SoFi

Having children can be rewarding, but thanks to higher rates of inflation, it’s also getting more expensive. Today, parents can expect to spend around $23,000 per year, or $414,000 through age 18, according to recent research.

If you’re considering growing your family, understanding all the costs involved can help you prepare financially. Here’s a closer look at the average annual cost of raising a child in the U.S. and how that figure has changed over the past two decades.

What Is the Cost of Raising a Child in the US in 2025?

According to recent research, the cost of raising a child can cost $23,000 per year as of 2024, which would equal $414,000 through age 18. That doesn’t include adjusting for inflation, nor does it include how much it costs to attend college.

Of course, the amount you end up spending depends on a number of factors, including household income, the cost of childcare, and the cost of living in your area.

If you want more personalized insights to help you plan your spending, consider using an online calculator.

A Comparison of the Cost of Raising in Child in 2000 vs 2025

The average cost of raising a child in 2000 looked much different than it does now, thanks in large part to the recent surge in inflation rates.

In 2000, a typical middle-income family could expect to spend $165,630 to raise a child to the age of 17, according to an analysis of USDA (U.S. Department of Agriculture) data by the Brookings Institution. For a child born in 2015, the USDA forecast that the cost would be $233,610. In 2025, that same family would spend $414,000 to raise a child through age 18, which is considerably more. Note that this amount doesn’t include extras like summer camp or birthday parties, nor does it factor in the cost of college.

Recommended: Average Salary in the U.S.

Top Expenses of Raising a Child in 2025

When it comes to the average cost of raising a child from birth through 18, families can expect to spend around $23,000 per year. The following table shows where that typically money goes.

Top Expenses of Raising a Child in 2000

Average middle-income parents in 2000 spent around $9,201 per year on child-rearing costs. As the chart below shows, housing and food were the biggest expenses. But compared to 2025, parents spent less on other things, like healthcare and child care and education.

How to Reduce the Cost of Raising a Child Today

No matter when you become a parent, you’ll likely have some major expenses. The good news is, it is possible to save money while raising kids. Here are some tips to consider:

•   Look for ways to lower housing expenses. Housing costs are the number-one expense for families, so finding ways to trim expenses there can really help you save. For instance, if you’re planning to move, you may want to expand your search to include smaller, less expensive homes located in neighborhoods with lower property taxes.

•   Purchase secondhand clothes. Kids tend to outgrow their clothing quickly. Rather than spend a lot on new outfits, shop secondhand whenever possible. Tag sales, thrift stores, and consignment sites are all good places to explore.

•   Make the most of your local library. Are expensive streaming subscriptions eating away at the family budget? Consider canceling some of those streamers and heading on over the local library. Not only can you check out books and audiobooks for free, you can also rent DVDs and enjoy free events.

•   Shop generic. When it comes to basics like diapers, toiletries, and household cleaners, skip the fancy brand names and go for less-expensive generic versions. Purchasing from wholesale clubs may also stretch your budget.

Recommended: How to Create a Household Budget

More Financial Tips for Parents

Whether you’re looking to start a family or add to your brood, there are also some smart financial habits you can start today that can make it easier to afford raising children. As a bonus, these habits can also help you teach your child about money management.

•   Pay down debt quickly. When a borrower takes on debt, they repay not only the amount they borrowed, they also owe interest and fees to the lender in exchange for borrowing the money. That’s why it’s so important to pay off debt quickly. The sooner you erase your debt, the less interest you’ll have to pay.

•   Create a budget that grows with your family. Coming up with a budget — and adapting it to meet your current needs — can help your finances roll with whatever changes life has in store. It’s a good idea to sit down once a month to evaluate what’s working in the budget, what can be improved, and what new expenses are on the horizon. A spending app can also help you keep tabs on where your money is going.

•   Prioritize savings. When you’re raising a family, it’s easy to let long-term savings goals fall by the wayside. One way to make saving second nature is to sock away a portion of each paycheck into a savings account or investment account. By paying yourself first, you’re better positioned to reach your financial goals, whether that’s putting multiple children through college, investing, or saving for retirement.

Recommended: Creating an Investment Plan for Your Child

The Takeaway

Having a family can be rewarding — and expensive. The average family in 2024 paid around $23,000 per year to raise a child. Housing, food, and child care/education are among the top three biggest expenses. The good news is, there are ways to manage expenses and still save for long-term financial goals. Budgeting well and tracking spending and saving are key steps.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

How much does it cost each year to have a child?

The average family spent around $23,000 per year to raise a child in 2024.

How much does it cost to raise a child to 18 in 2025?

According to 2024 data, a family will spend $414,000 to raise a child through the age of 18.

How much does a baby cost on average?

The average family can expect to spend around $23,000 a year to raise a child, according to 2024 data. Costs for a baby could be less, since there aren’t, say, educational expenses yet or hobbies to pay for. But there could be the costs of setting up a nursery and childcare.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SORL-Q125-069

When setting income goals, some people use a six-figure salary as a benchmark, which runs from $100,000 and $999,999 per year. Here, learn more about what this salary means, how to earn that level of income, and more important intel.

How Much Is a Six-Figure Salary?

“Six figures” simply refers to a number with six digits. Typically used with money, the term covers amounts from $100,000 to $999,999. (Once you hit 1 million, you’re in seven-figure territory.) Someone with a six-figure salary makes at least $100K.

How to Make Six Figures

There is no one right way to earn six figures. That said, there are strategies that can better position you for this level of income. Getting a good education, while not absolutely necessary, is a solid foundation for the kinds of jobs that pay in the six-figure range. Another path is to start your own business.

The Bureau of Labor Statistics (BLS) lists 170 occupations with typical annual salaries of at least $100,000. The degrees required for these jobs range from a high school diploma to a doctoral degree.

It’s important to recognize that certain careers just pay more than others. Once you’ve chosen a high paying field, you can determine the type of education and training you’ll need to pursue.

You’ll also want to learn how to manage and grow your money. A good place to start is by tracking your expenses and savings with a free spending app.

Average Age to Make Six Figures in the US

According to the U.S Census Bureau’s most recent data, about 22% of households earn between $100,000 and $149,000. Another 11.5% earn between $150,000 and $199,000. And 13% earn $200,000 or more. Note that this is household income, not individual. Compare those figures to the national average salary of $66,622.

Some workers begin earning six figures in their twenties and thirties. Economists nickname them HENRYs, for “high earners, not rich yet.” But for most people, their “peak earning years” are from age 35 to 64.

Keep in mind that annual income says nothing about someone’s financial health. An individual making $50K who manages their money well can be in a better place financially than someone making six figures.

Recommended: What Is a Good Entry-Level Salary?

Examples of Jobs That Pay Six Figures

A look at the highest paying jobs by state offers insight into these types of careers. All these jobs make at least $200,000, and all but one are in the medical field. Texas is an outlier. There, chief executives, the highest paying job in the Lone Star State, earn $239,060 on average.

Other types of jobs that can pay a six-figure salary include airline pilots ($219,140), IT managers ($169,510), and lawyers ($145,760). It’s probably fair to say that, in any industry, there are successful bosses who make six figures.

What Does a Six-Figure Salary Get You?

What a six-figure salary will get you depends on several other factors. A big one is the cost of living in your area. This is how much you spend on housing, transportation, food, and other necessities. When someone lives in a place with a high cost of living, they will typically have less disposable income and less to put into savings than someone who lives in a low cost-of-living location. This can be true even if both are making competitive salaries.

Another factor is household size. For a single person living in California, a six figure salary might be more than enough. However, a family of four living in the same area could be just scraping by.

Recommended: How to Counter a Salary Offer

Do You Need a Six-Figure Salary to Build Wealth?

While a six-figure salary may be considered good, you don’t necessarily need to earn that much to build wealth.

That said, you need to have a reasonable income to live on. For example, a $20,000 salary typically isn’t enough for a household to meet basic expenses. Consider rent: The 30% rule recommends spending no more than $6,000 on rent per year (that’s 30% of $20K), which works out to $500 a month. The average rent nationwide is now $1,750, more than three times what you could afford on a $20,000 salary.

What about a $40,000 salary? This may be enough for a single person in some areas, but probably not for a family. And while an individual could afford basic necessities, they may not have much left for building wealth — that is, saving and investing.

Another factor is existing debt. If you are paying down high-interest credit card balances, it can be hard to also put money toward savings.

The income needed to build wealth then is an amount that covers the cost of living in your location, allows you to pay off any debt, and provides enough extra to set aside money for an emergency fund, retirement, and investing.

How to Build Wealth Without Earning a Six Figure Salary

As we mentioned above, the steps to building wealth are the same for any salary. First, pay off your debt, especially high-interest credit cards and loans. Money going to interest is money that could be going into your savings or investments.

Second, look for ways to cut back on spending: cooking at home instead of going to costly restaurants, closing fee-based apps that you don’t really need, and so on.

Finally, save and invest the money that isn’t going to credit card debt or other nice-to-have but not necessary expenses.

Recommended: The 52 Week Savings Challenge

The Takeaway

A six-figure salary, meaning one between $100,000 and $999,999, is a benchmark for many people who want to meet financial goals. Having a good education is usually helpful but not always necessary, and certain jobs are more likely to come with six-figure salaries. Having a good salary is helpful when building wealth, but the same strategies can be utilized on a five-figure salary. Tracking your spending and automating your savings are two good first steps.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Is a six-figure salary good?

In most places in the United States, $100,000 is a good salary, covering the needs of an individual or small family, while building savings.

What does a six-figure salary mean?

This is a salary that contains six digits: from $100,000 to $999,999.

What is an-eight figure salary?

This is a salary amount consisting of eight digits: from $10 million annually to $99 million.

Photo credit: iStock/Renata Angerami

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SORL-Q125-027

The average cost of raising a child in the U.S. as of 2024 was approximately $23,000 per year. That means the typical expense of nurturing a child to age 18 would be $414,000.
Children bring a lot of light into a family’s life, but they also bring a lot of expenses.

It’s wise to be prepared for this financial commitment, which can include food, clothing, childcare, summer camp, medical bills, and more. Here, take a closer look at the average cost of raising a child per year so you can plan your budget and save accordingly.

What Is the US Average Cost of Raising a Child?

On average, the cost of raising a child is $23,000 per year as of 2024.

For more context on child-raising costs, take a look at the following table, based on a landmark U.S. Department of Agriculture study “Expenditures on Children by Families.”

Which State Has the Lowest Childcare Costs?

Where someone lives can impact how much it costs to raise a child. Mississippi residents have the lowest average childcare costs at $16,151 per year. At the other end of the spectrum is Massachusetts. Residents there spend more than twice as much as those in Mississippi do in terms of child rearing. Their average costs come in at a steep $35,841 per year.

How Much Does It Cost to Raise a Child?

The average cost of raising a child each year was estimated at $23,000 per year as of 2024, which leads to an overall cost of $414,000 to raise a child through the age of 18. When adjusted for inflation, one calculator shows the figure ballooning to more than $651,000. None of these numbers account for the cost of a college education, which many parents like to budget for far in advance.

For more insight into how much it costs to raise a child, there are free calculators online that can help parents to better estimate their spending based on their particular family needs. You may also be curious to learn how to create a household budget so you can manage your money carefully.

Are You Able to Afford a Child?

Whether or not you can afford a child depends on your particular financial circumstances, as well as factors like childcare needs and the cost of living in your area.

There is no one salary figure that means someone is able to afford a child. It’s important to research how having a child will impact housing, food, and health care costs, and how much of your disposable income will go toward clothing, equipment, childcare, and education, even toys. This way, you’ll have a clear idea of how having a child will impact your budget so you can plan appropriately.

Recommended: Average Salary in the U.S.

How to Budget for a Baby

Speaking of budgets, these are some expenses parents need to budget for when they plan to have a baby join their family. They can use a budgeting app, spreadsheet, or even good old fashioned pen and paper to create a new budget.

Some examples of baby expenses that should go in a budget include:

•   Food

•   Medical care

•   Housing

•   Childcare

•   Education

•   Clothing

•   Furniture and equipment (high chair, car seat)

•   Toys

•   Recreational activities

•   Care items (diapers, baby wipes, etc.)

Once parents know what their total expenses are, they can subtract that amount from their take-home income to determine how much money is left for fun (like dinners out and vacations) and savings goals. Some parents even like to create an investment plan for their newborn.

Recommended: Top Budgeting Tips for Single Parents

How to Reduce the Costs of Raising a Child

Because raising a child can cost a pretty penny, it can be helpful to think strategically about how to save money while raising kids. Here are some tips that can make it possible to spend less as a parent.

•   Buy second-hand clothes. No hand-me-downs at the ready? Shopping second-hand can be a great way to save money on baby and kids’ clothes. Most children grow out of their clothes very quickly, so new or lightly worn clothes are always available at thrift stores.

•   Spend less on housing. Even if you can afford to buy a larger house, you may want to consider living below your means. Housing is a major ongoing expense for any family, so saving here can really make an impact.

•   Buy generic. When it comes to things like formula and diapers, lower cost generics can get the job done just as well as fancy name brands.

•   Head to the library. Looking to keep kids entertained? Don’t forget about the local library. Alongside books, many libraries offer free access to online shows, story time, and tons of free events that can keep little ones active. So cancel those expensive streaming subscriptions and skip the overpriced petting zoos for now.

Example List of Expenses for Raising a Child

To help parents plan better, below are some common expenses that come with raising a child and the percentage of a parent’s income that goes toward each expense:

•   Housing costs: 29%

•   Food: 18%

•   Childcare and education: 16%

•   Transportation: 15%

•   Health care: 9%

•   Clothing: 6%

•   Miscellaneous: 7%

Recommended: 52 Week Savings Challenge

The Takeaway

The average cost of raising a child in the U.S. is about $23K per year. Knowing this can help families create a budget that makes it easier to reach their savings goals while raising young kids. The biggest child-related expense is for housing, followed by food and childcare or education. Developing a budget as a parent and tracking spending can be wise moves.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

How much does it cost to raise a child monthly?

On average, it costs $23,000 per year to raise a child as of 2024. This breaks down to average monthly spending of almost $2,000.

How much does it cost to raise a child to 18 in California?

California is a notoriously expensive state to live in, and that extends to child rearing costs. It costs an average of $27,849 each year to raise a child in California, which comes out to $501,282 over the course of 18 years.

What is the minimum salary to raise a child?

There is no one minimum salary that parents need to earn in order to afford a child. How much it costs to raise a child depends on many different factors, like location, childcare needs, education preferences, health conditions, and more.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SORL-Q125-036

Age plays a major role in how much money people make. This is simply because as you get older, you gain career experience and bring more value to companies. Income tends to peak at ages 35-44. But when are a worker’s “peak earning years,” and what happens after they’re past that period?

Keep reading for insight into the average income by age in the United States.

Average Salary by Age in the US

Your education, industry, work experience, negotiation skills, and plain luck can all influence how much money you make. To get an idea of whether you’re earning a competitive salary, it can be helpful to know how much other people in the same age group are making.

Here’s a closer look at the average income by age in the U.S. at the end of 2024, according to the Bureau of Labor Statistics.

Average Salary for Ages 16-19

The early days of your working life usually aren’t the most lucrative: 16 to 19 year-olds who work full-time make $679 a week or $35,308 a year on average.

Average Salary for Ages 20-24

Salaries start to rise as workers gain experience. Those in the 20 to 24 age group make an average of $784 a week or an annual salary of $40,768.

This is when many financially savvy professionals start building their 401(k) balance. That’s because the earlier you invest for retirement, the less money you’ll typically have to invest over time. Or, as the saying goes, your time in the market is more important than marketing timing.

Recommended: Average Savings by Age

Average Salary for Ages 25-34

Salaries begin to jump up once workers reach the 25 to 34 age group, with the average weekly pay being $1,136 or an annual income of $59,072.

Ideally, employees will put much of their raises and bonuses toward savings rather than impulse spending.

Average Salary for Ages 35-44

For 35 to 44 year olds, annual salaries are still growing: The average weekly pay is $1,356 or $70,512 per year on average. This is the beginning of what’s commonly referred to as “peak earning years.”

Average Salary for Ages 45-54

While many employees enjoy higher wages into their 50s, others find their salary stagnating. Overall, workers in the 45 to 54 age group actually see salaries drop a little, with a weekly pay of $1,336 on average. The average annual income in middle age is $69,472.

Recommended: Financial Tips for People in Their 40s

Average Salary for Ages 55-64

Salaries drop further for workers between 55 and 64, whose average weekly salary is $1,268 for an annual salary of $65,936. What happened to paying for experience? Some companies may believe they can pay younger employees less for the same work, and see older workers as overpaid. As a result, 55+ workers are no longer offered the same retention incentives — such as pay raises — regardless of performance.

On the other hand, professionals who are satisfied with their retirement savings may choose to work less or retire early instead of waiting until the average retirement age.

Average Salary for Ages 65 and Older

Once workers reach 65, they are likely shifting to part-time work to stay active during retirement and to earn a little extra retirement income. Some people need more retirement income than others, and Social Security benefits and savings aren’t always enough. Which may be why we see salaries drop to an average of $1,159 for an annual salary of $60,268 per year for those 65 or older.

Tips for Maximizing Your Salary

Now that we’ve shed some light on the average income by age in the U.S., let’s address some ways workers can maximize their salary. That can mean finding ways to hold on to what you’re earning or to make it grow.

Create a Budget

If you’ve ever created a spending budget, you know how shocking it can be to see all the ways we fritter away our hard-earned salary on unnecessary purchases. By cutting back on items you don’t really need — from bottled water to forgotten subscriptions — you’ll free up more cash for things like saving and investing.

Pay Down Debt

What’s even more shocking than the amount you spend on little things like daily snacks and late-night Ubers? The interest charges and fees that come with debt. The faster you pay off high-interest credit cards, the more you can put toward longer-term goals: an emergency fund, travel, or buying a home.

Make Saving Automatic

One easy way to make saving and investing a priority is to automate it: Set up regular, recurring transfers from your paycheck or checking account. That way, big goals like a dream wedding and retirement are prioritized before there’s even a chance to spend that money.

Take Advantage of Tax Deductions and Credits

Taxes may be an unavoidable part of life, but there are ways to pay less to Uncle Sam. Whether you hire a tax accountant or use software to file your return, look for opportunities to snag a larger tax refund.

Make Retirement Contributions

Contributing to a retirement savings account is a convenient way to save and invest in one fell swoop. As an added benefit, some employers match a portion of employee contributions. That means if someone isn’t contributing to their employer sponsored 401(k) plan, they’re leaving free money on the table. that helps expand an employee’s net worth.

Recommended: Investing 101 Guide

Open a High-Yield Savings Account

A low-risk way to earn money on savings is by opening a high-yield savings account. This type of savings account tends to offer a higher interest rate than normal savings accounts.

The Takeaway

The average income by age in the U.S. tends to rise as workers gain more experience. Eventually salaries plateau and then drop off. Your peak earning years coincide with middle age, meaning you make the most you ever will in your 40s and 50s. The average salary in the U.S. tops out at $ $70,512 for ages 35-44.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What does the average 30 year old make?

On a weekly basis the average 30 to 34 year old makes $1,136 per week or an annual income of $59,072. Workers ages 35 to 44 can expect to earn more: The average weekly pay is $1,356 or $70,512 per year on average.

What percentage of Americans earns over $100,000 a year?

Estimates vary about how many Americans earn over $100,000 per year. Some studies say about 18% of the population earns that much; others say almost 40% do.

What salary is middle class?

The salary that places you in the middle class varies depending on where you live and the cost of living there. According to one Pew Research study, the median middle-class household (not individual) makes $106,100. However, if you can afford to pay your bills and have money left over for savings and modest indulgences, you’re likely middle class.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SORL-Q125-029

Whether you want to retire a few years early or feel more financially secure, building your wealth can help you meet your financial goals. But what if you want to build generational wealth, or the type of lasting wealth that can be passed down to your children and grandchildren? While there is no one-size-fits-all path, there are some steps you may consider taking to start accumulating generational wealth.

What Is Generational Wealth?

Generational wealth refers to anything with monetary value that’s passed from one generation to the next. This might include cash, property, investments, jewelry, family businesses, or other financial assets. Typically, this type of wealth sets up future generations to financially benefit from what previous generations built.

Over the past 30 years, the generational wealth gap in the United States has been widening. What is a generational wealth gap? This simply refers to the difference between the wealth one generation accumulates relative to the wealth another generation accumulates. Factors such as income, education, race and ethnicity, age, and generation could all impact how much wealth someone builds and how much they’re able to pass down to the next generation.

Why Is Generational Wealth Important?

Whether you have new money or old money, building lasting wealth can help your family remain financially stable in the long term. This in turn could help give future generations a leg up in life. After all, when you don’t have to live paycheck to paycheck or stay in an unsatisfactory job, you tend to have more options in life. If you’re the one passing on the wealth, you can have the satisfaction of knowing you’ve helped give your children and grandchildren that level of freedom.

Pros and Cons of Generational Wealth

Generational wealth comes with clear advantages along with some potential drawbacks.

Pros

•   Future generations can enjoy some degree of financial security.

•   Generational wealth can provide support and resources for family members who are just starting out.

•   The extra financial assistance can help create room for innovation and free up family members to pursue their dreams.

•   It’s an opportunity to solidify your legacy.

Cons

•   Those who inherit wealth often have a responsibility to manage the money so there’s enough for the next generation.

•   Anticipating an inheritance could cause some people to lose the motivation to work hard and build their own wealth.

•   Some families lack a clear plan for transferring wealth from one generation to the next.

How to Start Building Generational Wealth

When it comes to building lasting wealth, there’s no strategy or template that will work for everyone. A spending app can give insights into your financial picture, which can help you keep your finances on track. Here are other steps you can take to better position yourself and your family.

Focus on Education

Generally speaking, education increases your earnings and reduces unemployment. But having a financial education is important, too, especially if you want to create and grow generational wealth. Discuss financial topics with your children and younger family members and pass on what you know. That way, they can be better prepared to manage the wealth they inherit.

It’s Never Too Early to Start Saving

Accumulating financial assets takes time and planning, so consider starting early. Building wealth in your 30s, for example, is possible and something you can continue to build upon as you get older. It’s also a smart idea to save consistently. By setting aside a certain amount on a regular basis, you can make the most of compound interest, which is interest that’s earned on the initial principal and the interest that accrues on it.

In addition to your paycheck, you may be able to passively earn money. This is money you make without active involvement. If that’s an option you want to explore, it can be quite useful to know how to manage passive income streams.

Make a Plan With Family Members

Considering working with other family members to build and preserve generational wealth? It’s a good move to discuss short- and long-term goals and strategies with them so you’re all on the same page. As part of those discussions, you may also want to decide how the money will be allocated.

Consider Home Ownership

Home ownership for generational wealth is another strategy to explore. When you buy a home and its value rises, you can sell it for a higher price and possibly use that money to move into a larger home or invest in other assets. Not planning to sell any time soon? You could still benefit from price appreciation, as it adds to your home equity and overall financial assets.

Explore Investment Opportunities

Investing could help your money grow over time, even if you start out small. Your investment strategy will depend on a number of factors, including your goals, how much you have to invest, your tolerance for risk, and your age.

Although no two situations are ever alike, there are nevertheless best investment strategies for each generation. People who dream of an early retirement, for instance, may subscribe to the “financial independence, retire early” (F.I.R.E.) movement. Achieving this goal may call for a more concentrated investment strategy.

Recommended: Pros & Cons of the F.I.R.E Movement

Protect Your Wealth

Having a team of trusted financial, tax, and legal experts on your side can help you protect your growing wealth and maximize the amount you’re able to pass along. You may decide to create a trust or estate plan, for example, which details how you want your financial assets to be distributed and invested and designates a trustee.

What Are Some Challenges to Building Generational Wealth?

Not surprisingly, building and maintaining generational wealth doesn’t typically happen overnight. It’s often the rest of years of hard work and planning, and it helps to understand how to strategically save, invest, and spend. Depending on how much you already know, achieving this level of financial literacy can take time.

Another potential challenge is creating a clear plan for how the wealth will be transferred from one generation to the next. Some families avoid having conversations about money, and there’s a chance not everyone shares the same vision for how the wealth should be distributed.

In addition, disparities in pay among different racial and ethnic groups and genders could impact each generation’s ability to grow and maintain generational wealth. According to the Department of Labor, White and Asian-Pacific Islander workers earn more on average than Black, Hispanic/Latino, Native American/American Indian, and multiracial workers.

How to Pass Down Generational Wealth

There are steps you can take to ensure your financial assets are handed down the way you want. Creating an estate plan, for example, can help ensure the assets are distributed according to your wishes. Establishing a trust lets you set the terms over how assets are managed and can help your heirs bypass the probate process and potentially lower their tax burden. When you’re creating an estate plan or a trust, you will likely want to enlist the help of a professional, such as a trust attorney. These professionals can help ensure the right legal documents have been created and signed and will be easily accessible to your heirs when the time comes.

Recommended: The Difference Between Will and Estate Planning

The Takeaway

What is considered generational wealth? As the name implies, it’s financial assets, such as cash, jewelry, real estate, investments, and more that are passed down from one generation to the next. Generational wealth can give heirs a sense of financial security and more freedom to pursue their dreams, though it often comes with a responsibility to manage the money so there’s enough for the next generation. There are potential ways to start building your wealth, such as focusing on education and financial literacy, saving consistently, exploring investment opportunities, considering home ownership, and taking steps to protect what you’ve earned.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

How do you build generational wealth?

Although no two paths to generational wealth are exactly the same, strategies often include a focus on education to prepare for a higher-paying job and to gain financial literacy, saving early and consistently, investing in a home or other real estate, and making sound investments. It’s also a good idea to work with a professional to create an estate plan or trust so your financial assets are more efficiently passed along to the next generation.

What are examples of generational wealth?

Generational wealth can include cash, investments, jewelry, and other financial assets. This can but doesn’t have to include a family business.

How does a family start building generational wealth?

As a family, it can make sense to discuss goals for generational wealth and brainstorm strategies to achieve them. You may also want to talk about how the wealth will be distributed and make sure everyone is on the same page. It’s also important for you and the next generation of your family to understand how to strategically save, invest, and spend, so whatever wealth that’s passed down can continue to grow.

Photo credit: iStock/kate_sept2004

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q125-042