We often see job posts that don’t clearly mention the salary. Instead, they simply put it as six, seven, eight or even nine figures. And sometimes, people tell us or others that they’ve a six figure income, seven, eight or nine figure income.but how to understand how much is 6 figures or 7,8,9 figures income?
Now what does this exactly mean? Stay with me for I’ll be explaining how to calculate six, seven, eight or nine figure income.
Explaining the Figure System
We’ve all learned at school that there’re 10 main numbers, starting from one and ending at nine. Plus, the magic figure zero, which we use to indicate a figure. Therefore, if we join the numbers one and zero, we get the figure 10.
Now 10 is a two digit figure. We can add the number one instead of zero to get the figure 11. Again, this is a two digit figure.
Adding More Figures
Using the same system of fixing numbers behind one-another, we get for example the figure 100 or 111 or 101.
We can go on increasing these numbers exponentially. For example, we can add 100,000 or even 10,00,00,00.
Of course, it’s not necessary to use only ones and zeros: we can add any digits and make the number larger. For example, we can fix 12,345,678,90 to get a 10 digit number. The same principle applies to arriving at specific figures.
Using the Figure System for Income
If I get $100,000 a year, I will be earning a six figure income. However, this doesn’t apply if I’m making $99,999.99. The reason is that the last two digits- 99- indicate Cents and not Dollars. Hence, with the amount of $99,999.99 I will be actually earning only a five figure income.
Understanding How much is 6 Figures Income
The above example makes it very clear that an income of $100,000 qualifies as a six figure income system. But again, there’s a major rider to this. If I’m making $100,000.99, I won’t be earning a seven figure income. Because, these 99 Cents I’m making above $100,000 isn’t very significant.
Therefore, any salary that fetches me less than $1 million a year will be considered only as a six figure income.This is a decent example of how much is 6 figure income.
The Million Dollar Figure Income
Any income that’s above $1 million but less than $99 million is a seven figure salary. We’re all aware that this is one of the biggest incomes in the world. You qualify as a millionaire with this amount.
If you still wonder about how much is 6 figures then just think about having a 7 figures income and you’ll be considered a millionaire.
Mostly, top sports persons, business persons, some political leaders, movie and TV stars make such kind of large money. Others inherit money from their parents or ancestors while some get lucky enough to strike a lottery or sweepstakes.
Eight and Nine Figure Incomes
Eight and nine figure incomes or earnings make you a billionaire. However, these would generally come from various sources such as stocks, ownership in companies, royalties and other rights or even real estate holdings.
Actual Calculations
The actual calculations of how much is 6 figures income or 7,8,9 figure income depends upon a lot of factors.
Billionaires of the world such as Jeff Bezos, founder and CEO of the single largest online retailer in the world, Amazon, saw his fortunes swing up and down compared over Elon Musk, founder the SpaceX and Tesla. The same holds true for Mark Zuckerberg, the founder of Facebook.
That was because the stocks of their companies often rise and fall due to any reason. This can directly affect their incomes but not their salary, since they own major stakes in their respective companies and often, also get a fixed salary.
Taxation Matters
Every person in the US, regardless of their income, has to file taxes annually. Taxation also affects a six, seven or higher figure incomes. Inland Revenue Service (IRS) calculates the taxes you have to pay based on different factors including your location.
If we go by this chart, we will find that a $100,000 salary per year- which is a 6 figures income, drops drastically to just five figures.
This is a clear indicator that a six, seven, eight figure salary or income doesn’t really mean you take home that much money every year.
Money Transfer Fees
In some cases you might also have to pay money transfer fees to payment gateways such as PayPal. This would cause a further drop in your six figure salary. Generally, freelancers pay these fees to receive money from their work from buyers.
And if you’re maintaining a high value bank account, you would have to pay annual maintenance charges too. These would differ according to the nature of your account and policies of the bank.
Income v/s Salary
And finally, I’ll also explain the difference between an income and salary. This has become a very important issue nowadays as increasing number of people have more than one source of income. That’s because they take side gigs.
Others rent out part of their property either to individuals or through companies such as Airbnb.com.
The exact definition of a salary is the amount of money your employer pays for a day, week or month. It doesn’t include perks and other benefits since these can be optional and an employer can sometimes stop paying them.
In corporate terminology, the six or seven figure income might include these perks. Hence, they’re known as Cost to Company.
While working under someone or in a company it can get difficult to negotiate your salary from a six figure income to seven or eight figure income but once you get a raise , you can aim for higher with investing your money in stocks or other investment opportunities.
If you’re getting $10,000 per month including perks, your annual income would be $120,000 or six figures. But when you deduct the perks, it could be much smaller. And remember, perks also attract taxes.
In Conclusion
There’s an old adage that says: “An average millionaire has at least seven sources of income.” Countless people around the world have proven that a salary needn’t be the only source of income.
Unfortunately, lots of people never consider the options of stepping up their income and remain happy merely with the salary they get from an employer.
Wondering only about how much is 6 figures income won’t make you a millionaire until you start thinking about how to increase the figures.
Therefore, if you’re looking at making a six, seven, eight or even nine figure income, consider various options such as investments on stocks and commodities, taking a profitable side gig or even following a passion that could fetch you more money every month.