What It’s Really Like to Live on $50K, $300K and $1M

Wealth is relative. An annual income of $50,000 might be more than enough for a single person living in a mid-sized city. But a family of four in New York City might feel pinched on $500,000 if they live in a penthouse apartment, pay private school tuition and own a second house in the Hamptons. Even a big paycheck might not go far in some parts of the country if you have an over-the-top lifestyle.

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To find out what life is like at various income levels in very different areas, GOBankingRates talked to three people with three very different paychecks. You might be surprised by the similarities and differences in their spending and saving habits.

Click through to find out what it’s like to live on $50,000, $300,000 and $1 million and whether salary alone can make you wealthy.

Last updated: Jan. 15, 2021

What It’s Really Like to Live on 50K

Jamie Hickey, a furniture maker in Philadelphia, Pennsylvania lives on $52,000 per year, with a tiny bit of unreliable side income from several websites he runs. He, his wife and two kids, pay about $1800 for mortgage, spend between $150-$200 per week on food, have a car payment of $500 and pay about $2000 per year on health insurance.

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It’s Enough for a Comfortable Life

Hickey and his family live a comfortable life. They can afford internet and streaming entertainment services, still put a little bit in savings, and take an annual vacation to the beach.

Hickey says one key is how he manages his debts. “I don’t have any debts. Some people wait until their monthly statement comes out, but I pay as soon as I use it. I don’t want to get into the habit of paying hundreds of dollars later.”

Hickey uses his credit card mainly to get the points it awards him.

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There’s Room in the Budget to Save

Hickey has always made it a point to save 10 to 15 percent of all income that he makes.

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“You just have to be careful of what you have, save what you can and understand that there’s a big difference between things you need and things you want.”

He uses an Excel spreadsheet for budgeting, but his expenses and income don’t change much, except for the unforeseen.

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Challenges of Living on $50,000

Before COVID-19, Hickey was doing fine, but the pandemic has put a huge dent in his income and ability to save. His business is largely dependent upon offices, schools and colleges that have been hard hit.

“I’ve scaled back a lot since COVID—if the schools are open, they have less of a budget.”

Now, he’s dipping into his savings, and has even begun to come up with new ways to earn money. In addition to his website, TruismFitness.com, where he reviews supplements and health products, a venture that brings in about $1500 on a good month, he’s now starting a second one, CoffeeSemantics.com to do the same thing for coffee products.

“I hope I can make up for some of the income loss,” he said.

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What It’s Like to Live on $300,000

Danielle Wolter is CFO of Pacific Ship Repair and Fabrication, as well as the owner and President of a franchise called Smash My Trash San Bernardino, California. She lives in San Diego with her partner, who is a construction manager. She also runs several blogs, including the finance blog, The Million Dollar Mama, and a blog to teach people how they can work from home called Leave Your 9-5.

Their mortgage is $3,500 per month. Groceries, $500. Utilities are $500, and other basic bills add up to another $1600 per month.

They live a good, comfortable life, even in San Diego, where expenses are rather high.

“We do enjoy some benefits of a higher income and choose to spend our money on first class airfare, eating out and travel,” Wolter said.

It’s More Than Enough for a Comfortable Life

Their home is spacious and sits on nearly five acres. Wolter says that when they travel, they do so first class. They splurge at nice restaurants when they eat out, and they use what they don’t save or invest to travel (at least, they did before COVID-19, and plan to again). In every other way, she says, they cut costs.

“Though we choose to live somewhat frugally, we have a very comfortable life,” Wolter said. “If we need to make a larger purchase, we are able to with minimal impact to our financial well-being.”

Being comfortable entails having an emergency fund, just in case, but is also about being happy and grateful with everything they have.

“Our life is based much more on experiences than on material items and that helps make us comfortable as well.”

Saving, Paying Down Debt and Giving Is Easier With a High Income

Because of their ability to save and cut costs in the places that matter, Wolter said, she and her partner are able to save $6,000 per month and do not carry credit card debt, student loans, or car loans.

“We work to save at least 50 percent of our income with the goal of retiring early.”

A High Income Makes Life Easier

At their income bracket, and with their ability to save, Wolter and her partner don’t have to worry too much about unexpected or sudden expenses.

They have an emergency fund of about $50K they currently keep in a regular savings account.

They have enough padding to account for emergencies, income loss, or big repairs. “We are more than prepared for any emergency such as loss of income or any disaster,” Wolter said.

Their income translates to a life of fewer anxieties.

What It’s Like to Live on $1 Million

“Living on an annual income of $1 million allows a family of five to enjoy a life everyone dreams of,” says Harvey Bezozi, CPA and financial strategist at YourFinancialWizard.com in Boca Raton, Florida

“Wealthy families earning at this level will typically spend 10% on food, entertainment, clothing, and personal care and another 15% on private schools,” Bezozi said. At $25k per child, putting three kids through school would cost $75,000 a year.

But the expenses don’t end there. Bezozi said that 20% goes towards paying the mortgage, HOA fees and other real estate-related concerns. And the list goes on: 10% is spent on health insurance and out-of-pocket medical/dental expenses, 10% is spent on car leases, car insurance and gas. Around 5% is put towards big ticket items — like boats.

Bezozi also said that people living at this income level generally put 30% towards savings, which includes whole life insurance.

“If structured properly and timely, the accumulated tax-deferred cash value can be used to fund the children’s college educations,” Bezozi said.

Making Big Bucks Requires Long Hours

Making this kind of money, however, requires a sacrifice in terms of time spent at work.

“Whether a corporate executive, doctor, attorney, or real estate developer, making this kind of money generally requires a commitment to long term success including long hours and constant learning to keep ahead of the competition and maintain a leadership position,” Bezozi said.

Taxes Take a Big Bite

Big income also means big taxes. Bezozoi says that millionaires are paying a hefty chunk of their income in taxes.

On a monthly basis, Bezozi explained, a millionaire’s gross income is $83,333 per month and approximately $50,000 after taxes (federal, state, and payroll taxes including FICA/Medicare). That’s more than $30,000 per month in taxes.

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Financial Worries Exist Even With a $1 Million Income

While people at the $1 million mark may have the money to pay for any unexpected expense that arises, they can also get into the habit of spending money too freely and not paying attention to a budget.

“It’s vitally important to be strictly disciplined with saving–pay yourself first–and to be extremely careful of the tendency to overspend,” Bezozi said.

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However, he finds that people at this income level often appreciate what they have. “High net worth families enjoy their beautiful homes and travel experiences, more so than physical possessions, understanding that stuff quickly loses its luster while fun experiences are everlasting.”

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This article originally appeared on GOBankingRates.com: What It’s Really Like to Live on $50K, $300K and $1M