Money / Financial Planning
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In 2021, the median family income in the United States was $79,900. If your household income is $90,000 — or your salary alone is $90k — you are already well ahead of the curve. While you haven’t made it to six figures quite yet, you may find yourself with some extra cushion and wonder what to do with it.
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The good news is that the best money moves at this income level are more or less conventional wisdom. That means getting the most out of your money doesn’t involve any complicated schemes or advanced trading.
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Putting a few of the right systems in place will help you move forward as you continue to build wealth. Let’s take a look at some of those systems here.
1. Pay off High-Interest Debt
One of the main culprits keeping people broke year after year is high-interest debt. After all, the average credit card debt is over $6,000 per family. It’s not always easy to know what is considered high-interest or how to prioritize it.
However, Maya Nijhawan, co-founder & COO at Finch, uses 7% as a threshold. “7% is our magic number because that’s the average you could be earning in the stock market,” Nijhawan says. “In other words, high-interest debt costs you more than what you could be earning by investing in the stock market.”
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2. Maximize Long-Term Retirement Savings
You might have heard before that you should put more money into your 401(k), but it bears repeating if you find yourself earning more than you did in the past. The 401(k), for example, has a contribution limit of more than $20,000 for those under the age of 50. For those making $40,000 per year, maximizing is likely not possible. As your income rises, however, you can get closer to that limit.
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You don’t have to stop at the 401(k), though. Accounts such as the Roth IRA can also be powerful retirement tools. “What’s often missed at this income level is taking advantage of underutilized Roth IRA contributions for savings that may not be long-term,” says Jason R. Escamilla, CFA, CEO …….