Earning Six Figures but Still Struggling? Here’s What You Need to Do

We’re often told that we’ve reached the pinnacle of success when our income hits six figures, but with everything costing more these days, the struggle is real. Even for those making more than $100,000 per year.

The Bank of America Institute conducted a spending analysis in October, which revealed some startling insights about people’s spending. From this information, the institute could determine if households were living paycheck-to-paycheck.

The results are quite interesting, especially when you look at those making six figures.

What Does It Mean to Live Paycheck-To-Paycheck?

Generally speaking, living paycheck-to-paycheck means you’re always counting on the next paycheck in order to sustain your lifestyle.

Bank of America defined it as a household that spends nearly all of its income with very little—or nothing—left over to put toward saving.

Lower Income Brackets Struggle More

This should come as no surprise to anyone. The fact is lower-income households feel the brunt of inflation the hardest.

Since 2019, the hardship has only grown. In 2019, just over 30% of households making less than $50,000 per year spent more than 95% of their income on necessities. In 2024, that figure has jumped to approximately 35%.

Six-Figure Households Are Not Immune

There’s an inaccurate assumption that people who make more don’t struggle. Oftentimes, they do, but it’s true they likely struggle less.

According to the analysis, the number of households living paycheck-to-paycheck has increased across the board from 2019 to 2024, even in households making six figures. In fact, there was more growth among higher-earning households in general.

Earn $150,000 or More? You’re at Risk, Too

Shockingly, results show 20% of those earning $150,000 or more per year also live paycheck-to-paycheck, proving higher income classes are not immune from this trend.

One of the reasons Bank of America points out for these higher earners is they may have purchased more expensive or larger homes, with larger mortgages, and are feeling the pinches in all aspects of homeownership, including an increase in heating, cooling, and electricity costs.

Breaking It Down Among Generations

The analysis broke down the figures across generations, too. Gen Z is struggling the least, having decreased significantly from 2019 to 2023, but increased slightly in 2024. Baby Boomers saw the biggest increase across the same time period, steadily growing from 2019 to 2024.

Traditionalists (those born 1928 to 1945), saw the next lowest impact, while Millennials and Gen X saw a generation-specific comparable increase.

Location Matters, Too

Some of the increases in living paycheck-to-paycheck are regional, per the study. The South-South Atlantic, which includes the Carolinas, Florida, Georgia, DC, Maryland, and Delaware to name a few, is the hardest hit with approximately 28% households spending 95% or more on necessities.

The West-Pacific, West-Mountain, Northeast-New England, and South-West South Central are all above 25% on average in this respect.

So, What Can Households Do to Lower This Percentage?

If you find that you fall into the group—regardless of income or generation—that lives paycheck-to-paycheck, or close to it, there are specific actions you can take.

Some of these tips may require a bit more diligence and/or a lifestyle change, but the trade-off is living a bit more comfortably with wiggle room in your bank account.

Downsize

Nobody likes to hear this one, because it involves reducing your costs across the board. One of the easiest ways to do that is to move. Either choose a smaller house, one that still fits your family size, of course, or move to a location where costs are lower, in general.

Downsizing can help you save money, especially if you find that with inflation, you’re now living close to or beyond your means.

Get a Second Job or Side Gig

If downsizing isn’t an option, you’ll need to find a way to bring in more money. That could mean taking on a second job or even a side gig, if you want something more flexible.

The good thing is that technology has made it very possible to make money from home. So, if you’re looking for additional avenues to make money, you could do it in your spare time at home. You could even start a small business to help supplement income.

Re-Examine Your Budget

One good way to find holes in your budget is to periodically review it. As our lifestyles change, so do our budgets. This can help you find potential areas where you need to scale back or increase spending.

If you don’t have a budget and you’re living paycheck-to-paycheck, now is the time to create one.

Track Your Spending

One great way to pinpoint where you can dial back is to track all of your spending. You can actually do this in most banking software, by labeling transactions then exporting that information to see where most of your money goes.

If you notice, for example, that you’re spending a significant money on eating out, whether as a family or for lunch each day while you’re working, the obvious solution is to eat at home more.

Source: The Bank of America Institute.