How Much is 6 Figures? 7, 8, and 9 Figure Income Explained
You may have heard someone say, “She earns a 6-figure salary,“ or “He is worth 9 figures,” but what, exactly, is a “figure”? A figure is simply one of the digits in a whole number, fractional values not included. Thus, 281,225 has 6 figures, but 2,812.25 does not since .25 represents a fractional amount, and fractions don’t count. Therefore, 2,812.25 has only 4 figures. Any number between 100,000 and 999,999, inclusive, has 6 figures. Numbers between 1,000,000 and 9,999,999, inclusive, have 7 figures. Those between 10,000,000, and 99,999,999 consist of 8 figures, and numbers from 100,000,000 to 999,999,999 have 9 figures. So, someone earning $281,225 a year is said to be earning 6 figures a year.
How Good is a 6-Figure Income?
Six figures sounds like a lot to many of us, and it can be. But how good it truly is depends on your circumstances, such as the size of your family and where you live. For example, a 6-figure salary is not uncommon for many who work on Wall Street, but the average monthly expenses for a family of four living in the New York City area average $4,835, not including housing costs. Tack on another $5,177, which is the average monthly rent for a “normal” house in the area, and you’re up to $10, 012 in monthly expenses, for a grand total of $120,144 a year. If you want to live in Manhattan, your expenses will be even higher.
The good news is that there are a number of jobs you can get that pay 6 figures and don’t require you to live in the New York City area, or in any other area with such a high cost of living. Some require a college education, but others do not. I provide some examples below:
6-figure jobs—no college degree required
- Air Traffic Controller: Air traffic controllers earn an average of $101,000 a year, bonuses included. This amount varies by location, certifications, and experience, among other things. The job can be stressful since it entails ensuring flights depart and arrive safely and that in-flight collisions are avoided.
- Oil Rig Worker: There are numerous types of oil rig jobs available, many of them paying substantially higher than what a similar job pays on land. For example, an oil rig welder can make between $78,000 and $132,000 a year. And the average salary of an underwater welder is $200,000 a year.
- Owner-Operator Truck Driver: According to a survey of over 160,000 owner-operator truck drivers, the average salary is $220,000. However, that is the gross amount and doesn’t include the expenses involved, such as the cost of the vehicle, maintenance and insurance. Nevertheless, their average net is over $100,000 a year, substantially more than an over-the-road driver who works for a company earns.
- Real Estate Broker: A real estate broker’s earnings depend a lot on location, and the income is irregular, so you have to have good money management skills to make it through market downturns. Nevertheless, you can make well over $100,000 a year in this field.
6-figure jobs—college degree required
- Electrical Engineer: Electrical engineers design, develop, and test electrical equipment and components, earning a median annual salary of $106,760. A bachelor’s degree in electrical engineering is required.
- Human Resource Manager: Human resource managers are responsible for recruiting hiring, and training employees, compensation and benefits, employee relations, and other personnel issues. This position requires a bachelor’s degree, and the average annual salary is $105,000 a year. As with most jobs, the salary varies with the location and the specific employer.
- Investment Banker: Investment bankers assist corporations and government entities in raising funds. They facilitate IPOs (Initial Public Offerings) for firms that are selling their shares to the public for the first time and advise firms on mergers and acquisitions and other matters. This is a high-stress job that sometimes requires you to put in 80 to 100 hours a week. However, the compensation is high. The national average base salary is $86,643, but the annual bonus typically ranges from 30 to 100% of the base salary, which pushes your annual compensation well above $100,000. Salaries vary by location and experience. At a minimum, a bachelor’s degree with coursework in economics, accounting, and finance is required.
- Personal Financial Advisor: The average compensation of a personal financial advisor in the U.S. is about $124,000. A bachelor’s degree is necessary, and while no specific major is required, a degree in finance or accounting is helpful.
- Nurse Anesthetist: One of the highest paying nursing jobs is that of a nurse anesthetist, at an average annual salary of $181,040. Nurse anesthetists are responsible for the safe and effective administration of anesthetics to patients. A bachelor’s degree in a related field and a master’s degree in a nurse anesthesia education program are among the minimum requirements for this position.
A 7-Figure Income
Someone who earns 7 figures has an annual salary of $1,000,000 to $9,999,999. These salaries are typically commanded by those who have a special skill, talent, or insight. Surgeons, professional sport athletes, and actors are among those with special skills and talents. Some in the tech industry also earn salaries in the millions of dollars, and most are those who happen to have exceptional insight into what future tech consumers will want and develop the software and/or hardware necessary to bring it to them. Some top financial advisors who advise the elite on asset management, leading Wall Street credit analysts, and chief financial officers (CFOs) of large companies also earn 7 figures a year.
An 8-Figure Income
An 8-figure income, which refers to annual earnings in the range of $10,000,000 to $99,999,999, is generally associated with the most popular actors, musicians, and professional athletes although some CEOS are deemed worthy of this amount of compensation, such as Robert Swan, CEO of Intel, whose 2019 compensation was $99,022,847 and Staya Nladella, Microsoft’s CEO, with annual earnings of $77,289, 149. NBA star Carmelo Anthony earned $33.2 million in 2020; comedian and TV personality Ellen DeGeneres earned $84 million; novelist James Patterson brought in $80 million, and Tiger Woods earned $62.3 million.
A 9-Figure Income
Nine figures are also typically commanded by only some of the top CEOS, professional athletes, and entertainment celebrities. Tesla’s founder and CEO Elon Musk earned $595 million in 2020; Tim Cook, CEO of Apple, earned $133 million; and Sumit Singh, CEO of Chewy, earned $108 million. In the sports arena, tennis player Roger Federer’s 2020 earnings were $106.3 million, and soccer star Cristiano Ronaldo earned $105 million. Rapper Kanye West’s 2020 income was $170 million.
What Does It Mean to be Worth 6 figures, 7 figures, 8 figures or 9 figures?
More important than earning 6 figures, 7 figures, 8 figures or 9 figures is being worth any of these amounts. When someone is said to “have” 6 figures or “be worth” 6 figures, it means their net worth is between $100,000 and $999,999 inclusive. Net worth is defined as total assets minus total liabilities. Assets are what is owned, such as a house, vehicle, bank accounts, and investments. Liabilities are what is owed, or the amount of debt a person has, including mortgages, car and student loans, and credit card debt. It is not unusual for someone to earn 6 figures or more but not have a net worth of the same number of figures. Many even have a negative net worth: the market value of their assets is less than the debt they’ve taken on to finance those assets. A 2015 Nielsen study found that one out of four American households earning more than $150,000 a year were living paycheck to paycheck.
Lifestyle creep is just one of the causes for this phenomenon. Essentially, this refers to the fact that the more a person earns, the more he/she spends. Larger salaries result in the purchase of larger homes (accompanied by larger mortgages), more expensive vehicles, more lavish vacations. . .you get the picture. Lifestyle creep is no doubt the reason that a large number of celebrities die in debt, despite their enormous annual earnings. For example, Michael Jackson died with estimated $400 to $500 million dollars in debt outstanding. Burt Reynolds, who made massive amounts as a huge movie star spanning three decades, from the 60s through the 80s, ended up declaring bankruptcy in the 90s. In 2015, he told Vanity Fair, “I’ve lost more money than is possible because I just haven’t watched it.”
And therein lies the rub. No matter how much you earn, in order to build wealth, it is necessary to employ good money management techniques. This means creating a budget that directs some of your earnings to an emergency fund and enables you to invest some money to achieve your financial goals. Believe it or not, you can become a millionaire—i.e., have a 7-figure net worth—even if you don’t earn a 6- or 7-figure salary a year if you will commit to saving just 10 cents out of each dollar you earn. For example, if your after-tax income is $30,000 a year and you invest 10% of that—$3,000—at 10%, you will have $1 million in your account at the end of 38 years. If you net only $20,000 a year after tax, it will take you 42 years to accumulate $1 million, assuming a 10% annual rate of return. And a 10% return isn’t out of range; it happens to be the average annual return on the stock market over the past several decades. You can expect to earn the same return by investing in an S&P 500 Index fund. And many of these funds allow you to invest as little as $50 a month via an automatic investment plan. You won’t even miss this money as it continues to build your wealth month by month.