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What’s a 'good' income?

Kelly earns $36,000 a year after taxes from her job at a professional screen printing and embroidery shop. She manages to save $1,100 a month towards a down payment for her eventual home purchase. She worked four jobs when she was studying at ministry school, and that allowed her to avoid any form of debt.

Kelly considers hers a “good income” but isn’t sure why Ramsey wouldn’t agree and is wondering if she needs to get another job.

“Good income is not a moral statement,” Ramsey explained. “Good income is relative to the average household income in America, which is $78,000 right now.” Real median household income in the U.S. was $78,250 in 2019 and fell to $74,580 in 2022, according to the Census Bureau. "You're not a bad person. You're not a horrible income earner. You're not lazy. None of those are judgements when we say 'good income,'" he added.

According to the U.S. Bureau of Labor Statistics, the median individual salary for full-time wage and salary workers is $1,145 per week, which is roughly $59,540 a year. By this measure, Kelly’s annual salary is 39.5% lower.

However, Kelly is performing better in other areas of her finances. The U.S. personal savings rate is 3.8%, according to the Bureau of Economic Analysis. This is the percentage of people's incomes left after they pay taxes and spend money. That is just over $2,200 a year in savings on a median income.

By comparison, Kelly is saving significantly more every year. She also has no debt, which puts her in a much better position than the average American who has $21,800 in debt excluding mortgages, according to research by Northwestern Mutual.

Ramsey believes Kelly is clearly in a much stronger financial position than most Americans. “You’re doing a good job, you’re amazing,” he said. Nevertheless, he encouraged her to keep seeking out ways to boost her income further.

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Future destination

Her annual income of $36,000 might be adequate to her now, but Kelly is just 23 years old. According to Ramsey, she needs to look ahead and have a plan to boost that income. “What do you want the 33-year-old version of you to look like?” he asked. “Anything that’s not growing is dying.”

Given the fact that Kelly wants to buy a home someday, this is important advice. The average sale price of houses sold in the U.S. surged from $334,400 at the end of 2013 to $492,300 at the end of 2023. That’s 47.2% higher in just 10 years.

Homes are likely to be more expensive by the time Kelly is 33 years old, so she will need to make enough to afford one comfortably.


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Vishesh Raisinghani Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.


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