As your income grows, it might afford you a bit more wiggle room in your budget. But higher incomes don’t always translate to financial health or lasting wealth.

If equally high debt payments and living expenses eat into your earnings, it can be challenging to build up savings, invest for the future, and grow your net worth — no matter how much you earn.

The good news is you can work toward a six-figure net worth, even on a five-figure salary. Here’s how.

Setting yourself up to achieve a six-figure net worth starts with a few basic steps.

Building a budget can help you better understand exactly how much you’re bringing home each month and where that money is going. Rather than thinking of your budget as limiting, use it as a roadmap to get to where you want to go financially.

With a budget in place, you can more easily identify spending categories you can afford to cut back on and reallocate money toward debt payments and investments. Plus, you’re better able to plan your savings into your budget, treating it as a line item just like all of your other obligations. Taking a “pay yourself first” approach ensures you prioritize your future before other spending eats into your extra cash.

Read more: Here's what the ideal budget looks like for a $60,000 salary

Carrying debt — particularly high-interest debt such as credit cards — holds you back from increasing your net worth. On the other hand, paying down high-interest debt quickly can free up cash flow to put toward savings and investments.

“[Having] debt is like swimming upstream, and the interest rate you’re paying is the speed of the current,” said Scott Hefty, CFP, senior wealth manager and founding partner at Serae Wealth. “It’s almost impossible to make progress when you’re swimming against a 20% or higher interest rate.”

Hefty added that prioritizing debt repayment may involve some sacrifice, but once you’re able to eliminate high-interest debt, you’ll see the benefits snowball over time.

After paying down debt, your biggest priority should be to invest. The sooner you start, the more time your money has to grow thanks to compounding. For example, if you invest $500 per month at an average 7% annual return, you’ll have $100,000 in about 11 years. Increase it to $800 per month, and you’ll hit six figures in under eight years.

Think carefully about where to park your funds and make your money work for you. And be sure to automate your retirement and brokerage account contributions. Even if you can’t afford to contribute a significant portion of each paycheck, it’s still well worth the effort — a little each month adds up over time.

If it’s been a while since you reviewed your workplace benefits, you could be missing out on perks that can help you grow your net worth, such as tuition reimbursement, student loan repayment assistance, or 401(k) contribution matching.

Review your available benefits, and ensure you’re doing your part to qualify for financial help, such as contributing enough to your retirement to receive the full match. Otherwise, you’re leaving any free money on the table.

Read more: What is the average net worth by age?

When growing your net worth, it’s important that your mindset and financial habits are working with you and not against you. Here are a few common pitfalls you should avoid to stay on track.

The No. 1 reason people struggle to build their net worth? Experts say it’s lifestyle inflation.

“Net worth is simple: assets minus liabilities. Yet people sabotage it constantly by mixing identity with spending,” said Eric Croak, CFP and president of Croak Capital, an Ohio-based fiduciary financial firm.

For example, maybe you buy a new car to appear more successful, even though a used vehicle would just as easily get you from Point A to Point B. “Over time, it is death by 1,000 upgrades: nicer apartment, daily coffees, premium streaming, random vacations. Those are just micro-luxuries disguised as progress,” Croak said.

Rather than trying to “keep up with the Joneses,” ask yourself if the purchases you’re treating yourself to are worth the financial progress you could be sacrificing. This isn’t to say you must deprive yourself of every splurge. But it could be worth rethinking some of your discretionary spending that could be keeping your net worth from growing.

Read more: 5 psychological money hacks to cut spending and increase savings

Attaining a six-figure net worth takes time and patience. Most people don’t build lasting wealth by discovering the next hot stock or buying up fly-by-night cryptocurrencies.

“Most people who hit significant pitfalls try to get too fancy too early,” Hefty said.

The reality, he explained, is that for most people, wealth building is a pretty boring process. “They sacrifice and save to pay down debt and begin investing in modest amounts.”

If you want to stay motivated and make more informed make more informed decisions about your finances, find out where you stand now and track your progress going forward.

“If you really want to grow, track your net worth monthly,” Croak said. “Even if it’s negative. Even if it hurts. Seeing that number creep up, even $250 a month, does something to your brain. You go from reactive to intentional.”

Read more: Negative net worth? Here are 3 things you can do to fix it.

Your net worth is the difference between what you own (assets) and what you owe (liabilities). This figure is important because it provides a clear snapshot of your overall financial health. Tracking your net worth helps you determine whether you're building wealth or accumulating debt over time.

According to the Federal Reserve’s 2022 Survey of Consumer Finances (the most recent survey available), the median net worth for all families in the United States is $192,300. The mean (or average) net worth is $1.06 million.

Several factors can impact your net worth, including where you live. Curious how your net worth compares to the rest of the country? Learn more about the average net worth in each state and why it varies.

The map below shows both median and mean figures for net worth in each state.

Keep in mind that the mean/average can be skewed higher by extremely wealthy individuals. That’s why it’s helpful to look at the median, which refers to the middle number in a sorted data set — exactly half of the data points are above it and half below. The median is less affected by extreme outliers, so it gives a more realistic picture of a typical person's net worth.

Why does net worth vary so much between states? There are several factors that can impact the typical net worth in a certain area:

Cost of living: Higher living costs in some states make it harder for residents to save or invest because more of their income goes toward paying for essentials.

Property values: Home equity often makes up the bulk of net worth. So, in states with higher property values, net worths also tend to skew higher.

Income: States with higher incomes on average also typically have higher average net worths.

Local economy: Strong economies and more employment opportunities in certain states tend to positively impact overall financial well-being.

Hawaii ranks as the state with the highest net worth where the median is $472,600. Although Hawaii has a higher cost of living than most other states, the average salary is also quite high at $65,030, according to data from Empower. Additionally, homeowners enjoy elevated property values; the average home value in Hawaii is $841,274, according to Zillow, versus the national average of $361,263.

The second-highest median net worth in the U.S. belongs to Washington at $375,100. The average debt-to-income ratio (DTI) in Washington sits at roughly 1.5, which is considered moderate compared to other states. The average salary in Washington is also $78,130, while the average property value is $603,837 — nearly double the national average.

Massachusetts residents have a median net worth of $308,400, thanks to lower debt levels and higher incomes and home values. The average DTI in Massachusetts is 1.2, while the average salary is one of the highest on our list at $80,330. The average property value in the state is $635,252.

Maine residents have a median net worth of $307,100, with an average DTI of 1.48. The average salary in Maine ($60,000) is on the lower end compared to other states on this list. Property values are also lower compared to other states, but at $400,642, they're still well above the national average.

In Utah, residents have a median net worth of $305,600. The average DTI in Utah is 1.8, and the average income is $61,070. Utah has the third-highest average property value on this list at $530,787.

Read more: How much money is considered rich?

West Virginia is the state with the fifth-lowest median net worth at $96,740. The average DTI in West Virginia is just under 1.2, and the average salary is $52,200. The average property value is $167,589, which is less than half the national average.

In Arkansas, the median net worth is $93,480 — less than half the national average. The average DTI is 1.2, and the average salary is $51,250. Property values in Arkansas are slightly higher than West Virginia at $210,633.

In Alabama, the median net worth is $90,200 — also less than half the national average. The average DTI in Alabama is over 1.3, and the average salary is $53,400. Despite having lower average salaries and higher levels of debt, homeowners in Alabama are at a slight advantage compared to the previous two states because the average property value is $228,669.

Mississippi has a median net worth of $82,440. Residents have an average DTI of 1.4, while the average salary is on the lower end at $47,570. Property values in Mississippi are some of the lowest in the country at $181,232, on average.

The state with the lowest net worth is Louisiana, with a median net worth of $71,900. The average salary in Louisiana is $53,440, and the average DTI is 1.3. On the bright side, property values in Louisiana are up 0.4% year over year, with the average property value sitting at $201,100.

If your net worth falls short of these averages, don’t worry. Your net worth will change over time as your financial situation evolves. And it’s never too late to make positive changes that lead to a higher net worth.

For example, consider paying off your high-interest debts. Liabilities such as credit card balances and loans can significantly reduce your net worth, even if you earn a decent income.

Additionally, looking for extra ways to earn and grow your income, such as negotiating a raise or taking on a side hustle, can help you increase your savings and pay off debts.

Need more ideas? Here are 6 ways to increase your net worth.

The term “cash flow” is common in business, but the concept has implications for your personal finances too. Cash flow, or the money going into and out of your accounts each month, is a useful metric for understanding your financial health.

When you spend more than you make, your cash flow is negative. When you spend less than you make, you have a positive cash flow and can save money over time.

If you’re having a hard time getting a handle on the movement of money into and out of your accounts, you’re in the right place. Continue reading for seven ways to improve your personal cash flow.

Your personal cash flow is the movement of money into and out of your accounts, typically on a monthly basis. All of your net income — including paychecks, investment income, side hustle income, rental income, and any other money you receive — makes up your cash inflow. Meanwhile, your bills, debt payments, and discretionary spending make up your outflow.

A positive cash flow means you’re making more than you spend; in other words, your inflow is higher than your outflow. A negative cash flow means you spend more than you make.

Understanding your cash flow is a helpful measure of your financial health. If your cash flow is positive every month, you can save money, invest, and make progress toward financial goals such as buying a house, going on vacation, or retiring comfortably.

On the other hand, if your cash flow is negative, you could end up in serious debt. Plus, bleeding money every month is stressful. Not only does it mean you’re falling behind on your goals, but you may also be scrambling to make ends meet.

Read more: 7 ways to save money on a tight budget

You can calculate your cash flow by subtracting your monthly expenses from your net monthly income. If your income and expenses look different each month, you can get a more accurate idea of your monthly cash flow by averaging multiple months of income and expenses.

If the thought of sifting through all your financial statements and calculating cash flow every month seems like a lot of work, don’t worry. You can rely on simple — and often free — online tools to do it for you.

For instance, My Money from Yahoo Finance allows you to connect all of your financial accounts, then automatically categorize expenses and calculate your cash flow on a monthly basis. Once you set up your account, your work is done. Want to give it a try? Sign up for free here.

If your cash flow isn’t where you want it to be, you can improve it by increasing your income or reducing your expenses. The following strategies can help:

The first step in improving your personal cash flow is to understand where your money goes after landing in your account. Start by combing through credit card and bank statements from the past few months. Figure out how much you tend to spend on essential expenses and discretionary spending, then use these targets to create a budget.

Remember, your budget needs to reflect your income. If you earn $4,000 in net monthly income, your expenses (including discretionary spending and savings goals) should add up to $4,000. If your expenses are higher than your income, that’s a sign your cash flow is negative, and you’ll need to make some adjustments.

Your budget will fluctuate as your income, expenses, and goals change. If your priority is to increase your cash flow, try combing through your budget for unnecessary spending.

For example, if you’re paying for two streaming services but only watch one, cancel the one you don’t use. Similarly, if you prefer working out at home rather than driving to the gym, stop paying for your membership.

Limiting your discretionary spending is one thing, but you can also improve your cash flow by saving money on essentials. There may be less wiggle room to cut costs here, but see what you can do with the following tips:

Groceries: Make a list before heading to the store, and choose store-brand over name-brand products. Try choosing more whole, unprepared foods to cook yourself instead of buying prepared and processed options.

Utilities: Negotiate your bills to bring costs down, and see if you can switch to a cheaper phone plan. You can also lower utility bills by switching to energy-saving devices and fixtures, like smart thermostats and water-saving shower heads.

Housing: Move to a less expensive area, get a roommate to cover part of your mortgage, or rent out your home when you travel.

Transportation: Reconsider how many vehicles you need for your household, and if it makes sense, sell one. Take public transportation, carpool, and bike when possible. Finally, compare car insurance policies to make sure you’re getting the best deal possible.

Clothing: Instead of buying new outfits for special events, try a clothing rental service instead. If you want to buy something, shop at consignment shops and secondhand marketplaces first.

Read more: How to save money in 2025: 50 tips to grow your wealth

An emergency fund is an essential cushion for anyone, especially those trying to improve their monthly cash flow.

An emergency fund is a pile of money you set aside for hard times, with the assumption you won’t touch it unless you truly need it. For example, you might use the funds when your furnace breaks or you need to book a last-minute flight for a family emergency.

Having an emergency fund means you can cover unexpected costs without going into debt, which can be a major drain on your cash flow. Experts generally recommend saving at least three to six months’ worth of essential expenses in your emergency fund. Keep this money in a high-yield savings account so it’s easily accessible (and earns interest while it’s sitting there).

Depending on your debt balance and interest rates, this monthly expense can take a major toll on your cash flow.

To improve your cash flow, focus your efforts on paying off high-interest debt, like credit cards, first. The higher the interest rate, the more you’ll end up paying in the long run — so it’s best to get rid of this debt as soon as possible.

You can also consider a debt consolidation loan, which allows you to pay off several loans at once, consolidating your debt into a single monthly payment. If you can qualify for a low enough rate on a debt consolidation loan, this strategy can help you pay off debt faster (and pay less interest along the way).

After cutting your costs as much as possible, you can continue to improve your cash flow by increasing your income with one of the following strategies:

Negotiate a raise: If you think there’s room to earn more at your current job, pursue a raise with your boss. Research what comparable roles are paying and get clear on what your responsibilities, contributions, and achievements are worth.

Look for a new job: If you can’t get a raise at your current job — or your negotiations don’t go as planned — you can look for a new job that pays more. You can even bring a job offer to your current employer to see if they’ll budge on your salary.

Start a side hustle: Side hustles are a great way to increase your earning potential, allowing you to explore a different skillset or industry outside of your day job. There are endless side gig options, such as tutoring, freelance writing, or pet sitting.

Regardless of how much you earn, automating your savings can help you improve your cash flow. When you automate your savings, you’re essentially paying yourself first. This approach means you prioritize your long-term goals and security (and a positive cash flow), even if it means spending less now.

To automate your savings, set up a recurring transfer from your checking to your savings account. Even if you only transfer a small amount to start, it’s building the habit that matters.

No matter your age, you’re probably saving for at least one milestone — whether it’s buying your first car, starting a family, buying a home, or funding your golden years.

As you get older, your savings goals will likely change, and your savings account balance will fluctuate as well. This is why it’s important to have perspective and come up with a savings strategy that makes sense for your future goals and current finances.

Still, it can be helpful to see how you compare to your peers. Here’s a look at how different generations save for the future.

The amount each generation saves will fluctuate based on the current economic climate, cultural attitudes toward saving, and individual financial circumstances. The following is a breakdown of how much each generation saved last year, according to a study by New York Life.

Millennials took the lead with an average of $12,004.87 saved in 2024. Generation X followed closely behind with more than $7,000 saved, and Generation Z came in third with $6,164.67 saved for the year. Baby boomers came in last with just over $3,400 saved.

While these averages don’t tell the story of every saver, there’s a clear pattern: Savings balances tend to grow at a slower pace during a person’s earlier years when they’re adjusting to life as an adult and getting started in their careers.

One of the biggest obstacles to saving that younger generations face is time. Less time in the workforce and less time to pay down debt translates to lower savings account balances, on average. Another contributing factor is the cost of living. The price of everyday goods and the cost of education have continued to increase, which puts younger generations in a precarious position when it comes to saving.

Many Gen Zers, for example, are still in college or have yet to attend. Older members of this generation, as well as millennials, make up the largest share of federal student loan borrowers, according to recent figures from the Fed. Those who are actively paying down student loan debt may find it difficult to build up significant savings with these competing obligations.

Read more: Should you refinance your student loans?

As people approach their higher-earning years, they’re presumably able to save more. However, credit card debt, which has recently reached $1.18 trillion cumulatively, is another barrier to saving. According to the most recent figures from Experian, Generation X has the highest credit card balance at $9,557, on average, followed by millennials at $6,932. In addition to inflation and student loan debt, individuals in this age range face numerous financial obligations such as mortgages, car payments, and childcare.

This is not to say that older generations don’t face their own obstacles when it comes to saving. Health care costs, for instance, tend to rise substantially with age. However, as individuals near retirement age, they transition from earning income through employment to relying on their savings, pensions, Social Security, and other retirement funds. This shift often means they are drawing down their savings rather than adding to them.

This can be seen on a more long-term scale when you examine the average savings balance by age, according to the Federal Reserve’s Survey of Consumer Finances.

If you feel like your savings account balance isn’t quite measuring up to your peers, don’t worry. There are steps you can take to give your savings a boost.

Savings accounts are not one-size-fits-all. Choosing the right account type — such as a high-yield savings account or money market account — or even switching banks can help you achieve a better interest rate and help your savings balance grow over time.

Debt payments and interest eat into your budget, making it more difficult to allocate money toward your monthly savings. Prioritize paying down your high-interest debt ASAP, even if it means slowing down on saving temporarily. The interest rates on credit cards, car loans, and student loans are much higher than the yields offered by savings accounts, which means you’re losing money as long as you’re carrying that debt.

Read more: What's more important: Saving money or paying off debt?

Unused subscriptions, unnecessary splurges, and one-too-many DoorDash orders may not seem like a big deal, but these costs add up over time. Take a close look at your monthly expenses and see if you can identify areas in your spending where you can afford to cut back and shift some of that money toward your savings account.

Read more: Struggle with budgeting? Following the 50/30/20 rule could be your solution.

Saving money can be tough, especially on a tight budget. But there’s also a psychological component. You may avoid logging into your online banking and transferring money out of your checking account because you don’t want to see your balance drop. However, automating your savings contributions can take away some of that mental pain and ensure you’re saving consistently

According to the Federal Reserve, savers between the ages of 65 and 74 (who fall into the baby boomer generation) have the largest amounts in their savings accounts.

On average, Gen Zers have $20,540 in their savings accounts according to the most recent data from the Fed.

The national average interest rate for a savings account is 0.38%, according to the FDIC. However, many of the best high-yield savings accounts offer 4% APY or higher.