How Much Do You Need To Earn To Be A Part Of The 1%?

Income standards vary widely in different parts of the world, so to create a standard amount to differentiate the top 1% of wealthy people around the world is difficult. Given that wealth is a constantly changing dynamic, results from different research firms are bound to differ. Yet, none are wrong.

Busting the Myth With Numbers

Contrary to our belief that the top 1 percenters of the world enjoy astronomical income, only about $32,400 in wages a year is required for inclusion into this niche category. This number varies when we consider the statistic from a net worth point of view. A net worth of roughly $871,320 (per Credit Suisse (SIX:CSGN)) is considered good enough to pull you into the pool of global 1 percenters. Here, we will limit our discussion only to income.

This number might not sound like a lot to Americans, millions of who belong to this club. However, for countries like India, this number is comparatively quite large. The number reflects a very important fact — the level of income disparity among the developed, developing and underdeveloped countries of the world.

Quoting from Shakespeare’s King Lear, “So distribution should undo excess, and each man have enough.” However, this is far from reality. The threshold to enter the top 1% is so low because of the extreme poverty endured by most of the world’s population. For instance, per Credit Suisse, the total wealth of an average adult in India is about $7,024, whereas that in Africa is even lower, at just $4,138.

Now, when we narrow down to only the United States, an income much higher than the global cut-off is required to be a member of club 1%. About $421,926 in wages a year (per the Economic Policy Institute, or EPI, as of 2015) is estimated to be the cut-off to be a 1 percenter in the country.

But wait! This is just the average. If we look into individual states, the number will vary even more. For instance, an average income of $255,429 is required to join the club in New Mexico, $700,800 in Connecticut, and so on.

Ways to Make the Cut

The idea of being in the top 1% is attractive to many. Even though we have discussed the income needed to be a 1 percenter, a much better way to establish the top 1% of wealthy families is by assessing their net worth.

To achieve this, one needs to find intelligent ways to boost income and be smart with finances. Here are some ways you can think about boosting your income and getting closer to becoming a one percenter:

Switch: A traditional way of pushing income higher is by switching employers. While staying and growing with a company does have its own benefits, relatively lower income hikes each year might limit the potential earnings growth that a person can achieve by switching his company.

Upskill: If switching companies is not a feasible option, one can choose to upgrade and equip oneself with the latest skills in the market that are relevant to increasing your position in the company, and inevitably lead to an income boost. There are various online courses available which can be easily taken to strengthen your resume. For instance, platforms like upskillcourses.com offer a range of technical courses primarily for people working in the software space.

Create/Freelance: Millennials have numerous earning opportunities through the Internet. A trend gaining traction is creating online courses and self-publishing informatory books. With so much information spread across the Internet, it becomes difficult for a person with limited time to pick out useful ideas and utilize them for their needs.

To address this issue, many are leveraging their knowledge about a particular subject, such as social media marketing, and creating an online course to help users while monetizing their own skills. If that seems too difficult, try writing a short book containing all the information on a particular subject, pet care for instance, and self-publish it on a platform like Amazon’s (NASDAQ:AMZN) Kindle. These ways have the potential to significantly supplement your income.

Invest: Last but not the least, start investing if you haven't already. Investing in retirement accounts is one of the best ways to build wealth as they offer tax benefits. Investing in stocks and ETFs after consulting financial advisors is also an excellent way to bring in financial discipline as well as grow wealth. However, it is advisable to be careful while choosing an advisor who earns commissions by recommending certain investment products to avoid biased information. Moreover, it is prudent to speak to a few advisors and compare their services and rates before picking one.

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