How much are the typical salary expectations today? Have you ever wondered if your annual household gross income is below the minimum required to live a happy, financially stable, and fulfilling life? If you have, then you are not alone. Around 60% of workers identify as underpaid employees and believe that today’s cost of living is far too expensive compared to their salary.
As shocking as it may seem, a household earning 100k annually is now considered to be living below the margin. The US Census Bureau estimates that a family of four can live comfortably with an annual income of around $115,000. This household income is only possible if both parents work full-time jobs with a fair salary or if the main provider is lucky enough to have high-paying jobs. Otherwise, it might be time for a salary negotiation.
1. Salary Expectations Should Exceed Housing Costs
It can be daunting to find ways of increasing your income, but it is necessary to learn how to ask for a raise if you are determined to provide your family with the basic necessities. A family of four can spend $2,900 monthly on rent alone, which adds up to nearly $40,000 per year. The cost of rent in this price range is already considered on the lower end, and families tend to be disappointed with the house they can afford. Even so, with an annual income of less than 100k, rent alone will cost over 40% of expenses, leaving little to no room for other necessities.
It is also important to take into account that housing costs varies depending on the state and location, but there is no denying that the cost of living is rising all over the country. While some skilled workers can opt for career advancement to increase their wages, salary negotiation can also be beneficial, especially if your skills are valuable to a company.
2. Rising Cost of Quality Education
Many working-class Americans are also raising children, which means expenses for education. Although public school is an option the average American family considers, some want to provide the best quality education for their children. With private school tuition ranging from $12,700 to $15,300 annually, a family earning $100k per year will find it difficult to enroll their children in a prestigious private school.
Families also tend to consider the cost of a private university education, which can cost up to $35,000 annually. While a college fund is something parents and children can slowly save up for, this additional cost will also come from the yearly household income. Unfortunately, those earning an average of $100k will find themselves limited regarding educational options. This educational ceiling, which only limits those who cannot afford quality education, leads to a further skills gap between the rich and the average person.
Underpaid employees need to increase their salary expectations to ensure their children have access to the best educational resources possible.
3. Increasing Healthcare Expenses
One of the many pitfalls of living a paycheck-to-paycheck lifestyle is when unexpected expenses hit. As much as Americans are encouraged to set aside 10 to 20% of their monthly income as part of their nest egg or rainy day fund, this is nearly impossible when earning $100k and below. While many can closely follow the 50/30/20 rule where 50% of the household income goes to essentials, 30% for wants, and 20% for savings, many find that 50% is already spent on housing alone. Other necessities are add-ons. By the end of each month, households are lucky if they can save even just 5% of their income.
Unfortunately, when a medical emergency occurs, all the savings and more are completely wiped up. Yes, even if you have insurance. The cost of healthcare in the US is too high, and underpaid employees cannot afford high-quality care. Asking for a fair salary during a salary negotiation can help you avoid future medical debt while protecting your family’s health.
4. A Fair Salary Equals Better Quality of Life
Other considerations to think about when determining that a yearly household income of $100k is no longer enough are other necessities that make life better for everyone. The rising cost of childcare can also take a toll on the family’s monthly budget. It is necessary, especially when both parents work full-time only to earn enough to skate by every month.
Another expense many people with high-paying jobs forget is access to high-quality food. The average working-class family tends to rely on cheap, low-quality fast food, affecting everyone’s health and well-being. Access to fresh produce, meats, and other food that enrich a family’s life has a major impact on both physical and mental health. When a family is well-fed, visits to the hospital become less frequent, resulting in fewer medical expenses in the long run. Earning a fair salary every year has an overall positive impact on a family.
5. Factor in the Cost of Inflation
Finally, the current job market trends and salary expectations have not factored in the cost of inflation and wages. There has been a 2.5% inflation increase compared to the cost of living in August 2023. Although a 2.5% increase does not seem like a lot, that results in a $2,500 decrease in value from the $100k annual earnings. That value is almost enough to pay for one month’s rent. While inflation continues to increase, many employers have not increased the pay according to employee value.
You are correct if you feel like what you were earning a year ago can no longer sustain your needs. With the cost of living continuing to increase but salary expectations and actual annual salaries remaining the same, it is now nearly impossible to continue a sustainable and comfortable life with a yearly household income of $100k for a family of four.
Finding Ways of Increasing Your Income
It is unfortunate, but it is the truth. To qualify as a middle-class American with a thriving family of four, your household needs to earn more than $100k a year. There are several ways to increase your income, but the first step is learning how to ask for a raise. Many employees feel like they are stepping out of bounds to ask their employees for a fair salary. But remember trudging through a job only to be financially unstable is not worth the effort.
You and your family deserve better and more. It is time to learn the art of salary negotiation or even invest some time in learning a new skill to aid in career advancement. Yes, it is possible to get high-paying jobs that will support your family and have extra for savings or even for some fun and additional hobbies.