How Much Money Do You Need To Make? (Eventually)
How much money do you need to make per year to function as an independent adult? To figure this out, I start with the 28/36 mortgage rule. The 28/36 mortgage rule says that your mortgage payment should be no more than 28% of your gross monthly income. So, look around online at housing in an area that you plan to live in. Find a good location (good schools, low crime, etc.) and the size that you would need for the conditions you expect (living alone, married with kids, pets, etc.). If you plan on getting married and having a couple of kids, a 3 bed, 2 bath apartment or house might be the ticket. But whatever you choose, make sure you have a relatively accurate selection so you don’t end up way off in your final estimations.
Let’s say the place you want to live will cost you $2,500 monthly. The formula is: Rent/Mortgage Amount x 100 ÷ 28. So, in this case, $2,500 X 100 ÷ 28 = $8,928.57/mo. Multiply that times 12 months and you have approximately $107,142. That’s what you need to make at a minimum per year to be in that 3 bed, 2 bath dwelling. So the question is? How do you make that money? You may not be married yet, nor have any kids, and you may still be living at home, (or, like I was, you may already have the wife and kids and you’re making way less than you need to) but you know that by the time you are married with kids, you will need to be making at least $107,142. Your future planning will also need to take into account the inflation rate especially if you’re planning to move out/get married 5-10 years from now.
What Jobs/Careers Pay That Much Money In My Area?
You need to find a job/career path that will pay at least as much as you will need to make to support the lifestyle you plan to have. So, if $107,142 is the income you need someday or even yesterday (and probably more since life gets more expensive and bigger houses/more kids can drive up expenses), you need to find a career path that pays at least that much in your area. You don’t want a job where salaries never get to $107,142 and you really don’t want a job where salaries of $107,142 are the tippy top of the market range. You want a job where the median income is very close to or preferably higher than $107,142. Enter: the Occupational Outlook Handbook (OOH).
Go to the OOH website (link below) and select occupations by pay with a setting of over $100,000. Once you pull up all the jobs where the median pay is over $100,000 per year, you can sort by project growth rate. It can be helpful to set the view to show 100 entries at a time. You do not want career fields in decline or that are slowing. You want a career that is growing at least as fast as the average or better. Take a look at the jobs by entry-level education. Start by selecting the lowest (no formal education credential) and then moving up in order (high school diploma or equivalent, then some college/no degree, and so on). Depending on how much time you have to prepare and your aptitude, you may be able to pick anything you want on the list. However, you’re probably in a time crunch, only some of the jobs may interest you, and you may not have the aptitude for certain types of careers. Also, you’ll need to check and see if the job/career you’re interested in has openings/a market presence in your area. You can use the Occupational Employment and Wage Statistics (OEWS) Profiles to see breakdowns of where jobs are located and how much they pay. Set the “Measures” parameter to “Annual median wage”.
Watch out for jobs/careers that have the title “manager” or “supervisor” in them because you would likely need more experience in the field as a non-manager before qualifying for the role. In other words, entry level managers may only require a certain level of education, but managers are normally expected to have significant experience in the field before becoming an entry-level manager. I would suggest that you find a job that interests you, is in line with your aptitudes, has a market demand where you want to live, and requires the least amount of time/preparation to enter into the field.
Also watch out for jobs that require apprenticeships. Don’t necessarily exclude them but remember that securing those kinds of positions requires a different approach and they can be abnormally selective. For example, in the “High school diploma or equivalent category” with a median pay of $100,000 or more and a career that’s growing faster than average “Elevator and escalator installers and repairers” may sound like a great deal. But when you realize how hard it is to get into the unions to get an apprenticeship (from what I’ve been told), you realize it’s not as easy as it seems (unless you know someone who can get you in).
When you finally pick a career from this list that has a median salary of over $100K, matches your interests and aptitudes, is growing at least as fast as average, and has market demand in the area you want to live, it’s time to see what it takes to qualify for a job. You may also realize that you need to relocate for the career you want which means you’ll need to double-check your calculations on how much money you need to make based on the area you want to live.
How Do I Prepare To Get That Job/Career?
Look at the Occupational Outlook Handbook’s “How to Become One” tab regarding the job you want. That should tell you the general qualifications you’ll need to acquire. From there you need to investigate schools, training, certifications, etc. related to qualifying for the job you want. You generally will want to pick from options that are a good balance between low cost and what is industry accepted. Pick a college or training school that has a high success rate of placing graduates in the field you want. Make sure you tabulate the cost of your education/training. Overpaying for job preparation is a bad adult decision that will kick you in the pants. All things being equal, a $20K education that lands you a $100K job is better than a $60K education that lands you the same job. However, a $20K education that won’t get you a job is a useless waste of money vs a $60K education that will actually get you into the paying career you chose. You basically want the lowest-cost, industry-accepted, guaranteed-employment option.
Grow your network. Find people who are in the field and can tell you what you need to do to get in. Maybe you can land a job in your field before you finish getting the needed credentials! You need contacts because your final ability to land a job will mostly result from who you know, not what you know.
Look at job ads online for the job you want and see what skills and qualifications employers are looking for particularly. Tailor your study and preparation to be in line with market demand. Don’t waste time on stuff no one wants and don’t expect employers to be impressed if you’re missing key skills. As a professional, you will have to be constantly learning new skills to meet job needs. You need to prove that you have the ability to find out what skills are needed to be good in your field and then get after them.
Also, see if you can volunteer in your field to build experience, build a portfolio, and build your network.
Conclusion
Hopefully this helps you get an idea of finding out how much you need to make to live the life you want and a way to figure out how to make enough money to get there. I’ve included some references/links below related to what I’ve discussed.