's a more detailed breakdown of six-figure income brackets and the percentage of households in each one: $100,000 to $149,999: 16.9%
If you make $75,000 a year, you're earning more than half of all workers in the U.S. And in fact, many people would probably consider the salary as good pay. After all, a $75,000 salary works out to around $6,250 per month, $1,442.31 per week, or $36.06 an hour.
The Pew Research Center defines the middle class as households that earn between two-thirds and double the median U.S. household income, which was $65,000 in 2021, according to the U.S. Census Bureau. Using Pew's yardstick, middle income is made up of people who make between $43,350 and $130,000.
Introduction: My name is Allyn Kozey, I am a outstanding, colorful, adventurous, encouraging, zealous, tender, helpful person who loves writing and wants to share my knowledge and understanding with you.
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