How to Make Six Figures Even Bigger (Or, Avoid What I Did)


I don’t know how I made it home that night. My legs were moving, but I was flying.

The meeting was hours old but still fresh in mind as I made my way (however it happened) across 57th Street. “Here,” he had said, teetering forward, sliding the paper across the desk, then rocking back to recline, hands stretching behind his head, Gucci loafers plopping on the table. “Make of it what you will.”

The white paper glows like a stage-light shining a hot spot on the numbers. Numbers may not convey emotion, but they sure made me feel something.*

Six figures. I never thought I’d make that much.


The next day, I took a long lunch stroll over to Saks and bought a $200 Hilditch & Key shirt. Soon after, sea island cotton Turnbull & Asser shirts and silk Hermes ties lined my closet. With how I spent, it’s no mystery why I had less than $5,000 in the bank after that year.

Cold Splash

I didn’t invent the high income, low savings strategy. In fact, I’m in good company. Bloomberg writes that “close to half of those who earn from $100,000 to $149,999 have less than $1,000 in their savings accounts.”

An income of $100,000 places you in the top 20% of households according to the Census Bureau, yet almost half of high income earners negate this advantage. Here’s something to consider: An income of $100,000 that produces $1,000 in savings is no different from an income of $10,000 that produces $1,000 in savings.

This math should be no surprise to anyone. The interesting thing is why we don’t save more despite more income. I believe it’s because of expectations. We imagine what lifestyle a six figure salary should be: a 3,500 sq ft home in a ritzy suburb, a Lexus SUV and BMW sedan, exotic vacations, and brand-name everything. Expectations aren’t accountants, though —a $100,000 income can’t afford that lifestyle.

If you’re part of the half of those making six figures but with less than $1,000 in savings, you’ve shrunk your income by at least 99%. Here are some tips to make it grow.

4 Tips for Making Six Figures Even Bigger

1. Wag the Dog.

 For those making less than $75,000, income should dictate your spending decisions since this is generally the income where you begin meeting your basic needs with a little leftover for savings and travel. However if you make six figures, spending need should dictate your decisions rather than income. With few exceptions (namely, those living in New York and San Francisco), a six figure income means that you can more than cover your basic needs.

Here’s what I mean. You have fixed costs and variable costs. Your housing, car, and insurance costs are relatively fixed, which means they’re harder to change month-to-month. On the other hand, your food and clothing costs are relatively variable, which means they’re easier to change month-to-month. When you were making $35,000 a year, it makes sense that you made spending decisions based on your income, because most of what you made went toward fixed costs. When you make $100,000 a year, fixed costs should drop as a percentage of income.

However, once you pass the $75,000 threshold, if you hold onto the paradigm of spending based on income, you’ll have something called “lifestyle creep where you spend more on luxuries as you make more, but these luxuries start to feel like necessities that are hard to give up.** As a result, neither your fixed costs nor your variable costs ever drop. But at six figures, if you make your decisions based on your spending, then spending controls will lead to savings.

This is an important habit to keep since high income jobs tend to be volatile. You don’t know when you’ll have a low-bonus year or be laid off.

Take action: First, make that budget. Second, organize your budget by variable and fixed costs.

(Don’t know how to make an effective budget? Start here for a simple budget, and here for a more advanced budget. Contact us if you want a free excel budget!)

Lifestyle Creep Saver
Annual Gross Income $35,000 $100,000 $100,000
Income (take home pay) $26,600 $64,000 $64,000
Variable Costs:
Credit Cards $2,400 $12,000 $4,000
Groceries $4,200 $5,000 $4,600
Eating Out $600 $1,500 $1,200
Household Items $150 $500 $400
Clothes $300 $2,000 $500
Other $150 $500 $300
Total Variable Costs $7,800 $21,500 $11,000
Variable Cost / After Tax Income 29.3% 33.6% 17.2%
Fixed Costs:
Mortgage/Rent (incl. taxes/ins) $14,400 $26,500 $21,600
Car (finance/insurance) $2,400 $9,000 $2,400
Utilities $1,000 $6,000 $4,000
Total Fixed Costs $17,800 $41,500 $28,000
Fixed Costs / After Tax Income 66.9% 64.8% 43.8%
Annual Cash Flow $1,000 $1,000 $2,500

If you’re a lifestyle creep, your savings don’t change much due to your spending increase. With $35,000/yr and $100,000/yr lifestyle creep, variable costs were 29.3% and 33.6% of income, respectively, while fixed costs were ~66.9% and 64.8%, respectively. In general, as income improves, your fixed costs should decrease as a % of income. This makes you more able to withstand a low-bonus year or worse. The fancy term for this is “operating leverage.”

2. Shhh! 

Not only do you have expectations of what a six figure lifestyle looks like, but your friends do as well. In your exuberance, it’s normal to want to share or drop hints about your newfound entrance into Club 6 Figs. Tread carefully. Money changes things. And in a relationship where money hasn’t been discussed before on a personal level, the dialogue itself creates something that previously didn’t exist. You’ve now made it a thing.  

That thing can be happiness, jealousy, or expectations, not a great ratio of outcomes (‘Cuz two out of three ain’t good!). But if you abide by stealth wealth, you lessen the pressure of trying to spend up to a certain lifestyle. When expectations arise because of your mouth, crease those lips. Expectations will vanish. Money talks, but wealth is quiet.  

3. With Mustard, Please. 

Is that cheese whiz or mustard on that dog? From 15 feet away, it’s hard to tell. They’re both yellow, goopy, and delicious, but oh so different. Walk closer and it becomes clearer; smell it and it’s obvious; taste it and the differences are unmistakable. In the same way, high income and wealth seem like twins but are really only distant relatives. If you make six figures, you’re wealthy in many ways, but money is not one of them (yet). To achieve wealth, you’ll need to generate savings so that you can invest. Like many things in personal finance, it’s easy to grasp but hard to execute. So how do you do it? With more mustard analogies, of course:

Have you ever rolled a mustard seed between your fingers? They’re round and about a millimeter in diameter—small, even as seeds go. Plant it, continually water it, and it can grow up to 20 feet tall, 6096 times its original size. Then this plant itself will bear many thousands of seeds.

You look at your savings now and see a tiny seed. There’s a forest inside. Just continually add water by investing your savings every chance you get, and growth will crack from its shell. Don’t see what is, but what could be.

4. Just Add Water. Consistently.

Just like an actual plant, consistent watering matters. In general, it’s better for you to invest monthly than stowing your money away to invest at the end of the year. Here’s why:

  • When you have money burning a hole in your pocket, your will-power has to be herculean to miss out on the latest iSomething so you don’t deplete the savings you intend to invest.
  • You’re missing out on important gains. Here’s how: over the last 88 years, the S&P 500 (and its prior incarnation, called the “Composite Index”) has only ended down 24 times versus its prior year, or 27.3%. That span includes both the Great Depression and recent Great Recession. So, if you go by history—which isn’t predictive, but is indicative—that means that 3 times out of 4, it’s better for you to invest throughout the year rather than wait for the end of the year.
S&P*** Zuzzy Zack Difference
Jan 2.66% $1,027
Feb -0.11% $2,024
Mar 0.71% $3,046
Apr 0.82% $4,079
May -0.60% $5,049
Jun -0.25% $6,034
Jul -2.59% $6,852
Aug -3.24% $7,597
Sept 4.13% $8,953
Oct 2.76% $10,227
Nov 0.28% $11,258
Dec 2.47% $12,561 $12,296 $265

Zack and Zuzzy’s Gains, No Longer Fuzzy

Both Zuzzy and Zack invest $12,000 in the year. But because Zuzzy invested throughout the year, she bested Zack, who only invested in December, despite Zack catching the market in a good month when the S&P gained 2.5%. The $265 difference is 2.2% (of $12,000) better, which would create an enormous difference in wealth if it persists for decades.

Take action: If available, invest in your employer’s 401k plan, especially if there is a company match. At minimum, invest in an amount to receive the full match, and more if possible. Your first dollars you invest should be in a 401k because, 1) it defers your ability to touch your savings, forcing you to let it compound its growth, and 2) there is oftentimes a company match to boost your returns. When there is free money, take it! Plus, 3) your investments are tax deferred, and the best thing you can do to maximize your wealth is to minimize your taxes.

Have it automatically taken out of your pay check and invested in your 401k. Set it and forget it.

You are not your money, but money is a manifestation of your work. And you worked hard for that six figure income. Make of it what you will. But what you make of it can either grow into a forest or wither in a desert of expectations.

*What does it feel like the first time you make six figures? It’s like 100 mini-Dean Moriartys parking cars in your body (excerpt from On the Road, by Jack Kerouac):

The most fantastic parking-lot attendant in the world, he can back a car forty miles an hour into a tight squeeze and stop at the wall, jump out, race among fenders, leap into another car, circle it fifty miles an hour in a narrow space, back swiftly into tight spot, hump, snap the car with the emergency so that you see it bounce as he flies out; then clear to the ticket shack, sprinting like a track star, hand a ticket, leap into a newly arrived car before the owner’s half out, leap literally under him as he steps out, start the car with the door flapping, and roar off to the next available spot, arc, pop in, brake, out, run; working like that without pause eight hours a night, evening rush hours and after-theater rush hours, in greasy wino pants with a frayed fur-lined jacket and beat shoes that flap.

**During a conversation this summer with my neighbor, he mentioned that it was time to trade in his still new-ish BMW. After renting a Chevy on a recent trip, he discovered that he really liked the car and was going to buy one. I just saw him driving his new BMW. Lifestyle creep.

***Hypothetical S&P 500 returns to capture monthly volatility. This scenario was created to give a 7% increase, consistent with historical annual returns.

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  • Tfell October 18, 2016 at 4:06 am

    BMWs are sweet though…

  • amileinmyshoes October 18, 2016 at 6:33 pm

    It’s true, you shouldn’t talk money with your friends – for the reasons you stated. I’ve missed your posts!

    • justmakingcentscom October 19, 2016 at 2:11 pm

      Thank you! I hope you enjoyed your holiday! I’m on mine right now, but the wifi connection is spotty here in Santorini. Looking forward to reading more of your post-holiday posts.

      • amileinmyshoes October 19, 2016 at 2:22 pm

        Santorini – how lovely. Have a great time!

  • jsant1214 October 19, 2016 at 1:16 pm

    I enjoy reading your posts. I agree with you, it’s tempting to become a lifestyle addict. A few years back when I received a promotion I leased a Lexus and starting eating out at more expensive restaurants, “living the life” as many will say. Great comparison between money & wealth. It’s crazy how easily we can burn through money if we aren’t cautious. Thanks for sharing 🙂

    • jsant1214 October 19, 2016 at 1:19 pm

      Sorry – didn’t finish my point with the Lexus. LOL Rather than building wealth, having money for a rainy day, and creating an emergency cushion I preferred to spend it. I was more concerned with status quo than have I could prepare myself for the future. You’re posts are tapping into my brain and making sure I stay on the right path & stop repeating past mistakes. 🙂

      • justmakingcentscom October 19, 2016 at 2:15 pm

        Thank you! Isn’t it so amazing that one of the first things we do when we get some income is to get a luxury car? It’s a traveling marketing piece that says, “I’ve made it.”

        We have a used Honda Pilot that is pretty much only utilized to shuttle our kids to and fro their activities. We put less than 7k miles on it a year. It’s an expensive, underutilized thing. I’m always thinking about how to get rid of it!

        • jsant1214 October 19, 2016 at 2:24 pm

          Yes, it’s how we show the world that “we’ve made it.” Yea right, it really says “I’ve made it so that my income flushes right back out of my bank account to pay my debts.” No thanks!! My phone screen just shattered (iPhone 6) and I’m comparing the options of having the screen replaced instead of the typical “I’ll upgrade to a knew one” mentality. It’s the small things that shape our way of thinking and make a difference in the long run. Best wishes on your Honda Pilot brainstorming. 🙂

  • stylelullaby October 19, 2016 at 8:32 pm

    Great tips! Thank you for this informative piece. It’s useful for someone going the freelance route and trying to sustain a full-time living out of it long term 🙂 xo, sharon

    • justmakingcentscom October 20, 2016 at 5:13 pm

      Thanks for visiting, fellow dreamer! Hope to be part of your “like-minded” circle that helps lift you up and encourage you when the hustling gets hard!

  • forward motion. – just making cents October 24, 2016 at 3:24 pm

    […] finance to your kids (or yourself), before you can change your lifestyle to get out of debt or change your budget to up your savings,  before you can pull a Katie Ledecky on whatever the 1500m freestyle race of […]

  • John R July 22, 2017 at 2:58 pm

    I enjoyed reading this “money talks, wealth is quiet”

    An old saying from world war II “loose lips sinks ships”

    On the $100,000 ‘white sheet’, nice bonus, yet no stock options, well that sucks.

    On the neighbour with the BMW, I’ve come across many ‘lifestyle creeps’ & they do my head in. I figured a way to make them feel small during such a ‘show off’ with a ‘nice, really nice vehicle, it must be expensive’?

    Human nature what it is, the person will say yeah, I managed to negotiate this, that & the other, got myself free upgrades, extra warranty, free service etc… you get the picture.

    Me – so tell me, ‘how much was it’

    The response is always, well ‘it was $70k, but I managed to get it for $65k.

    Me, huge chuckle – when someone is a ‘lifestyle creep’ they are generally up to their neck in debt, a forever revolving debt.

    The response from the neighbour should have been ‘ I have no idea what the final price was, I just paid it’

    Same as someone that goes on & on about the business class ticket they got a deal on or that vacation package, right down to telling everyone about their splurge on that $200 shirt, then the tie all to try to impress the Gucci image boss or the rest of the crew that finally figured it out that someone got a bigger bonus, paycheck or promotion than they.

    Is a six figure income important?

    Do people live within that six figure paycheck or within their means, obviously not – no they just up the limit from when their income was half that, probably many folks like being ‘lifestyle creeps’

    On investments, the S&P 500 etf SPY since 2007 to July 2017 its the growth of initial $10,000 with dividend reinvestment is now $19,675.16.

    Is that good enough?

    BTW, there is no such thing as “free money”

    • JT July 22, 2017 at 9:18 pm

      A high income, and what it all entails is such an interesting thing, isn’t it? We Dream of it, but for many of us, it didn’t really make us feel better / get ahead. Now, big income with frugality? That’s powerful stuff!


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