You want a wage north of $300K in NYC, San Francisco and Honolulu simply to deliver residence $100K — here is why plus 3 simple methods to maintain extra of your paycheck
You need a salary north of $300K in NYC, San Francisco and Honolulu just to bring home $100K — here’s why plus 3 easy ways to keep more of your paycheck
Many people find tax season to be a stressful time of year, but those living in some of the most popular cities in America may find paying taxes to be an even more discouraging experience — even when they’re wealthy.
SmartAsset, a financial research firm, analyzed the impact of taxes and living costs on individuals living in America’s biggest cities. Their research found that an annual salary north of $300,000 in New York City, San Francisco and Honolulu is required just to bring home $100,000 after taxes and cost-of-living adjustments.
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For context, the median American household income is $70,784, according to the U.S. Census Bureau. But SmartAsset’s research shows that a family living in the Big Apple or Silicon Valley would need more than four times that amount to feel like they’re in the “middle class.”
Regardless of income level or location, it’s always a good idea to save money. With that in mind, here are five ways to stretch your paycheck.
Minimize housing costs
Housing expenses can be among the most significant drains on your finances. Making adjustments to these costs can be an effective way to stretch your paycheck further.
If you’re looking to buy a home, it’s important to stay well below your mortgage approval amount to ensure you don’t stretch your finances too thin. Locking in at a good interest rate can also save you money in the long run.
According to a study by Freddie Mac, borrowers who obtain at least five quotes when shopping for a mortgage save an average of $3,000 over the life of the loan.
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It’s important to ensure that your monthly payments are stable and less than one-third of your monthly income. This is known as the 30% rule and is widely recommended by financial experts. By adhering to the rule, you make sure that your housing costs aren’t eating up too much of your budget, leaving you with more money to save or invest.
Put simply: strive to live below your means.
Read more: ‘It makes an enormous difference’: Warren Buffett says this simple ‘trick’ is the key to earning a generous retirement nest egg
Maximize tax-advantaged retirement accounts
Contributing to a 401(k) or IRA can help to reduce your taxable income and thus lower your tax bill. It can also fuel your wealth-building over time.
You should also look to take advantage of employer-sponsored benefits. Many employers offer perks like commuter benefits and flexible spending accounts, which can help to reduce your out-of-pocket expenses and save you money.
If your employer offers health insurance benefits, be sure to take advantage of them so you can reduce your health-care costs and save money on medical expenses.
Hire a professional accountant
If you make a lot of money, it’s a good idea to hire a professional accountant to help with your finances, including filing your taxes, to ensure you don’t make any costly mistakes.
Those of you who have a side gig might want an accountant to help you figure out how to deal with the income tax complications that come with being self-employed.
Even if you don’t make a lot of money, it might still be worth it to hire an accountant. They can help you get the most out of government subsidies and tax credits that you might qualify for. This could save you a lot of money in the long run and bring you peace of mind.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
