The Significance of Income Level

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When people start throwing around financial advice (and when you’re deciding which advice to take), one of the considerations that often gets ignored is the significance of income level. Advice gets thrown around about what to cut and how to save without realizing that how much money you’re bringing in is the biggest factor in determining which advice will work for you.

Think about it: Someone making $90,000 per year has a lot more room to maneuver than someone making $30,000 per year (in most areas of the country). When the $90,000 person is setting up a budget, he will likely have categories in there that simply aren’t available to the $30,000 person (travel, meals out,


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5 Responses to The Significance of Income Level

  1. I totally agree. I think being comfortable with your income level and accepting it makes it a lot easier adjust it when needed.

  2. This is really a great point that I surprisingly have not seen anywhere else. As you said, the person making 90k has much more wiggle room than the person making 30k (assuming same cost of living/same location). 300k of debt is totally different if you are an anesthesiologist making 400k/year vs. a school teacher making 30k a year; it’s an apples to oranges comparison.

  3. Lena @ WhatMommyDoes says:

    This is something I get hung up on when I’m writing money-saving tips on my blog. I write about things I cut from my budget, but I realize not everyone has all the same items in their budget. I don’t want to highlight exact income amounts, however, because I don’t feel comfortable doing that on my blog.

    However, I think many people, regardless of income, have expenses that they probably shouldn’t have because we tend to place necessity status on luxuries. Like cell phones and cable TV. So, yes, budgets will vary, but there are some things that most people will have regardless of income and whether or not it makes sense for them.

  4. Gailete says:

    Yep, and some of us just don’t care about having some of the things that others have so we can have tremendous savings in those areas. I am always interested in seeing the clothing budget that is tucked into every budget and can’t begin to understand why adults need to be spending money monthly for clothes (I do understand that kids grow and may not get hand-me-downs). I can go months without buying new clothes and have actually gone a year or more at a time without purchasing new clothes. Today I came home one happy lady from the thrift store since I had picked up a sweater in my size and in my colors that will go with just about everything in my closet. Cost me $2 and I suspect it cost the original buyer $30-40 but what do I know, I haven’t been shopping for clothes in a regular store for years. Last week I also found some clothes that fit at the thrift store too. Our thrift store burnt down 5 months ago and so it is just reopened and somewhere along the line someone donated a lot of clothes in my size range and I will be checking them out carefully before they are all gone. Why? because the last time I went on a thrift store spending spree for clothes 10 years ago I got some garments that at this point in time I have probably worn 300-400 times! Petty good for a $4 jumper and a 28 cent top! Someone with a high income might never see the inside of a thrift store, only the dumping off side, but I bet what they buy at full price (or even on sale) at regular stores, can’t beat my joy at finding something that I will get a lot of use from over the next 10+ years! Since my size of clothes are rarely seen in thrift stores (and in the quality that I am seeing from this lady or ladies), I make hay while the sun shines so to speak and get what I can. Then I will be able to go for years again without new clothes :)

  5. Anni says:

    That brings up another interesting point. How much a person spends on clothing can depend on what kind of job they have and where they live. Another way personal finance is just that, personal.

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