I’ve been trying to find a cost-of-living to income ratio that will define the ability to be financially healthy (meaning: pay all your bills, save properly, invest properly, and stay out of debt). If you make $100,000/year but the cost-of-living is $100,000/year then you aren’t able to save or invest. When expenses arise that exceed the usual cost-of-living, you will find yourself borrowing money with interest. A one-to-one ratio means you will end up in debt and sinking financially over time barring some miraculous windfall. Hope is not a plan, so something more substantive is needed.
So how much money do you need to make to achieve financial stability? I looked around the internet and decided that the 50/30/20 rule gives a decent (enough) estimation of what it takes to be financially comfortable: 50% of your after tax income should cover cost-of-living, 30% should be spent on wants (fun things with discretionary income) and 20% should be spent paying off debt, investing, and saving.1
Personally, I think that the 30% and 20% allocations will vary depending on your financial situation and I suspect that investing at a much higher rate will help you achieve financial independence faster. Financial independence is when your entire required income comes from your investments. If you are heavily in debt, paying off debt faster before investing would probably be beneficial.
In any event, we’re saying that 50% of your after-tax income needs to cover your expenses in order to live comfortably and 50% needs to be discretionary however you decide to slice it up.
Smartasset.com did me a favor and already put together a table demonstrating how much money you would need to make to live the 50/30/20 rule in Virginia.2 Here is their table based on 2024 data so the numbers have gone up a little since then:
Virginia came in as the 12th highest salary needed to live a comfortable living. For a single person, they need to make $99,965/year to live comfortably. For a family of four with two working adults, they need to make $235,206/year to live comfortably. Now, a couple of notes, the MIT Living Wage Calculator always says that it costs less for a family with one adult earning income than for two adults earning income. And the number of kids beyond the baseline of two only goes up by a certain percentage for each kid beyond the baseline. So, we have to figure out what an 50/30/20 income in Virginia looks like for a single-income family plus X number of kids beyond the baseline.
To make this simpler for me, I’m going to go to the MIT Living Wage Calculator that they referenced and do some simple math. First, I’m going to double the rate of the “2 Adults (1 working)” expense column so that the expenses (cost-of-living) is 50% of our income. Second, I’m going to figure out the variance between their 0, 1, 2, and 3 children costs to see if I can find a per-child cost that I can multiply to account for large families. I’ll then calculate a comfortable income for a single-income family with nine children living in Virginia.
The MIT Living Wage Calculator gives the following cost increments based on the number of children in the house:
| Annual income | Per-child increment | |
| 0 kids | $74,379.00 | - |
| 1 kid | $89,177.00 | $14,798.00 |
| 2 kids | $97,787.00 | $8,610.00 |
| 3 kids | $111,698.00 | $13,911.00 |
I don’t know how they came to that cost per child so I’m just going to average it and then multiply by nine. The average of those three values in the far right column (cost per child) is $12,439.67. Nine children means $111,957. So, if we take a base household expense of $74,379 (2 adults no children) and add in the cost of nine children that leaves us with $186,336 in expenses. We need to double that for the 50/30/20 rule and that gives us an annual income before-tax income requirement of $372,672 per year to live comfortably.
Breaking this down to income-per-household-member we have the following:
| Household Size | Annual Income | Per Person Income | |
| US Median | 2.5 | $80,610 | $32,115 |
| US Poverty Level | 2.5 | $31,200 | $7,800 |
| N. Virginia Median | 2.5 | $142,583 | $56,805 |
| 50/30/20 Rule | 11 | $372,672 | $33,879.27 |
The formula for your own salary needs is:
[MIT COL Expense (2 adults, 0 kids)] + [(number of kids) x $12,439.67] x 2 = 50/30/20 Income Requirement
1https://www.citizensbank.com/learning/50-30-20-budget.aspx
2https://smartasset.com/data-studies/state-salary-living-comfortably-2024