This should go without saying, but earning $200k a year is a good thing. Earning $200k a year puts you in the top 12% of all earners and should grant you a wonderful lifestyle, but could still leave you wondering is $200k a year good.
After earning a bit more than $200,000 in 2023, I’d like to share from experience the good and bad of earning $200k a year.
Those of you who make $200k may not know how good you have it. Many others of you may like to earn $200k a year, so this post should shed some light on things to consider.
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How I Earned $200,000 In 2023
I can predict that the burning question from readers is how I made $200k last year.
It’s a bit anticlimactic, but I earned a healthy bit more than $200,000 through a combination of earned income and a severance payout from my 2023 layoff.
Professionally, I work in tech as a project manager. I’ve been in the field for 5 years, so my experience is starting to command a high income. I also moved into consulting last year. Thus, I’m compensated well enough to offset some of the risks involved with contract work.
I have a suspicion that some readers have snooped around on my LinkedIn profile to figure out what I’m all about.
No harm there! But please, also engage with me in the comments section below as it helps me know I’m reaching people. It also helps me stay motivated.
Profiles Of Other Folks Making $200k A Year
As you’ll see in a moment, earning $200k a year is no small feat. I bet most of us have some combination of hard work, intellect, and luck at play that helped us get there.
Here are a few profiles of the special people who’ve worked their tails off to be able to earn $200k a year. I’ll take a few key examples from this Reddit post for the discussion:
200k A Year Is Really Good For A Family
One Redditor posted that they worked in the law field making $185,000 per year. Presumably this person is a lawyer, who according to the Bureau Of Labor Statistics, earns a median salary of $ 176,470. This is obviously short of the $200k mark, but they went on to say they married a doctor.
If the spouse happens to earn the BLS median estimate for physicians of $239,200, this household would bring in a cool $424,000 each year.
That’s a ton of money. But it certainly came with an equal amount of sacrifice. Doctors take an average of 11 to 16 years of schooling and training before they are earning the big bucks. Lawyers have to put in an additional 3 years beyond undergrad to receive their JD.
And the costs ain’t cheap with average student loan bills for 95% of lawyers exceeding $150,000 according to the American Bar Association. If that sounds steep, pile that on to the fact that the average medical school graduate owes $250,995 in total student loan debt.
Given that, it is perfectly feasible for this high earning couple to have close to $500,000 in debt to match their stellar incomes.
200k A Year Is Extraordinary For A Single Person
It’s an amazing thing for dual earners to eclipse the $200,000 a year mark together, but it’s a totally elevated level for a single earner to do it. Here’s an example from the Reddit post that I absolutely loved to see:
The person mentioned here is an accomplished romance author. I like to see this as they are likely doing something they are passionate about. And as a fellow writer, I totally get what they mean when they say they write all the time as I write incessantly for this blog.
We’ve now seen a few examples of what $200k earners look like, so let’s now talk about why this much money is a wonderful thing.
5 Reasons $200k A Year Is Good
You should feel fortunate to make $200 a year. You’ve likely worked hard and have made a lot of good decisions to get to this earnings level.
Unfortunately, our adaptability as humans makes it easy to lose sight of just how good we have it because we’re designed to focus on problems while discounting the good we have.
This can make you feel less content and certain about your life in spite of being one of the lucky few to earn such a strong income. On top of that, you still face many of the same challenges everyone else does which can make you wonder what it’s all for.
Given that, here’s a quick reminder of why $200k a year is a good thing.
1) $200k A Year Is A Lot Of Money
Is 200k a year good? The simple answer is yes, 200k a year is ridiculously good. In case you still have doubt, let’s put $200,000 a year in perspective.
Starting in the United States, as reported by the Census Bureau and IRS, 200k a year would put you somewhere in the top 5 – 12% of all earners.
How about 200k a year worldwide? Well, it turns out that would make you a top 3% of the almost 8 billion on earth.
Is that good? I think so.
2) $200k A Year Is Good Because It Should Solve All Money Problems
No amount of money will solve all of your problems. However, earning $200k a year should absolutely solve all of your money problems.
Challenges such as debt, money stress, insufficient savings, emergency vulnerability, and lack of investing should all be in your rearview mirror thanks to a $200,000 income.
Miraculously, there is still a large share of these “rich people” struggling to make it as evidenced by a report from 2022 that estimated upwards of 36% of those earning $200K a year were living paycheck to paycheck.
How is that possible you may ask? I’m not really sure. But one thing I am certain of is that these people have chosen the pain of being broke over doing the work necessary to manage their riches well. Fortunately, they can just as easily decide to change when they are ready.
3) $200k A Year Is Good Because It Helps You Win The Comparison Game
If we are being honest, many of you have found this article because you’d like to to quantify how well you have it relative to other people. No harm there because we all do it from time to time.
That said, cheers to those of you who are earning $200k a year because you do indeed have it quite well relative to everyone else!
Now, with this newfound knowledge I suggest you find a way to be content with what you have and get on with your life. I say this because no matter how much you earn, constant comparison will only make you miserable.
4) $200k A Year Is Good Accelerates Your Path To Financial Freedom
If you are doing it right, you’re using that 200k a year to accelerate yourself toward financial freedom.
I was able to save around 70% of my $200K+ earnings in 2023. As a result, I’m now solidly in the third level of financial freedom known as the semi – financially free stage.
What I love most about being at this level of financial freedom is the sense of liberty it gives me while also knowing I’m on pace to retire much earlier than the average person who remains in their jobs for many decades.
Earning 200k is good because it enables you to easily save 40% or more of your income while also living a relatively lavish lifestyle.
Few people can enjoy such a privilege, so I urge you to take advantage of it the right way. Afterall, the last thing you want to do is look up many years from now and wonder where all of your money has gone.
5) $200k A Year Enables You To Give Generously
Few things give me more satisfaction than giving generously to those less fortunate to me. I love to give! And earning $200k makes it much more possible than it used to be.
Take for instance the brand new pair of $110 dollar shoes I gave away to a homeless man last week. I had only worn the shoes twice before deciding they didn’t offer enough support.
I stumbled upon the gentleman with holes in his shoes and gave him mine because he needed them more than I did. The end result was me being able to help and serve someone in need while feeling really good in return.
If I was more strapped for cash, I may have been more inclined to return the shoes for another paid rather than take the loss. But thanks to making $200k a year, I’m able to prioritize giving over saving a few dollars from time to time.
In a word, I highly encourage those of you who are making $200k a year to start giving whenever possible. If you aren’t already doing it, you won’t know how much you are missing out on until you start.
The Downsides Of Earning $200k
I hope I’ve convinced you that earning $200k a year is good. If not, I’m not sure what could be said that would.
For those of you who are convinced, I must discuss the other side of the coin for fear that you can get caught off guard by potential downsides that are ever present with earning $200k each year.
They say experience is the best teacher, so here are some of the dangers of earning $200k that I’ve discovered the hard way.
1) Earning 200k A Year Can Cause You To Be Very Sloppy With Money
As mentioned above, 36% of those earning $200,000 a year are living paycheck to paycheck. I think this goes to show that we can blow through any amount of money if we aren’t careful.
From experience, a major reason for this is that earning a lot of money can make you believe you can be a bit sloppy while making up for it later. It’s like we know in our subconscious that we have a bit of extra wiggle room and can erroneously lean into that.
For me, this manifests most as ridiculous restaurant spending which I continuously struggle to keep under control. But thankfully I do a decent job everywhere else.
2) Steep Taxes Is A Major Downside Of Earning $200k
Nothing rains on earning a lot of money like high taxes. After painfully shelling out $37,000 worth of payroll deductions for taxes over the year – I was dealt the final death blow when I filed my taxes on tax day and had to fork over an additional $6,682 to bring me square with Uncle Sam.
Everyone wants to scream that we should tax the rich. But as a guy who’s literally started from nothing, it stings to have to give up so much of my hard earned money given the obstacles I’ve overcome.
Nevertheless, I’m not one to play the victim as I know that is a trait of losers.
Instead, I will do what I always do and plow ahead toward the places I want to go. Albeit with an eye for finding legal ways to strategically minimize my tax exposure going forward.
How To Estimate Your Taxes When Earning $200k A Year
Since I am on the subject of taxes, let me give a quick lesson on what to expect if you make $200k a year.
The first thing to know about taxes is that the U.S. has a progressive tax system which means you pay different amounts of taxes on different portions of income. Here is a chart of the progressive tax breakdown for both single filers:
To estimate your tax burden, you can simply take out a pen and paper and run your income out through each bracket as you multiply the tax rate on that segment of income. Here is what that calculation would look for a single filer making exactly $200,000 per year:
For a single filer with a $200,000 income:
- 10% on the first $11,000: $1,100
- 12% on the next $33,725: $4,047
- 22% on the next $50,650: $11,143
- 24% on the next $86,725: $20,814
- 32% on the next $17,900: $5,728
Total federal tax: $1,100 + $4,047 + $11,143 + $20,814 + $5,728 = $42,832
3) 200K A Year Won’t Solve All Problems
I mentioned above that earning 200K a year should solve your money problems. But don’t make the mistake of having the money misconception that it will solve all of your other problems.
In terms of character flaws, bad habits, and toxicity – they say that money usually magnifies them.
I’ve seen this first hand with my drug addicted father who, in his last days, started receiving $11,000 in monthly back payments from the government. This only fueled his drug habits and his ultimate demise in less than a year of the payments starting.
This is just a one example from my own experiences. You likely have your own unique problems to deal with. So, just trust me when I say that earning $200k a year probably won’t fix them all.
4) $200k A Year Makes You A Target
You should be keenly aware that earning $200k a year comes with the downside of making you a target to individuals looking to come up off the back of your good fortune.
Take for instance the story of a gentleman from Miami who brought home a woman from a nightclub who ended up robbing him for $600,000 in jewelry. Or, there’s the recent time a friend suddenly asked to borrow money from me the same week I revealed this blog to him.
I’m not suggesting you will necessarily be a target for harm, but I’m certain earning $200,000 will increase your potential for risk. For this reason, I think it’s better to act broke and practice stealth wealth.
I’m often overlooked by people because of my modest approach. Little do they usually know I’m a top earning man, and I’ll keep it that way as the low profile keeps my risks down a lot.
You Don’t Need To Earn $200k A Year To Be Wealthy Or Happy
Is $200k a year good? Of course it is.
But in a study of 10,000 millionaires, Dave Ramsey and his crew found that 7,000 of those sampled averaged less than $100,000 for the durations of their careers. Even more astounding was that a bit more than 3,000 of that group never made more than $100,000 in any single year!
The obvious takeaway here is that earning a high income isn’t necessarily the key to wealth.
As I mentioned earlier, earning a lot of money comes with the downside of lulling us into being sloppy and frivolous as we think it’ll never end. It’s just so easy to lose sight of the bigger picture when you earn a lot while those who earn less are forced to stay closer to remain grounded.
I’ve also mentioned in several posts on the blog already that money doesn’t automatically make you happier. I often allude to an old friend who seemingly became miserable after hitting the crypto jackpot of untold millions.
Life extends so much further than how much you earn. This is probably why there are 22 countries ranked ahead of the U.S. when it comes to happiness. Perhaps all of the status games, materialism, and chasing money is actually making us less happy?
As far as I’m concerned, the most important things in life are family, relationships, health, and the absence of stress. If you can tick off those boxes you are going to have an amazing life no matter what.
Which leads me to question, how many of us can say we have each of those covered today? $200k a year can’t check these boxes and that is a good thing.