Have you ever wondered what it means when someone says they have "a nine figure salary?" What do these numbers even represent? In this article we'll explain everything about what a nine figure salary is and who earns one!
But first, let's cover some basic definitions...
The number "9" represents your total annual earnings (in other words: $1 million). A higher number like 100 would be considered a ten-figure amount. The letter after that tells us which currency was used for calculating those earnings ($) -- so if I said my net worth was $100 million dollars then you'd know exactly what country/currency I'm referring to. If I told you I had a $10 million dollar house in New York City, you could also understand where the money came from. This makes things easier later on when we talk about specific people having large amounts of cash.
A seven-digit number refers to any number with 7 digits. So an example of a seven digit number would look something like this: 123456789. You can easily tell that because there are only 7 places available for allocating each individual digit, the maximum value possible here is 999999.
Seven-digit numbers were popular during the early days of computers and calculators as most machines back then only supported them. Nowadays though, you're likely to see more eight-digit numbers than anything else. An eight-digit number simply adds two extra zeroes at the end of a seven-digit number. For instance, 1234654321 becomes 1 234 543 21.
Finally, a four-letter word such as "million," "billion," etc., indicates a quantity of data measured by billions. These terms refer to monetary units. Billions are usually expressed using the same unit of measurement as billions ("trillion"), but sometimes you may see trillion written out instead.
With all that explained, now onto the main point of this post: what does it mean to earn a nine-figure salary? Let's start with the very basics...
If you've been fortunate enough to make it big in business, you probably already realize that earning millions doesn't necessarily equate to making easy work for yourself. When you hit the top echelons of high earners, however, you might find yourself working harder than ever before just to stay afloat. To put this into perspective, a CEO of General Motors earned roughly $8 million per year while his company lost around $4 billion over the past few years. And that's not including his personal wealth either... he reportedly owns several homes across America along with luxury cars galore. But don't worry too much, because anyone with a huge bank account will agree that living life on the edge isn't always fun!
On the flip side, many workers today face long hours and low paychecks. Some folks work multiple jobs just to support themselves and their families, and others live paycheck to paycheck without seeing much hope for change. Even with massive corporate profits soaring through the roof, wages continue to lag far behind inflation rates.
And although no single person really knows how much someone else is actually worth, if you add up all the hourly salaries within a particular industry, you should come close to approximating the average compensation. So, let's say everyone earning less than $35,000 per year works 40 hours per week for 52 weeks per year. That comes to around 24,800 man-hours worked every year. Multiply this by the national minimum wage of $7.25 per hour ($17,825 annually), and you get approximately $14,700.00. Add this figure together with the above average worker's actual yearly earnings, and you get a rough approximation of a typical employee's true annual salary.
From there, multiply this by 365 days (or use Google Calendar's calculator function) to determine how much someone made last year. Then divide this by 2 to convert it to monthly earnings. Finally, take the result and divide again by 30 to get your yearly earnings estimate.
Now, keep in mind that this calculation doesn't include overtime payments or bonuses. Also, remember that this is based off of statistics relating to employees rather than independent contractors. However, if you assume the latter scenario applies, the following calculations should still hold true for you:
Let's move on to learn who has a nine figure salary.
According to Forbes Magazine, there are fewer than 300 individuals worldwide with a net worth exceeding $9 billion. Here are five of them:
Bill Gates, Founder & Chairman Of Microsoft Corporation -- Currently holds the title of richest person in modern history. His current fortune stands at $79.2 billion.
Warren Buffet, Investor & Billionaire Businessman — He currently sits atop the second spot with $62.6 billion under management.
Jeff Bezos, Co-Founder & CEO At Amazon.com Inc — As of July 2016, Jeff Bezos' holdings amounted to $82.5 billion.
Carlos Slim Helu, Mexican businessman & investor — Carlos Slim holds the third position with $58.5 billion.
Jacqueline Mars, American entrepreneur & founder Of Red Bull GmbH — She ranks fourth with $51.3 billion.
Income and assets aside, the truth is that most of us won't become billionaires anytime soon. While some people believe the rich deserve their status due to hard work alone, many others attribute success to good luck. Either way, getting to the ninth spot requires tremendous determination and persistence. It takes time and effort to build a successful career, especially nowadays.
Although there are plenty of ways to rack up a lot of money quickly, this strategy often involves shady practices, frauds or outright lies. Furthermore, the majority of super wealthy businessmen didn't gain a monopoly on good fortune. They typically started small businesses, invested wisely, built upon existing industries, and eventually expanded internationally. Many self-made millionaires amassed great fortunes thanks to investing in stocks, bonds, mutual funds, real estate, oil wells, retail stores, franchises, technology companies, new media ventures, and internet properties. Others became wealthy by creating inventions like vaccines, computer chips, textiles, and household products.
One thing's clear: the road to becoming extremely affluent requires patience, perseverance and smart choices. Most importantly, you must avoid risk-taking schemes that promise instant riches overnight. Otherwise, you run the risk of losing your entire fortune and possibly going to jail.
Next, let's discuss what 7 figure income looks like.
When talking about financial success, the term "six figure income" seems to pop up everywhere. Although it sounds impressive, it's important to note that the phrase is mostly associated with online marketing jargon. On its own, the term "six figure income" lacks context or explanation. We can break down what it means in relation to money, however.
Simply put, a six-figure income equates to roughly $60,000-$72,000 per month. Generally speaking, six figures signify a substantial increase over a regular salary. With that being said, you shouldn't expect to enjoy lavish parties or fancy dinners everyday. Instead, a six-figure earner is expected to spend most of their free time developing skills, building a network, attending professional conferences, taking classes, reading books, writing articles, traveling, and networking among other activities.
Of course, this varies depending on a variety of factors. Earning potential depends greatly on experience level, education level, geographic location, physical abilities, age, gender, lifestyle preferences, availability of job openings, and personality traits.
You can read our interview with millionaire author Ramit Sethi for more information regarding whether you have what it takes to achieve six-figure income levels.
As mentioned earlier, anyone can attain a six-figure income. Once you reach this threshold, you can begin enjoying greater freedom away from the daily grind. Sixers tend to travel extensively, invest in passive streams of income, and engage in hobbies outside of work. Additionally, they tend to save and plan for retirement better. More often than not, sixers don't need loans or credit cards to finance purchases. In fact, they're pretty adept at avoiding debt altogether.
Lastly, let's wrap up by explaining why people strive for nine-figure incomes in the first place.
While some people aspire to earn lots of money for the sake of accumulating capital, others seek to create lasting legacies. Regardless of the reason, the results are generally similar: increased quality of life, improved health, better relationships, stronger communities, enhanced mental well-being, access to opportunities, and the ability to help future generations prosper.
For example, consider retired NBA star Kareem Abdul Jabbar. Before retiring, he averaged nearly 28 points per game throughout his 22 seasons in the league. After leaving basketball, he founded the nonprofit organization Beyond Basketball to provide mentorship programs for youths in urban areas.
Another notable achievement occurred in 2014. Former NFL player Peyton Manning announced plans to donate half of his 2015 football contract to charity. According to reports, this donation will fund scholarships for students pursuing degrees in STEM fields.
The first thing you need to know about the "7 figure" pay range is that it's not actually specific to any particular amount of money -- it describes a certain kind of income rather than an exact number. In other words, when someone says they make $7 million dollars per year (or even $72k), what they're really saying is that they earn well over $711,000 per month. This is because there are seven characters total involved in defining the annual salary range for a typical American worker. Here's how these numbers work together...
The "Millionaire" Payout Range
You might be familiar with the standard payout range used by most states, which sets the minimum wage at just above 50% of the state median household income. The national average is around $26,942 per annum, so if your state has one million residents, then the lowest paid worker needs to pull down $539 from them before taxes. That means the highest earner will take home something like 97 cents out of every dollar earned!
If we apply the same formula to the top 1 percent who live on the West Coast, where incomes tend to be higher, the top earners can expect to pull in more than $1.2m each year. This makes sense -- the bigger the population base, the larger the potential pool of workers, so naturally those earning power scales up accordingly. A millionaire today may have only been worth tens of thousands of pounds 20 years ago.
There are also different ways to calculate how much people should be making based upon age. For example, some countries use a 40-hour week, others a 37 hour week, while Australia uses 35 hours. These differences affect salaries slightly but shouldn't change too dramatically within cities or regions. However, keep in mind that many companies now offer employees flexible working conditions including part time roles, reduced hours, job sharing etc., all of which impact on how high you can go based on your skills and experience.
But back to our original question: How do I convert my own income into salary ranges? Well, here's a basic overview of what you'll find in terms of salary packages offered to new graduates across America, as well as tips on converting your current income into these figures.
Income levels typically increase steadily along with education level until 30 or 31 when things start to slow down. After this point, there tends to be little difference between occupations in terms of earnings. So let's look at the breakdowns below.
According to the US Census Bureau data, the average hourly wages for men was $21.90 per hour, while women averaged $18.17 per hour. To put these figures into context, the UK National Living Wage rate is £16,096 ($23,438) per year for 2019/20. As such, anyone who earns less than this would probably consider themselves poor, regardless of whether they were living in New York City or Liverpool.
These averages hide significant variation though. While the overall male weekly earnings rose 3.8%, female earnings fell 0.5%. One reason why women still lag behind is due to greater likelihood of divorce being cited as the main cause. Women are also more likely to leave jobs early, especially once children enter the picture. Men often stay longer in employment due to better career prospects, increased life expectancy and lower risk of alcohol abuse.
Nevertheless, despite gender gaps, both males and females see similar increases in income according to occupation. Lawyers, public officials, salespeople, managers and professionals saw the biggest gains, followed closely by service sector staff members such as nurses, teachers and accountants.
Average Weekly Earnings By Occupation And Gender [US Census]
For comparison purposes, let's break down the following table to show exactly what 7 figures looks like in terms of annual income compared to actual monthly income. We've included two tables showing the relationship between annual income and monthly income.
As you can see, the largest portion comes from overtime payments. It doesn't matter whether you're earning $30,000 or $300,000 annually, you'd end up taking home roughly 90 percent of your monthly income after tax. On the flip side, however, if you earned $70,000 per year and worked 60 hours, you'd receive $4200 extra cash per month. If you want to learn more about calculating overtime, check out the links at the bottom of this article.
Here's another interesting note regarding the number of weeks that Americans are employed full time. According to statistics released earlier this year, the average duration of unemployment sits somewhere around 27.3 weeks. Since the majority of us won't be lucky enough to land six figure positions straight away, it seems reasonable to assume that many individuals may struggle financially during periods of unemployment.
It's important to remember that the average person works around 34 hours per week, although most people spend far fewer hours on the clock. With that said, the average hourly earnings for people aged 25-64 sit at around $22.98 per hour. You could potentially save hundreds of dollars per week simply by reducing the number of hours you dedicate towards work.
When talking about financial success, most people think of millionaires. But what happens to those whose income eclipses the traditional definition of riches? Are they suddenly considered wealthy? Or just extremely successful?
Well, it depends on whom you ask. There's no official global consensus on what constitutes a billionaire, nor is there a consistent threshold for billionaires either. Forbes magazine defines a billionaire as having net assets valued at $100 billion, whereas Bloomberg offers a $250 billion cut off point. Meanwhile, Wikipedia suggests a threshold of anywhere between $500-$1000 trillion!
However, regardless of whatever arbitrary value you choose, it's safe to say that very few individuals ever reach this mark. Even Bill Gates, arguably the richest man alive, wouldn't fit the bill, unless he started selling his shares. Warren Buffet tops the list at present, sitting comfortably at $81 billion thanks to investment returns. He's joined by Jeff Bezos, Carlos Slim, Mark Zuckerberg and George Soros among others who commandeer large portions of wealth.
Some economists believe it makes more economic sense to define superrichness as anything above $10,000,000,000. This equates to approximately 200 times the gross domestic product (GDP). This way, the world's wealthiest individual, Amazon CEO Elon Musk, pulls in a measly $13.2 billion per year. His closest rival, Berkshire Hathaway chairman Warren Buffett, commands around half as much.
Bill Gates' personal fortune stands at $86 billion, giving him a healthy lead over Donald Trump, the commander-in-chief, who has recently announced plans to build a wall separating Mexico and Canada in order to stem illegal immigration.
Nowadays, very few people manage to achieve the sort of monetary success described previously. Most people settle instead for a sizable paycheck in exchange for long days spent slaving away in front of the computer screen. Although perhaps understandable given the bleak outlook facing the future, this isn't necessarily ideal.
While it's great to enjoy a nice vacation occasionally, spending endless amounts of time commuting, eating poorly and sacrificing precious family time certainly doesn't equate to happiness. Furthermore, the stress associated with office politics, tight deadlines and rigid schedules can easily lead to mental health problems.
Sure, if you're fortunate enough to become a manager or director within a company, then sure, you can expect to earn substantially more than your colleagues. But if you're looking to strike out on your own, it pays to understand exactly how big your target market is, and what type of business model you intend to adopt. Once you've made a decision, you can begin researching local businesses offering products and services related to yours, and contact them directly. Many entrepreneurs opt to join online forums and social media groups dedicated to their interests, allowing customers direct access to support teams. Other options include hiring professional help through agencies, freelancing websites and self-hosting platforms like Patreon and GoFundMe.
Of course, it goes without saying that the best option is to create your own website, blog or YouTube channel, and promote yourself effectively using SEO techniques. Social networks such as Facebook are also invaluable tools for promoting your talents.
To truly excel, you must treat your newfound status like any other regular nine-to-five gig. Don't forget to eat, sleep and relax too. Remember, nobody likes a grumpy employee.
Perhaps surprisingly, there's no universal agreement on how much a 9 figure salary is. Some sources claim that the number lies somewhere between $720,000 and $999,000, while others suggest closer to $900,000. Either way, it definitely sounds impressive, but don't hold your breath waiting for the cheque book.
One key factor affecting the precise calculation relates to inflation rates. Let's imagine that somebody gets a $600k raise next year. Their real income would rise to $912,869. Now suppose that inflation rises to 2% the following year. This means that the same $600k raises nets the recipient $729,799.99 in purchasing power the following January.
You've probably heard the term "6 Figures" before. It means earning $66,000 per year (or $33,333 monthly). But what about other higher numbers like 7, 8 & 9? How big are these payouts really? And why do people talk about making so many millions when they're not even at $1 million yet? Let's take a look!
First up...7 Figure Salary Payout. This one seems pretty straightforward since it has such an obvious definition. So let's break down exactly what that means for you as well as see some examples of where someone could earn this amount.
A 7 figure annual income equates to approximately $366,667 each year. For example, if your yearly earnings were $50,000 then it would be considered a 5 figure annual income ($166,666 annually), and if those same earnings were $100,000 then it would equate to a 6 figure annual income ($266,667 annually).
The reason why there aren't any more specific definitions after 6 figures is because once you reach this point, the numbers just keep going upwards without stopping. The first person who earned over $400,000 was Bill Gates back in 1991 -- he made almost half a billion dollars in 2014 alone. In fact, Forbes estimated his net worth to be around $79 Billion today. If we use the above formula, Mr. Gates' annual income would come out to roughly $532,143 which puts him on par with being labeled a 'billionaire'. However, Forbes estimates his total wealth to be somewhere between $101-$108 billion depending on the day. Now that's something else!
Now that we know what makes them famous, we can ask ourselves why people tend to refer to this kind of fortune as becoming a '7 figure earner', etc.? Well, simply put, it comes from the way most business models work. When you sign up for certain online businesses, the average compensation plan will usually offer you a set base wage plus commission bonuses based upon performance. Some companies may also give you additional perks like health insurance, 401k contributions, vacation time, free training, etc. Once you hit a certain threshold for commissions, you'll start getting paid via commission checks rather than straight wages.
But enough theory, here are some actual case studies and explanations as to how someone might have reached that coveted 7 figure mark.
According to CNBC, a typical company may offer its salespeople incentive plans that reward top performers through different types of incentives including cash bonuses, profit sharing, increased benefits, stock options, referral programs, etc. Depending on the type of company, this can range anywhere from $75K/year all the way up to $900+K/year. With regards to the latter, this is actually what Elon Musk did for Tesla. He took home $72 Million last year by himself. That said, I don't think anyone would consider him a millionaire unless he had another source of income outside of Telsa.
If we assume that the previous example represents a 7 figure earner, then an 8 figure earner must be doing quite well according to our calculations. According to a recent report published by CNN Business, the median household income in America is currently sitting at $60,054 per year. Based off of this information, an 8 figure earner must be pulling in roughly $360K/year, right at the border of a 7 figure annual income. Again, this is assuming that all incomes are adjusted for inflation. Most likely, 8 figure earners won't receive anything close to this amount but will still be able to afford a nice house and car on top of everything else.
When talking about 9 figures, things become a bit tricky since no one knows exactly what the cut off point is. As far as I'm concerned, a 9 figure earner should be receiving a minimum of $432K/year or greater. Anything less than this would be classified as a billionaire. By this calculation, Warren Buffet earns roughly $51M per annum while Mark Zuckerberg pulls in slightly under $50M per annum.
In order to qualify for a 9 figure salary, you'd need either to inherit large sums of money or own a successful company with multiple sources of revenue generating streams. We talked briefly about Elon Musk earlier, but that was due to his having 2 separate sources of income. One coming directly from Tesla and one coming from SpaceX. Regardless, if you want to achieve this goal, you'll definitely need to follow a similar path.
With regards to whether 8 figures is indeed a lot of money, I believe it depends on several factors such as location, lifestyle choices, personal preferences, financial goals, debt levels, spending habits, investment portfolio, savings rates, etc. Obviously, if you live paycheck to paycheck, only taking home $30K per month, you wouldn't necessarily say that 8 figures is a huge deal. On the other hand, if you're already comfortable financially, enjoy traveling, eating out every night, buying new cars, etc., then yes, I would say that 8 figures isn't too shabby.
Finally, we arrive at the highest possible annual income level -- the infamous 10 figure salary. While this doesn't represent a real world scenario, it's interesting to note that if you ever wanted to try to pull this off, it would require owning both a very profitable company AND a lucrative side hustle. To clarify further, a 10 figure earner typically refers to someone who owns a publicly traded company along with having a significant passive income stream.
For instance, Jeff Bezos reportedly makes roughly $150M per year from Amazon and Microsoft founder Paul Allen makes $110M/year from various investments. Granted, neither of these men worked 40 hours per week during their entire career. They truly became multi millionaires overnight thanks to smart investing strategies and hard work. Not everyone is lucky enough to possess such strong willpower and drive however.
As mentioned previously, the vast majority of billionaires started out with nothing and eventually built themselves into success stories. You certainly can learn from these individuals and apply the lessons learned towards achieving your own dreams. Afterall, history shows us that anybody can go from rags to riches provided they stick to their guns long enough. All you have left now is to pick a dream, find a mentor, and finally begin working toward your goal. Good luck!
I hope you enjoyed learning about what 7,8 & 9 figures in money mean. Please share your thoughts and questions below regarding this article. Also feel free to leave feedback and suggestions on improving my articles in general.
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