You would think that the more money that a person makes, the more financially secure they would be. On paper that may appear to be true of course taxes and where they live is a big factor. Two people earning the exact same salary can end up in completely different financial situations- one thriving and the other barely surviving.

The median annual wage in the U.S. is about $62,000, according to the Bureau of Labor Statistics. So, logically, you’d expect that people earning well above that—say, six figures—should be in solid financial shape.

Sadly that is not always true due to many different factors. Reports have found that 48% of people making over $100,000 a year live paycheck to paycheck. Even more startling is that 36% of those who make $200,000 or more struggle to make ends meet.

So exactly why do we find this? How can someone making six figures still feel financially stuck? It all comes down to financial habits—good ones can set you up for life, while bad ones can keep you in a cycle of stress and debt.

Bad Financial Habits That Can Hold You Back

On the flip side, some habits can quietly drain your bank account and keep you stuck in the paycheck-to-paycheck cycle. Here are a few big ones to watch out for:

1. Lifestyle Creep: Spending More as You Earn More

A raise should improve your financial situation—not just upgrade your lifestyle. But too often, when income goes up, spending follows.

This is called lifestyle creep, and it’s a big reason high earners can still struggle financially. Instead of increasing spending across the board, pick a few things that truly add value to your life and keep the rest in check.

2. Taking on Too Much Debt

Debt can be a major roadblock to financial security. As of late 2024, U.S. household debt hit a staggering $17.94 trillion, with credit card balances reaching $1.17 trillion, according to the Federal Reserve.

The average credit card balance per person? $6,380, according to TransUnion. That’s a lot of money going toward interest instead of savings or investments.

The goal? Keep credit card debt low—or avoid it altogether. And when it comes to big expenses like housing, try to keep your total housing costs under 30% of your income to avoid becoming “house poor.”

3. Impulse Spending

Ever buy something just because it was on sale, or because you were bored? You’re not alone—89% of consumers admit to impulse buying, according to Capital One Shopping. On average, unplanned purchases cost people about $282 per month.

One of the best ways to curb impulse spending is to make it harder to buy things on a whim—remove saved credit cards from your phone, take a day to think over non-essential purchases, and avoid shopping when you’re bored.

4. Inflation

Even though all of the above are things that can be changed inflation is not something that we can change. On average every year inflation ranges between 2-3% which means the value of the dollar decreases by that much. To further add to this that comes out to the prices of all goods and services doubles approximately every 35 years. Since it is the year 2025 I thought that I would compare prices to what they were in 1925. In 1925 the average home prices was $3,500 and if you compare to now the average is $400,000. That is a 11,000% increase or 110x since 1925. 

What can be done

1. Budgeting: Knowing Where Your Money Goes

Tracking your spending is one of the best financial moves you can make. In 2024, 90% of Americans said they follow a budget, according to Debt.com, and 89% said budgeting helped them get out or stay out of debt.

If you’re not budgeting yet, now’s the time to start. A simple spreadsheet can do the trick, or you can use a free budgeting app. The goal is to see exactly where your money is going each month so you can adjust as needed.

2. Building an Emergency Fund

Life happens—car repairs, medical bills, unexpected job loss. Without savings, these surprises can send you straight into debt. But here’s the reality: 21% of Americans have no emergency fund at all, and 37% wouldn’t be able to cover a $400 unexpected expense, according to a 2024 Empower survey.

If you don’t have an emergency fund, start one ASAP. Financial experts recommend at least three to six months’ worth of expenses to give you a solid safety net.

3. Automating Your Savings

Saving money is easier when you don’t have to think about it. If your employer offers a 401(k), setting up automatic contributions is a great way to build retirement savings without lifting a finger.

If you don’t have a 401(k), consider an IRA with automatic transfers from your checking account. Even small contributions add up over time.

4. Increase your income

All of the solutions above are great solutions; however, they don’t address inflation head on. Inflation will in the long-run eat into your savings and increase the costs of goods and services making budgeting an increasingly difficult task. Investing is known to be a hedge(protection) against inflation, but that is a long term solution (25+ years). There is no way around the fact that we now live in a world where we need to constantly get promotions, raises, or just jump ship to another job. Ideally you want your income to increase by the average inflation of 2-3%. 

The Bottom Line

Making six figures doesn’t guarantee financial success—your habits do. Budgeting, saving, and avoiding lifestyle creep can help you build long-term wealth, no matter what your salary is. The key is to be intentional with your money so it works for you, not against you.