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Whether you’re getting your ducks in a row to buy a house, trying to secure a lower interest rate on a future auto loan, or simply monitoring your credit as a personal finance best practice (good on you!), even a small dip in your credit score can make your stomach drop.

The good news: In the big scheme of things, a credit score drop of 10 points isn’t a huge deal — or at least it doesn’t have to be. While it’s smart to keep an eye on what’s going on, a 10-point drop could be due to a new credit application or an increase in your credit utilization, both of which are often temporary and easily made up for with positive credit behavior over time.

Below, we’ll look into some of the most common reasons your credit score may have taken a quick dip.

Why Did Your Credit Score Drop 10 Points?

Credit scores usually run from 300 to 850, so 10 points really isn’t that significant of a drop. Of course, if you happen to be just a few points shy of having “good” or “exceptional” credit, that drop could feel like a more substantial loss. Fortunately, these fluctuations are normal and usually easily made up for with on-time payments, which have the largest effect on your credit score.

Some common reasons for a 10-point credit score drop include:

Hard Credit Inquiries

If you’ve recently applied for a new loan or line of credit, the credit check the lender makes to assess your creditworthiness can affect your score. This category, known as “new credit,” accounts for 10% of your FICO score. The effect can be compounded if you apply for many new loans or lines of credit in a short amount of time.

Balance Increases

Fully 30% of your FICO score is based on the total amount you owe versus the amount of credit you have available. So if you recently made a larger purchase on credit or took out a new personal loan, you could see a ding to your score.

Account Closures

While paying off a credit card or loan could help increase your score (by lowering your total balance), closing an account can affect the age of your overall credit history. This accounts for 15% of your FICO score. In the case of a credit card closure, it could also lower your total available credit, which could actually increase your credit utilization ratio even as your total balance decreases. So if you’ve recently closed an account, again, you may see your score take a small dive.

Errors or Identity Fraud

Scary but true: An unexpected dip could point to something fishy on your credit report, be it a payment misreported to the credit bureaus as late or a brand-new account you don’t recognize.

In any case, unexpected changes to your credit score are a great reminder to take a look at your in-depth credit history at least once per year. (A credit score update typically occurs every 45 days.) There are plenty of ways to check your credit score without paying, and you can pull your full reports annually at annualcreditreport.com. From there, you can file disputes with the credit bureaus — and the reporting lenders.

Recommended: Why Did My Credit Score Drop After Dispute?

Should You Be Worried About Your Credit Score Dropping?

As unsettling as a small credit score dip can be, if you’re carefully monitoring your credit and actively working on good financial habits, it’s usually not something to worry about. (Credit score monitoring lets you keep tabs on your score and earn rewards points when it increases.)

If, however, your credit score is dropping because you’re borrowing more than you can afford to pay back, taking out too many new loans or lines of credit at once, increasing your utilization ratio, or making late payments, it could be a wake-up call to start moving back toward healthier financial habits.

And, of course, if your dropping score alerts you to fraudulent or erroneous information on your credit report, it’s well worth the effort it takes to file a dispute and clear up that misinformation — before it wreaks even more financial havoc in your life.

Reasons Your Credit Score Went Down

As mentioned above, some of the most common reasons a credit score could drop include increased credit utilization (even if only temporarily), hard inquiries on your report, account closures, and errors or fraudulent information in your credit history.

Keep in mind, too, that the younger and less robust your credit history, the more weight each individual occurrence will have in your score. For example, if you’re a young adult who got their first credit card only a year ago, and still has only that single line of credit, a hard inquiry or balance increase could affect your score more profoundly than it would for someone with 15 years of credit history, thousands of dollars in available credit, and several different types of credit lines and loans.

What Can You Do If Your Credit Score Dropped by 10 Points?

If you notice your credit score has dropped by 10 points, you’re likely already monitoring your credit — which is a great habit to be in. Depending on why exactly it dropped, you may simply need to wait the fluctuation out. (For instance, if your score dropped due to multiple hard inquiries, there’s little else to do but wait — and stop applying for new lines of credit or loans.)

If you’ve recently increased your credit utilization or made a large purchase on a credit card, focusing on paying the balance back as soon as possible may also help. As always, making on-time payments in full on every account you have is one of the most important steps toward building and maintaining a healthy credit history and credit score.

Examples of Credit Score Dropping

Here are a few scenarios where you might notice a dip in your credit score.

Say, for example, you just successfully applied for a new credit card and then decided to apply for an auto loan, too. Even if your credit score was healthy enough to handle both of those inquiries — and get you qualified for both the new card and the loan — you may see a temporary dip because of the multiple hard inquiries.

Or maybe you regularly use a credit card for everyday purchases and then pay it off in full each month to take advantage of cash-back rewards. But one day, your car breaks down, and you find yourself needing to quickly fork over $800 you weren’t expecting to spend — and you reach for your everyday credit card. Even if you pay the total off in full at the end of the month, the temporary increase in your balance could diminish your score for a while, depending on when the amount is reported to the bureaus.

How to Build Credit

If you’re paying close attention to your score because you’re figuring out how to build your credit, the good news is, you’re already on the right track. While it’s impossible to build great credit overnight, awareness of your score and the factors that contribute to it is a great first step toward excellent credit.

There are plenty of ways to build credit over time, but here are some of the most important tips:

•   Make your payments in full, on time, every time. Since payment history accounts for the largest chunk of your FICO score, being consistent with payments is a key to building credit. If you can, paying off your credit cards entirely each month can help you build your credit without paying interest or carrying a revolving balance.

•   Avoid taking out too many loans or lines of credit at once. Along with the negative impact of multiple hard inquiries, getting yourself into too much debt too fast can make it impossible to keep up with payments and keep your utilization ratio low.

•   Don’t unnecessarily close accounts. Even if you stop using one of your credit cards, consider leaving the account open so it can help lengthen your overall credit age. (Try to remember to use the card every once in a while and then immediately pay it back. The card issuer may automatically close the account if it’s inactive for too long.)

Allow Some Time Before Checking Your Score

Rome wasn’t built in a day, and neither was your credit score. While it can be tempting to constantly check in on your score to ensure it’s trending the right direction, it can take some time for the 10-point dip you noticed to pass — or for the changes you make in your daily habits to reflect in your score.

What is worth checking every day, however, is your spending. Knowing where every dollar you earn is going can give you insight into areas where you could afford to cut back and save more. Using a money tracker app can help.

Closing a Credit Card Account Can Hurt Your Score

As discussed above, closing a credit card account can hurt your score, even if you’ve paid off the card and no longer plan to regularly use it. That’s because having the account open can increase the length of your credit history and also provide you with more available credit, which can help keep your credit utilization low. In short, think twice before you close a credit card account once you pay it off!

What Factors Impact Credit Scores?

According to Experian, these are the factors that affect your credit score and how heavily they’re weighted in the calculation:

•   Payment history, which refers to your record of making on-time payments to all of your accounts: 35%

•   Amounts owed, which refers to the ratio of money you owe versus your available credit (aka credit utilization): 30%

•   Length of credit history, or the average age of your credit accounts: 15%

•   New credit, which takes into account the number of recent hard inquiries: 10%

•   Credit mix, which favors those who have different types of accounts (a mortgage, auto loan, and credit card rather than only credit cards, for example): 10%

Pros and Cons of Tracking Your Credit Score

Tracking your credit score is one of the best ways to ensure you’re fully informed about what’s going on with your report. It also gives you the biggest leg up on nipping potential fraudulent charges or errors in the bud before they can have a deeply negative impact on your file.

But there are cons, too. For instance, if you’re paying hyper-close attention to your credit score and checking every single day, small, normal fluctuations of 10 points or less could stress you out.

As with everything else in life, the key is balance. Keep track of your score, sure, but don’t obsess over it every single day. This is especially true if you’ve checked your report and ensured it’s free of errors or fraud. Just keep paying your bills on time and avoid overspending, and your score will eventually catch up with your good habits. (A spending app can help you manage budgeting and bill payment.)

How to Monitor Your Credit Score

These days, there are nearly endless ways to keep track of your credit score without having to pay for the privilege. Many credit card companies offer FICO score tracking as a free perk, and you may also be able to access your score via your online bank account.

Keep in mind, though, that your score is not the same as your report, and only viewing your full report gives you the comprehensive details about what factors are going into your score. Examples include payment history, how long your accounts have been open, and how many accounts you even have in the first place. Checking your credit report is the best way to get ahead of fraudulent or erroneous information, so make sure you give them a look at least once a year.

The Takeaway

While a credit score drop of 10 points can be unsettling, in many cases, it’s perfectly normal — and will normalize so long as you continue to maintain your good credit habits. If it’s an unexpected fluctuation, however, it’s worth looking over your credit report for errors or fraud.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Why did my credit score randomly go down 10 points?

There are many reasons why a credit score might drop 10 points, including temporarily increased credit utilization, one or multiple hard inquiries on your file, or a recent account closure. To understand why your score is dropping, it’s a good idea to access your full credit report, which will help you ensure there’s no fraudulent activity or erroneously reported information in your file.

Is it normal for your credit score to fluctuate 10 points?

A credit score fluctuation of 10 points is fairly minimal and often normal, especially for those whose credit histories are younger and slimmer. If you only have a few accounts and they’re all relatively new, even small changes can have a relatively large impact on your score. However, as long as you keep making your on-time payments and avoid running up a large revolving credit card balance, these should automatically neutralize over time.

Why is my credit score going down if I pay everything on time?

Although payment history is one of the largest factors impacting credit score, it’s not the only one. Other reasons you might see your score decrease include a recent account closure, a change in your credit utilization ratio (caused by an account closure or taking out more debt), or a recent spate of hard inquiries on your file.

Photo credit: iStock/Tempura

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q324-010

Applying for credit cards isn’t something you should take lightly because it can lower your credit score with each application you submit. Reviewing a credit card application typically involves a hard credit inquiry, which usually lowers a score by perhaps five points or so. If you were to fill out several credit card applications at one time, that could have a significant impact on your score.

Still, while applying for a credit card can hurt your credit, there are a number of potential pluses to credit cards, from allowing you to build your credit history to earning rewards. Here’s how to navigate the effects of applying for credit on your credit score, as well as some alternatives to consider if you don’t think your score can currently weather it.

Hard vs Soft Credit Inquiries

To understand how applying for a credit card can hurt your score, it’s first important to know the difference between hard and soft credit inquiries.

A hard inquiry, also known as a hard pull or hard credit check, generally occurs when a lender is determining whether to loan you the funds you’ve applied for. This might happen if you’ve applied for a mortgage or a new credit card, for example.

On the other hand, a soft inquiry, or soft credit pull, tends to happen when someone runs a credit check to gather information without the express purpose of lending you money. For instance, a credit card issuer may do a soft pull in order to make a preapproval offer, or a potential employer might perform a soft inquiry as part of the application process. A soft credit inquiry also may happen when you check your credit report.

Perhaps the most important difference between a hard pull vs. a soft pull is how it impacts your credit scores. While hard credit inquiries show up on your credit report and affect your score, soft inquiries do not. Further, while soft pulls can be done without your consent, creditors need your approval to do a hard inquiry.

How Applying for Credit Cards Can Hurt Your Score

While your credit score won’t take a huge hit when you apply for a credit card, it will get dinged. Why? When you apply for a credit card, the card issuer will perform a hard inquiry to determine whether you’re a good candidate to lend money to.

Hard inquiries can lower your credit score because a new application can represent more risk for the card issuer. According to FICO®, a hard credit inquiry will generally affect the score on your credit report by five points or less. Those with few accounts or a thin credit history can experience a greater impact on their score. Additionally, multiple inquiries within a short period of time can exacerbate the negative effect on your credit score.

Hard pulls stay on your credit report for two years, though their impact on your credit scores typically vanishes after a year. It’s important to note that your score will see an impact whether or not you’re approved, as the hard inquiry is conducted either way.

Should You Apply for Multiple Credit Cards at Once?

Simply put, probably not. Applying for multiple credit cards at one time is likely to have a negative impact on your credit score. While it might make sense to apply for more than one job at a time, that’s not the way to go with credit cards. Instead, you should approach applying for credit cards strategically.

By applying for several cards over a short period, you might send the signal that you’re desperately seeking funds and headed for — or already in — trouble. You’ll appear risky to lenders and that will likely be reflected by a dip in your credit score.

Of course, this doesn’t mean you can’t have multiple credit cards. You’ll just want to take your time and space out your acquisitions. If you get rejected for a card, pause to figure out why, and then take steps to address the suspected weak spots. Once you’ve had time to build your credit, consider trying again.

How Often Can I Apply for a Credit Card Without Hurting My Credit?

Per Experian, one of the three major credit bureaus, it’s wise to wait at least six months in between credit card applications. If you apply for a number of credit cards within a few months, you could see more than the usual ding to your score that new credit inquiries typically cause. While the effects may be brief, Experian states that you could see a “potentially significant drop” in your score.

While six months is the minimum waiting period suggested, how often it’s appropriate to apply for new credit cards also depends on your financial specifics. For instance, if your application was denied due to your credit score and you still haven’t built it, then it may not make sense to apply again, even if six months have passed. Similarly, you might not choose to apply for a new card if you know you have another big lending application coming up, such as for a mortgage.

On the other hand, if you have a strong credit profile, your score may not take as much of a hit if you decide to apply for another card sooner to try to cash in on generous rewards or a hefty welcome bonus offer. Those who don’t yet have a credit history and are beginning to build a credit profile may also find it’s worthwhile to wait less time between applications.

Recommended: What Is the Average Credit Card Limit?

Can Applying for Credit Cards Help Your Score?

There are two sides to a coin and so it goes with applying for credit cards — there can be some upside when you apply for a new card.

This is partly because opening a new account effectively increases your credit limit. In turn, this can lower your credit utilization ratio, which is your outstanding balances compared to your overall credit limit. Credit utilization accounts for 30% of your credit score and is second in importance only to your payment history.

Another potential plus to opening a new card is that if you make on-time payments on your new card, your positive payment history can build your score over time. However, if you’re a credit card newbie and still working on establishing credit, you may not see the uptick in your score as quickly. This is because FICO requires you to have at least one account that’s been open for six months and one account that’s been reported to the credit bureau within the last six months to qualify for a credit score.

If you don’t already have a handful of credit card accounts, a new card also can positively impact your score because it’s adding another revolving account to your lineup. While your mix of account types only comprises 10% of your credit score, credit scoring models do look at and reflect this.

Recommended: When Are Credit Card Payments Due?

Does Applying for a Credit Card and Not Getting Approved Hurt Your Credit?

Your credit will be affected whether or not you’re approved for a credit card. That’s because when you submit a credit card application, a hard credit inquiry is conducted to determine if you’re eligible. The effects of that hard pull will apply regardless of the results.

However, your credit won’t face any consequences for the fact you were denied a credit card. That information won’t be reflected in your credit score, nor will it show up on your credit report.

Recommended: Tips for Using a Credit Card Responsibly

Things to Consider Before Applying for a Credit Card

Before you rush to apply for credit, make sure you’re ready. Here’s what to consider doing prior to applying.

•   Check your credit report: The first step is to get a copy of your credit report. To get your free report each year, go to AnnualCreditReport.com . As you review your credit report, look for any errors. If there are any, take steps to fix them before you approach a credit card issuer. Also check to see if you’ve had any other recent hard inquiries.

•   Consider any other upcoming credit applications: Be mindful about what’s on your horizon before moving forward with applying for a new credit card. For example, if you think that you will be applying for a mortgage or car loan soon, you may not want to apply for a card and rack up multiple inquiries at once. It may make sense to get your mortgage or car loan first and wait for a little while to go after the credit card.

•   Don’t plan to ditch your old cards: Just because you hope to get a new card, don’t start canceling the other cards in your wallet. Remember, length of credit history makes up 15% of your credit score. By canceling old cards, you’d also reduce your total available credit, which could drive up your credit utilization ratio if you have hefty balances on other cards.

•   Think about why you want to apply for a credit card: Lastly, have a little talk with yourself. A credit card rule of thumb is just because you can get a credit card doesn’t mean you need one. If you already have a credit card, what’s driving you to apply? How are you managing your existing credit card? If you’re not 100% sure you’ll be able to pay off the balance in full each month, think twice about getting it. When balances linger from month to month, it becomes costly due to interest racking up.

Recommended: How to Avoid Interest On a Credit Card

Alternatives to Credit Cards

If you’re worried about the effects that applying for a credit card may have on your credit score, know that you have other options. Instead of getting a credit card, you may also consider the following alternatives for financing:

•   Debit card: If you’re simply looking for another way to easily make purchases and avoid carrying around a wallet full of cash, consider a debit card. While a debit card does not allow you to build your credit score, applying for one does not require a hard pull and is often as easy as opening a bank account. Do note that debit cards tend to have less robust security protections on purchases compared to credit cards though.

•   Loan from a family member or friend: If you’re wary of weathering a hard credit inquiry right now, consider approaching a close family member or friend about borrowing the funds you need. Make sure to clearly agree to the terms of the loan agreement, including when you’ll pay back the money. Also realize the potential implications for your personal relationship if you don’t make good on paying this person back.

•   Salary advance: Another option may be to ask your employer if you can borrow funds from a future paycheck. This can allow you to borrow money in a pinch without needing to go through the formal credit application process. Employers typically won’t charge fees or interest, though you may have to pay an administration fee or interest if your employer relies on a third party for the service.

The Takeaway

Applying for a credit card may be a simple process in terms of filling out the forms, but that doesn’t mean it’s something to take lightly. It can have very real effects on your credit score due to the fact that a formal application requires a hard credit inquiry. Thus, applying for a credit card is always something you should consider carefully and do responsibly.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How much does my credit score go down when I apply for a new card?

Typically, when you apply for a new credit card, your score will only go down temporarily by five points or even less. This will, however, depend on other factors related to your credit status.

How bad does a credit application hurt your credit?

In most cases, a hard credit inquiry as part of a credit card application will temporarily decrease your credit score by five points or less.

How often can I apply for a credit card without hurting my credit?

Typically, hard inquiries stay on your credit report for two years, but only impact your FICO score for one year. You might therefore want to space out applying for a credit card and do so only once every six months or so.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOCC-Q324-023

A six-figure salary is often associated with a comfortable lifestyle, and for many workers, reaching that threshold is a dream come true. If you’re a single person earning $100,000 a year, you may find that you have more than enough to cover your basic needs, with money left over for short- and long-term financial goals.

But it’s worth noting that the salary doesn’t go as far as it used to. The rising cost of living, shifting economic conditions, and individual spending habits and financial obligations can all play a role.

Let’s take a closer look.

Is $100K a Good Salary?

Generally speaking, $100,000 is a good six-figure salary for a single person. Before taxes, $100,00 works out to roughly $8,333 per month. Whether that’s enough for you depends largely on where you live. Savings, property ownership, and discretionary funds may be achievable in an area with a low cost of living. But in a more expensive area, that same salary won’t go as far because housing, transportation, and other necessities all cost more.

A money tracker can provide a bird’s-eye view of your spending and saving and help ensure you’re staying on track financially.

Average Median Income in the US by State in 2024

In Q4 of 2023, the average pay in the U.S. was $59,540, according to the U.S. Bureau of Labor (BLS). But wages vary greatly by state, reflecting regional differences in the cost of living and economic equality.

States like California, New York, and Massachusetts, which have robust economies and a high cost of living, generally report higher median salaries, frequently topping $80,000 annually. Average annual income in states like West Virginia, Arkansas, and Mississippi, which have a lower cost of living, is typically closer to $50,000. The presence of certain industries, job opportunities, and state-specific laws are all reasons for the difference in pay.

Here’s a look at the median household income in each state, per U.S. Census Bureau data.

Average Cost of Living in the US by State in 2024

It’s not just you: Goods and services have gotten more expensive, thanks in part to inflation. Depending on where you live, you may be paying more for housing, transportation, food, health care, and other necessities compared to someone in a neighboring town or state.

One way to determine whether $100,000 is enough for you to live on is to look at your cost of living. The cost of basic necessities varies by location, and this is often reflected in salaries. Areas with higher wages tend to have a higher cost of living, while areas with a lower cost of living have lower wages.

With that in mind, here’s a look at what the average resident in each state spends on basic necessities, according to data from the U.S. Bureau of Economic Analysis.

How to Live on a $100K Salary

Even if a $100,000 salary is more than enough to cover your expenses, it’s still a smart move to create a budget. Having a plan for where your money is going can help keep unnecessary spending in check and allow you to make progress toward your financial goals.

The first step is to ensure your budget can cover your necessities, such as housing, utilities, groceries, and transportation. Next, set aside money for short- and long-term savings goals, such as retirement or buying a home, and debt repayment. Finally, carve out funds for discretionary spending to ensure you’re able to enjoy a balanced lifestyle without going over your budget.

How to Budget for a $100K Salary

There’s no one-size-fits-all approach to making a financial plan and no shortage of different budgeting methods to explore.

One popular option is the 50/30/20 approach. Here, you earmark 50% of your budget to needs (think housing, transportation, food); 30% to wants (travel, entertainment); and 20% to savings and debt repayment.

Prefer something more straightforward? Consider a line-item budget. This requires you to list all your expenses, or categories of expenses, over a period of time, such as a month or year, and assign a spending target to each one. Then, every month, you can compare current expenses to past expenses to ensure you’re staying on track.

Of course, life changes, and you’ll want to review and adjust your budget regularly to make sure it’s in line with evolving goals and circumstances. A budget planner app can help you create a new budget, categorize spending, and monitor your credit score.

Maximizing a $100K Salary

There are ways to get more out of a $100,000 salary. Here are a few strategies to try:

•   Prepare for the unexpected. Once you’ve paid for your monthly expenses, dedicate some of the remaining amount to building up an emergency fund. A good rule of thumb is to save enough to cover three to six months’ worth of expenses.

•   Save for retirement. After your emergency fund is established, direct some funds to your retirement savings account. Crunch the numbers and see if you can contribute more, and find out if you qualify for a company match.

•   Improve your credit. Check your credit score, and if the number isn’t where you want it, look for ways to improve it. Steps may include setting up a system to ensure your bills are paid on time, routinely checking your credit report for errors, and keeping your credit utilization low.

Quality of Life with a $100K Salary

Whether it’s an entry-level salary or a pay upgrade earned after several years on the job, $100,000 can offer a good quality of life for many people. This amount typically is enough for the basics with some left over for enjoyment and long-term savings goals, like buying a home, retirement, or continuing education.

That said, the quality of life on a $100,000 salary varies based on living expenses in your area, your financial obligations, whether you support anyone else, and other factors.

Is $100,000 a Year Considered Rich?

There’s no single definition of how much someone must earn to be considered rich. So much comes down to factors like cost of living, geography, and your individual financial situation. Someone who makes $100,000 a year, has a low cost of living, and is investing and saving might feel better off financially compared to those who make the same amount but live in a high-priced location like New York, San Francisco, or Los Angeles.

Bottom line: Even though $100,000 a year might not put you in the highest echelons of wealth, it typically provides a stable, comfortable lifestyle.

Recommended: How to Calculate Your Net Worth

Is $100K a Year Considered Middle Class?

Middle class is defined as income that is two-thirds to double the national median income, or $47,189 and $141,568. By that definition, $100,000 is considered middle class.

Keep in mind that those figures are for the nation. Each state has a different range of numbers to be considered middle class. In Spokane, WA, for instance, a middle-class household needs to earn between $39,338 and $117,428 per year. In Jackson, MS, the range is $27,085 and $81,262.

Example Jobs that Make About $100,000 a Year

Wondering which jobs come with a six-figure salary? Here are some professions that pay around $100,000 per year, according to the BLS — some of which could be a good fit for introverts:

•   Physical Therapist: $100,440

•   Architect: $100,400

•   Math and Computer Professor: $100,060

•   Social Scientist: $99,260

•   Biological Scientist: $99,060

Recommended: 25 Highest Paying Jobs in the U.S.

The Takeaway

In many ways, earning $100,000 can feel like achieving a major professional milestone. And certainly in many places, it can provide a comfortable, middle-class lifestyle with room for savings, investments, and discretionary income. However, in expensive cities, you may find that $100,000 covers the basics but doesn’t leave much left over. Creating a budget you can stick to can go a long way toward helping you maximize your salary.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Can I live comfortably making 100K a year?

Yes, you can live comfortably on $100,000 per year, though how comfortable you are will depend on a variety of things, including where you reside, your lifestyle, and your financial commitments.

What can I afford with a 100K salary?

If you make $100,000 a year, you can save money for investments and savings, as well as afford adequate health care, dependable housing, and occasional travel and entertainment.

How much is 100K a year hourly?

Assuming a 40-hour work week and working 50 weeks a year, a $100,000 salary is equivalent to about $48 per hour.

How much is 100K a year monthly?

Before taxes, a $100K wage works out to about $8,333 per month.

How much is 100K a year daily?

A $100K wage, assuming a regular five-day workweek and working 50 weeks a year, is roughly $384 every day.

Photo credit: iStock/Pekic

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you’re single and earning $200,000 a year, chances are you’re able to afford a comfortable life. That level of income is more than three times what the average American worker makes each year. Of course, your cost of living, inflation, and financial obligations also factor into how far the money goes.

Let’s dive into a $200,000 salary and see how it compares to incomes across the country.

Is $200K a Good Salary?

By most standards, $200,000 a year is a good salary, especially for a single person with no dependents. However, how well you’re able to live on that income will depend on a number of factors, including your household size, where you live, and your financial habits. You may find it useful to use tools like a money tracker, which can help you monitor your spending and also provide you with valuable insights into your finances.

Average Median Income in the US by State in 2024

Wondering how a $200,000 salary stacks up against a typical salary in the U.S.? There are a few ways to find out. You can look at the average salary in the U.S., which currently stands at $63,795, per the Social Security Administration. Or you can compare it to the national median salary, which as of Q4 2023 was $59,384 per year, according to the U.S. Bureau of Labor Statistics (BLS). In both cases, a salary of $200,000 is significantly higher.

As the chart below shows, that salary is also more than the median household income in each state.

Average Cost of Living in the US by State in 2024

Cost of living varies by region, state, and even city, and this is often reflected in salaries. An area with a high cost of living, for example, tends to pay higher wages — and vice versa.

So when you’re thinking about whether $200K is a good salary, it can help to look at the cost of living where you live and see how it compares to different parts of the country. The chart below, which features data from the U.S. Bureau of Economic Analysis, breaks down this information by state.

How to Live on $200K a Year

In general, when you earn well into the six figures, you have more than enough for your basic needs (think housing, food, transportation, health care) with funds left over for savings, investments, and enjoyment.

But it’s human nature to spend up to your income. Even if you have one of the highest-paying jobs in the state, it won’t do you any good if you spend every bit that you earn. As your income increases, so do your expenses, so it’s important to set up and stick to a budget.

Recommended: What Is a Good Entry-Level Salary?

How to Budget for a $200K Salary

There are many different ways that you can budget on a $200,000 salary. A simple way to start is by writing down your monthly income and expenses and comparing the two. If your expenses are higher than your income, you will need to make a plan to either raise your income or lower your expenses to be able to balance your budget and live within your means.

As you fine-tune your plan for spending and saving, you might find value in a budget planner app.

Maximizing a $200K Salary

You have no shortage of options when it comes to making the most of a $200,000 salary. For some people, maximizing their salary means increasing their standard of living and enjoying the here and now. For others, a high salary might offer more of an opportunity to contribute to retirement accounts and save for the future.

In fact, creating an emergency fund, paying down debt, and contributing to your retirement savings account are just a few ways you get the most from a $200,000 salary. Whatever strategy you choose, be sure it fits with your financial and life goals.

Quality of Life with a $200K Salary

A $200,000 annual salary is significantly higher than the average pay in the United States. This means that financially speaking, you can most likely afford to settle down in a desirable area, cover your living expenses, build up your savings, and still have money left over for enjoyment. However, keep in mind that salary is just one piece of the puzzle; geography, unique personal circumstances, and your financial situation can all impact your quality of life.

Is $200,000 a Year Considered Rich?

There’s no standard definition of “rich,” though most people would certainly consider a single person making $200,000 to be well-off. But again, where you live — and the cost of living there — play a role. Another way to think about what “rich” means is to calculate your net worth. Essentially, it’s the value of your combined assets minus any outstanding debts, or liabilities.

It may also be useful to see how your net worth compares to your peers. Tools like a net worth calculator by age can be a good place to start.

Is $200K a Year Considered Middle Class?

Short answer: No. If you look at the data for the average income by age, you will see that an annual salary of $200,000 is significantly above average for all age cohorts. What’s more, it exceeds what the Pew Research Center defines as middle class, which is income that’s two-thirds to double the national median income, or $47,189 and $141,568.

Example Jobs that Make About $200,000 a Year Salary

Whether you’re considering a new career path or thinking about asking for a raise, it can help to know the types of jobs that pay around $200,000 a year.

Professions that pay around $200,000 a year tend to require advanced degrees or specialized training. Here are a few examples of jobs that pay near that amount, according to data from the BLS:

•   Nurse Anesthetist: $214,200

•   Aircraft Pilots and Flight Engineers: $209,680

•   Pediatrician: $205,860

•   Dentist: $200,870

•   Computer and Information Systems Manager: $180,720

Recommended: 30 Best Jobs for Introverts

The Takeaway

Is a $200,000 salary good for a single person? Yes, it is. In fact, that level of income significantly surpasses what a typical American worker earns in a year. But it’s worth noting that your local cost of living and financial obligations can impact how far the money goes. Spending habits can, too. After all, it’s easy to spend more as your income grows. To help keep yourself on firm financial footing, it’s a good idea to create a budget you can stick to and adjust it as your life and financial needs evolve.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Can I live comfortably making $200K a year?

Since an annual salary of $200,000 is well above the national average salary, it’s quite likely that you will be able to live comfortably on that salary.

What can I afford with a $200K salary?

What you can afford with a six-figure salary like $200K will depend on a number of factors, including where you live, the size of your household, and your overall financial situation. However, $200,000 is a very good salary, especially for a single person, so it’s likely that you can afford your basic needs with money left over for savings and enjoyment.

How much is $200K a year hourly?

If you earn $200,000 a year, your hourly rate would be around $96.15.

How much is $200K a year monthly?

A $200,000 annual salary works out to roughly $16,667 per month.

How much is $200K a year daily?

A $200,000 salary is approximately $547.95 per day.

Photo credit: iStock/FG Trade

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you’re single and earning $45,000 a year, this salary could be considered a decent living. But this largely depends upon where you live, your lifestyle habits, the amount of debt you may have, and where you are in your professional journey.

For instance, earning $45,000 a year can be a good starting off point for someone entering the workforce, such as a recent college grad. Living in a small town or city as a single person with a roommate or two, curbing any unnecessary spending, and sticking to a budget can also make subsisting on $45,000 possible. With some budgeting, you may even be able to put some money toward savings.

Read on to take a closer look at whether $45,000 a year is a good salary for a single person in 2024.

Is $45K a Good Salary?

How well you get by on $45,000 a year largely depends on your spending habits, ability to budget, and specific financial obligations. Higher rates of inflation have made living on $45,000 annually more difficult, though a budget planner app can help you monitor spending and saving.

Perhaps the best way to determine whether $45,000 is a good salary is to break it down by hourly, weekly, and monthly amounts. According to ZipRecruiter, the average hourly rate for someone making $45,000 a year in the U.S. is $18.07. When doing the math, the monthly pretax pay comes to $3,750, and the weekly pretax wages are $937.50. To break that down even further, the daily rate is $187.50.

Average Median Income in the US by State in 2024

According to the Social Security Administration, the average salary in the U.S. is $63,795. The median average salary, which represents the midpoint of salaries in the nation, was $59,540 in 2023, the U.S. Bureau of Labor Statistics reports.

Here’s a summary of the median household income in each state, based on the most recent data available from the U.S. Census Bureau.

Average Cost of Living in the US by State in 2024

The term cost of living refers to the amount of money a person needs to cover their basic needs, such as housing, transportation, groceries, and health care. Let’s take a look at how much residents in each state spend on these necessities, according to data from the U.S. Bureau of Economic Analysis.

Recommended: 25 Highest Paying Jobs in the U.S.

How to Live on $45K a Year

Living on $45,000 a year will most likely require you to keep spending and average monthly expenses in check. It’s also a good idea to consider your housing situation, since that’s often the biggest line item in a budget.

Unless you’re living at home with your family — a common scenario for about one-third of Gen Zers — you’re going to need to make sure you can afford monthly rent. On a $45,000 a year salary, this could be a challenge.

According to RentCafe, the average apartment rental in the U.S. is $1,713 per month, or roughly 45% of a typical pre-tax monthly paycheck. (The general rule of thumb is that housing costs comprise around 30% of your gross income.) If you plan on living in a major city, where rents are typically higher, you could very well end up spending even more of your income on rent.

However, if you don’t have to live in one of those cities to be close to work, or you have a remote job, it may be worth looking into one of the many affordable places to live in the U.S., such as Dayton, OH; Knoxville, TN; Erie, PA; and Hickory, NC. Along with more affordable housing, these towns also offer a lower cost of living, which means a $45,000 annual salary can go further.

How to Budget for a $45K Salary

The reality of living on a salary of $45,000 a year could pose some obstacles. However, taking the time to create a budget and using a tool like a money tracker can help you stretch every dollar and keep your financial goals on track.

One popular method is the 50/30/20 budget. This approach breaks down your salary into three buckets: 50% of your earnings cover basic needs, such as housing, utilities, food, and medical costs; 30% is allotted for your wants, such as travel, dining out, entertainment, and hobbies; and 20% is for savings and paying off debts.

There are many different types of budgeting methods, but the 50/30/20 strategy provides a simple, clear-cut picture of how your earnings should be split up.

Maximizing a $45K Salary

The way to maximize any salary is to live within, or even below, your means. This can be easier said than done, but it’s definitely possible.

While it’s tempting to start big, you may find more long-term success by taking small steps: Eat more meals at home. Shop at a less-expensive grocery store or during sales. Watch your utility use, which can help keep bills at a minimum. Carpool or bike to work.

Other ways to make a $45,000 salary work better for you include building an emergency fund to cover at least three to six months’ worth of expenses, and ramping up your contributions to your employer-sponsored 401(k) retirement plan.

Quality of Life with a $45K Salary

Depending on their cost of living and debt, a single person can have a nice quality of life with a $45,000 salary. But you may need to put in some work to find an affordable place to live, choose a car with a reasonable monthly payment, and opt for low-cost entertainment such as meeting a friend for a casual meal, happy hour, or movie.

Keep in mind that staying healthy lends itself to a better overall quality of life. If your job offers you health benefits, take advantage of them by keeping up with covered wellness exams and preventive health screenings. Your health insurance may even offer behavioral health services, such as therapy, at no added cost.

You can eat nutritiously on a budget without too much trouble. Look for deals on fruits and vegetables at small vegetable stands. Buying the store brand instead of a name brand product can also save you money.

Is $45,000 a Year Considered Rich?

Unfortunately, no. While there’s not an official classification as to what it means to be considered rich, it’s often thought to include the top 1% to 5% of earners — which means a half million dollars a year. In order to be considered in the top 20% of earners in the U.S., you’d need to earn a six-figure salary — or more than $100,000 a year.

Recommended: How to Calculate Your Net Worth

Is $45K a Year Considered Middle Class?

No, it is not. According to the Pew Research Center, households with an income between $47,189 and $141,568 are considered middle class. A $45,000 annual salary falls below that definition.

Example Jobs that Make About $45,000 a Year Salary

Whether you’re looking for entry-level work or jobs for introverts, there are plenty of positions that pay $45,000 a year. Here are some examples, per the U.S. Bureau of Labor Statistics:

•   Bookkeeper: $47,440

•   Dental Assistant: $46,540

•   Fitness Trainer or Instructor: $46,480

•   Administrative Assistant and Secretary: $46,010

•   Bill and Account Collector: $44,250

The Takeaway

Making $45,000 a year if you’re single can be tough, especially if you’re living in an expensive area. However, there are several ways to make it easier, including establishing and sticking to a budget, having one or more roommates, and curtailing extraneous spending.

The good news is, depending on where you are in your professional journey, a $45,000 salary can be a good starting point. In time, your salary may very well increase, whether because of a raise, promotion, or moving to a new, higher-paying job.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Can I live comfortably making $45K a year?

While it depends on what you consider comfortable, this yearly salary can cover your basic needs without requiring you to sacrifice too much. You may even have some money left over for fun and savings, if you’re able to stay within or below your means.

What can I afford with a $45K salary?

A $45,000 a year salary should be enough to rent an apartment in an area where the cost of living is below average and where your salary is in sync with the median salary of that city or town. And provided you’re not driving a luxury vehicle with all the bells and whistles, you can also swing a car payment.

How much is $45K a year hourly?

The average hourly rate for someone making $45,000 a year in the U.S. is around $18.07. However, hourly wages can be as high as $24.28 and as low as $10.10.

How much is $45K a year monthly?

The monthly take-home pay before taxes comes to $3,750, which translates into a weekly paycheck of $937.50.

How much is $45K a year daily?

When broken down by a day rate, a $45,000 a year salary comes to $187.50 a day. Keep in mind this is before taxes.

Photo credit: iStock/Marco VDM

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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