Managing a six-figure income

While earning a six-figure salary feels pretty great, many six-figure earners have shared that they often find themselves on shaky financial ground, rather than enjoying the stability that they assumed high earnings would bring. Here, we’ll explore some factors that might be standing between your salary and stress-free finances, then offer practical tips to help you not just manage but conquer your fiscal situation, ensuring that your earnings work for you, not against you.

Reasons even big earners struggle

Many factors can contribute to salary strain in high earners. Many positions with high salaries are in cities with a high cost of living, often nearly negating any excess in earnings. And regardless of geographic location, the temptation to “live larger” can present as income grows, with bigger homes, nicer cars and clothes, or more frequent travel gobbling up even an attractive salary. The social pressure to match peers and colleagues in these areas can even accelerate unnecessary spending. On the “necessary” side of spending, insurance, childcare, and your child’s education may cost more.

Sometimes inadequate savings to cover surprise expenses, let alone emergencies, can be at the root of financial struggles, and almost always, there’s a mountain of debt stemming from student loans and other education costs.

Ways to stay on track

An attractive salary doesn’t come with directions for managing it, so it’s easy to err. Fortunately, it’s also pretty easy to make some corrections, allocating your paycheck so that you can get out of debt quickly and be on the road to genuinely enjoying that higher paycheck. Here are some suggestions:

Face the numbers head-on. Start by scrutinizing your finances and breaking down your income, expenses, and debts. This clarity is the foundation for your financial game plan. Get familiar with the interest rates and terms of everything you owe, including student loans and credit cards.

Craft a strategic budget. Develop a realistic budget that aligns with your financial goals and focuses on needs over wants. Allocate a portion of your income specifically to debt repayment. This disciplined approach ensures that you’re not just spending but strategically investing in your financial freedom.

Scale back a bit. This may go without saying, but try to live modestly while you’re realigning your budget. Direct the surplus toward debt payoff and savings. For the most part, resist the urge to accumulate more debt, sticking to cash or debit for purchases and avoiding new credit card debt.

Dial in on debt. Craft a repayment plan and allocate a portion toward debt reduction. While it’s essential to manage all debts, prioritize high-interest ones. Channel extra funds toward these debts first, as they can accumulate quickly and hinder your financial progress.

Tackle student loans with precision. Student loans can seem daunting, but they are conquerable. Explore refinancing options to secure lower interest rates. You might investigate employer-sponsored repayment initiatives, be on the lookout for qualifying forgiveness programs, and consider consolidating student loans for streamlined repayment.

Look at other options. If student loans are really all that stands between you and a new home, and you’re working on getting said debt under control, there may be programs that help you move forward in other areas of your life. For example, UBT’s Physician Mortgage Program is designed for professionals who may not have a conventional debt-to-income ratio and gives special consideration to those working in the medical field, offering a lower down payment option not available in conventional mortgage lending.

Fund your financial safety net. Building a robust emergency fund is crucial, as unexpected expenses can derail your financial plans. A well-funded safety net acts as a cushion, preventing you from accumulating additional debt during unforeseen circumstances.

Side hustle for additional income streams. Consider leveraging your skills or passions for additional income streams. Whether it’s freelancing, consulting, or a side business, diversifying your income provides extra ammunition in your battle against debt, meaning the lifestyle you dream of will be within reach sooner.

Utilize windfalls wisely. if you receive bonuses, gifts, or other windfalls, consider allocating a significant portion toward debt reduction to accelerate the payoff process.

Maximize employer benefits. Take advantage of employer-sponsored retirement plans, especially if they match contributions. It's a way to save for the future while also reducing taxable income.

Invest strategically for long-term gains. If employer benefits are not an option, explore strategic investments* that align with your financial goals, keeping in mind that any debt and savings need to be priorities. This is a good time to loop in a financial planner, as investing wisely can accelerate your journey to financial freedom. If you have a relationship banker or private banker, such as in UBT’s Private Banking department, they can connect you with all the professionals necessary to get you on track.

Celebrate milestones. Recognize and celebrate your achievements along the way. Paying off a credit card or reaching a savings goal can be motivating and reinforce positive financial habits.

Six figures, one goal

Mastering a six-figure income is about discipline, balance, and financial intelligence, so we know you’re more than qualified. By facing your financial reality, crafting a budget, strategically managing student loans, and investing wisely, you’re not just managing your income, but paving the way for a financially empowered future. 

We want you to know that you have people in your corner. Debt or not, high-earning professionals are busy folks, and we have just the financial pros to help connect all the dots. UBT’s Private Banking team serves as a single point of contact for all your banking needs, including the special circumstances a higher income presents. Let us know if you’d like a qualified banker to contact you.