Is $120,000 a ‘good’ income? The answer’s not so obvious

An interesting conversation has been taking place online since late last year when an Australian influencer asked her TikTok followers what they thought a good salary was.

The number, she said, would be one that if it were to appear on a job offer or on a payslip would leave you thinking, “I’m happy with this. I don’t mind if it never goes up again, this is a good salary.”

What might be enough for some could be too little for others.Credit: Dionne Gain

Unsurprisingly, responses to the video varied wildly, as did the contributing factors of those listing their happy salary figure – having children or not, being single or in a relationship, any outstanding HECS debt, living in a major city versus regionally, renting or paying a mortgage.

The vast majority of people who engaged in the conversation listed a six-figure salary as “good”, with about $120,000 the most commonly listed aspirational wage. But for those already taking home that number or higher, the figure of a “good” income rose to as much as $250,000, with one commenter admitting that despite earning $110,000 at present, “I struggle to have any fun money whilst having savings, good super and investments, which is why I want more”.

For me, there are two major points of interest in this discussion: the picture these magic numbers paint about our financial expectations versus realities, and the time in which we’re talking about them.

In December, the Australian Bureau of Statistics published its latest employee earnings data, which indicated the median salary for full-time employees is $1700 a week – up $100 from the same time last year.

Just as one person’s trash is another’s treasure, one person’s good might be another’s great.

Annually, that works out at $88,400. While earnings went up across all groups between August 2023 and August 2024 and 25 per cent of Australians now earn more than $105,000 a year, just 10 per cent of Australians earn more than $158,000.

That means the odds for those who deemed $120,000 to be a good income are roughly one in five of landing the salary they would be happy to take home for the rest of their working lives by today’s wage standards. While certainly not terrible odds, they’re hardly in the majority’s favour.

What’s also interesting is research from Purdue University in the United States, which shows the number needed to reach what is known as income satiation – where you will be no financially happier were the number to rise past that point – is $190,819 globally. That’s well above what those polled on TikTok shared.

But when emotional wellbeing was the priority – where an income is enough to live off comfortably without negatively affecting a person from an increased workload or stress, for example – instead of satiation, the salary range lowered to between $93,000 and $117,000. That’s much more in line with what people were talking about.

Then, there’s also the question of what “good” really means? To most of us, it could mean a salary range that allows us to cover the essentials without living pay cheque to pay cheque or worry too often about money. Enough to pay for daily expenses while still saving some rainy day money and living comfortably.

For other people, a good salary could translate to a dream salary – the kind of income that allows you to upgrade your car every few years and enjoy overseas holidays every six months without making drastic lifestyle changes to save up.

But what about the amount you need for the bare minimum? For simplicity, let’s use the 50-30-20 rule as a basic guideline: that’s 50 per cent of your income going towards things you need (food, utility bills, transport, health insurance, school fees, etc.), 30 per cent going towards rent or mortgage repayments, and 20 per cent being saved.

According to Domain’s most recent rental report, a median house located in one of Australia’s capital cities will set you back $36,800 across the course of a year if you were to pay the entirety of the rent on your own, or $18,400 if you’re sharing the cost with a partner or flatmate.

Regionally, that figure drops to $28,600 for one person, or $14,300 shared. If you’re paying a mortgage, the median repayments now sit at roughly $25,200 a year, or $12,600 between two people.

Using the 50-30-20 rule, that means you need a bare minimum income of $56,333 if you’re sharing costs. If a good income is $120,000, that leaves you with a spare $64,000. Surely, that qualifies as great at the least, or even amazing.

The problem with these figures is that they don’t paint an accurate picture of how much things now cost. Let’s say you’re renting or have a mortgage (between $25,200 and $33,800), and two children per the annual Australian average ($16,800).

Groceries will set you back about $8736 for the year; utilities are another $1326. Transport costs, including car registration, car loan repayments, petrol and insurance is another $23,234, while private health insurance is up to $10,000 a year for a family of four. Putting aside money for things such as coffees, buying lunches or the occasional evening out will conservatively be roughly another $10,000.

Assuming you share these costs with a partner, and again by using the 50-30-20 equation, suddenly that bare minimum income jumps from $56,333 to about $71,000 – where $14,200 can be saved, and $21,000 can be put aside for mortgage repayments or rent.

Groceries will set you back about $8736 for the year in an average four-person family.Credit: Dominic Lorrimer

But that figure is also before any additional expenses, such as credit card, personal loan or HECS debt is factored in. Considering the majority of adult Australians carry some personal debt, that’s an important expense to consider. Suddenly, you can see where the aspirational figure of $120,000 comes in.

And that’s the problem with trying to put a single figure on individual circumstances. Just like a person’s money story, everybody’s financial ambitions are different. No matter how many ways you add, subtract or divide, every person will have a different number for the bare minimum needed to cover the most basic expenses, just as everyone will have an estimation of what an ideal income is to them, based on their personal circumstances.

Because just as one person’s trash is another person’s treasure, one person’s good might be another person’s great.

Victoria Devine is an award-winning retired financial adviser, bestselling author and host of Australia’s No.1 finance podcast, She’s on the Money. Victoria is also founder and co-director of Zella Money.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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