Earning a six-figure salary is a major financial goal for many people. Only 18% of people in the U.S. earn $100,000 or more annually, according to a 2023 Zippia study. When you hit this benchmark, it can feel like the key to unlocking financial security and becoming a millionaire — but is it?
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In a recent Instagram post, millennial money coach Rachel Covert argued that even people earning six-figure salaries may never become millionaires if they don’t handle their money responsibly. Here are her five signs that you’ll never be a millionaire, even if you’re earning $100,000 or more.
Also see nine steps to become a millionaire in five years or less.
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Financial planning would be much easier if everything were perfectly predictable 100% of the time, but that’s just not how life goes. You’ll definitely face some emergencies and unexpected situations that come with similarly unexpected costs over your lifetime. The key to protecting your financial health is having an emergency fund to cover those costs when they arise.
Covert argued that if you don’t have at least $4,000 in an emergency fund (or a similarly liquid account) to cover such costs, that’s a sign that you’ll never become a millionaire. If you don’t have that money saved up and a $4,000 emergency were to arise, you’d have to go into debt. Since debt, especially credit card debt, can be expensive, not having a fully funded emergency fund can threaten your financial future.
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Most salaried employees in the U.S. receive a paycheck every other week. When you see that money hit your account, you may be tempted to go out and spend most of it. But then you have to wait another two weeks for your next paycheck. You can easily run out of money in that period of time if you’re not careful.
Covert’s post said that running out of cash and needing to put essentials like groceries on your credit card is a sign that you won’t become a millionaire. Someone who manages their money well and makes it last between paychecks is better equipped to reach millionaire status, even if they don’t earn more money. Resist the urge to spend your money as soon as you get paid. Instead, focus on allocating enough of your paycheck for your essential expenses, saving some of the money and planning for your future financial goals.
