You’ve never been more likely to make $100,000

Now that I have your attention, think about this: inflation has made $100,000 not worth what it used to be.

In the past, earning a six-figure income was a significant milestone, some sort of marker of financial success.

But with rising costs and inflation, the purchasing power of $100,000 has decreased.

So, setting an arbitrary income goal like "$100,000" might not be the right target anymore.

It’s definitely what I did when I entered the workforce though!

Instead, maybe we need to be thinking about more meaningful and specific financial goals.

The likes of focusing on outputs: practical, everyday financial achievements.

For example, always being able to afford a coffee when you want one, building a weekly investment habit, or being able to cover all of your monthly expenses without stress.

For some people, these tangible goals can be more motivating and relevant to your everyday life.

Because $100,000 isn’t what it used to be and nor is $1,000,000.

That almost feels sad to type out, but you know what I mean.

Inflation, right!

Something else we need to be mindful of is that, when people say to us ‘it’s hard to make $100,000’, we can not take that as an absolute truth.

Because many people do make six figures, so it CAN be done.

And get this...

It is believed that about 16% of working Kiwis now earn $100,000 or more.

That number will continue to increase.

In 2001, that was under 2% of wage and salary earners.

That is a massive increase, right?

But of course, $100,000 today isn’t $100,000 in 2001!

Those walking around in the early 2000’s saying ‘I want to make six figures’ would probably now need to be saying. I want to make $180,000+!

Today, about 2.5% of NZers make $180,000+.

While inflation increases the cost of living, it also tends to push wages higher over time.

This makes it easier to think we are making more in nominal or 'bigger number terms', but our money may be buying less, which drives us to want to be paid more.

This week we learned that inflation is apparently back under control and within the target range of 1-3% for the first time in over 3 whole years!

If this latest inflation bout has taught us anything, it is to regularly review your salary and negotiate raises to keep pace with inflation.

If you’re in business, you need to look at what you’re paying yourself and whether you’re adjusting this for inflation too.

Also, as I have said before, you don’t want to be solely relying on inflation for your pay rise.

Demonstrating your value to your employer/the market and continuously improving your skills can open up higher-paying opportunities.

Yes, more people may be making $100,000, which sounds great, but the % of people who are earning those large incomes which keep pace with historical income targets (i.e. targeting $100k in 2000, which is roughly $180k now) remains about the same small %.

While $100,000 may not stretch as far as it once did, the likelihood of achieving this income level has increased.

So, setting these goals of 'x' figure may not be the right goal for you long-term?

Perhaps it needs to be something more specific for you.

Remember, financial success isn’t just about hitting a specific income number.

It’s about ensuring you can live comfortably, meet your needs, and achieve your personal financial goals. Those are different for each of us.

An income figure is a great goal to start with, but once you get the concept of goals, start going a bit deeper.

Focus on practical outputs that are meaningful to you and keep pushing forward.

Until next week, Keep The Change!

Luke

P.s. You are one of 11,250+ recipients. The KTC podcast had over 75,000 downloads in September. Feel free to share a lesson with someone to help this reach more people. ___________________________________________________________________________

Did you know: inflation compounds. For the quarter 30th Sept 2024, things are 2.2% dearer than they were 12 months ago. Inflation is decreasing, but costs are still increasing. They just aren't increasing as fast as they once were.

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