Bora Tuncoglu believes you can’t live on $100,000 a year anymore, especially in Sydney. (Source: TikTok\/Getty) <\/p>\n
For many Australians, earning a $100,000 salary<\/a> used to mean you had \u201cmade it\u201d. But as the cost of living<\/a> and property prices<\/a> climb ever higher, the concept of what constitutes a \u201cgood\u201d salary has become a point of contention.<\/p>\n Australian broker Bora Tuncoglu works with people applying for mortgages<\/a> and financing every day and has settled more than $1.5 billion in loans. It may sound \u201csad\u201d, but he says you \u201ccan\u2019t really live on $100,000 a year\u201d anymore. Especially in a pricey city like Sydney<\/a>, where the median home value is more than $1.2 million.<\/p>\n \u201cWhen we start actually breaking down the numbers, $100,000 a year income equates to net roughly $6,000 a month,\u201d Tuncoglu told Yahoo Finance.<\/p>\n \u201cThe repayments on a million-dollar mortgage are roughly $6,000 a month. And you see what you can get for $1 million in Sydney is not too much, unfortunately.\u201d<\/p>\n RELATED<\/p>\n The Bmoney founder said this meant you would be spending your entire salary<\/a> just on your mortgage repayments, which he described as a \u201creality wake-up call\u201d for most middle and high income earners.<\/p>\n Even if you had two couples earning $100,000 each, he noted you would be putting one income purely towards a mortgage<\/a> while the other would go towards living expenses.<\/p>\n \u201cThen what\u2019s left for saving at the end of it all? Probably not much. That\u2019s having a $1 million mortgage. That means to buy a $1.2 million property, you have to save $200,000, which is quite hard,\u201d he said.<\/p>\n Realistically, on a $100,000 salary, Tuncoglu said you would be able to borrow about four and a half times your income. So that means you may only qualify for a mortgage of between $450,000 and $500,000, which wouldn’t get you very far in Sydney.<\/p>\n Do you have a story to share? Contact tamika.seeto@yahooinc.com<\/a><\/p>\n Tuncoglu said there was a common idea that the \u201cright track\u201d was going to school to get an education, going to university to get a job and eventually earning six-figures<\/a>. But it won’t offer the \u201clavish lifestyle\u201d you might think, he said.<\/p>\n Tuncoglu explained that he failed school himself and worked \u201cdead end jobs\u201d hoping to one day earn $100,000 a year. But he soon realised the salary goal wouldn\u2019t offer him the type of lifestyle he wanted to live.<\/p>\n He eventually started a lending business and owned an ANZ franchise for 10 years, before selling it to launch Bmoney group in 2020.<\/p>\n Story Continues <\/p>\n \u201cPeople work to one day earn six-figures, which is great. But six-figures isn\u2019t as big as it seems, not in Sydney anyway,\u201d he said.<\/p>\n When inflation is taken into account, a $100,000 salary in 1990 would be worth about $241,000 today. While a $100,000 salary in 2000, would be equivalent to around $194,000.<\/p>\n It\u2019s important to recognise that a $100,000 salary is above the average in Australia<\/a>. The latest Australian Taxation Office (ATO) statistics for the 2022-23 financial year found the average taxable income for Australians was $74,240, while the median was lower at $55,868.<\/p>\n AJ Financial Planning founder Alex Jamieson agreed there was still an \u201cautomatic assumption\u201d in society to some degree that if you were earning $100,000 or more then money should be \u201cfree flowing\u201d.<\/p>\n \u201cBut probably what hasn\u2019t been recognised is that model of income to pay a mortgage now versus previous generations and how much it\u2019s consuming on a single person,\u201d he told Yahoo Finance.<\/p>\n \u201cOnce you\u2019re handing over a decent chunk of that to tax, it\u2019s actually quite a fair bit of a smaller amount leftover.\u201d<\/p>\n Jamieson said it was difficult for single people to buy their first home if they didn\u2019t have any assistance from the bank of mum and dad<\/a>, particularly in places like Sydney.<\/p>\n \u201cIf you\u2019re thinking of a single person … it really is an incredible struggle to achieve that goal if you\u2019re not getting any assistance from extended family being parents or if you’re not prepared to live somewhere that’s quite a fair distance from Sydney CBD,\u201d he said.<\/p>\n \u201cThat\u2019s possibly why you see a lot of people leaving Sydney<\/a> in terms of outflows to other states, just because it is very challenging to get in front, especially $100,000 when you look at the actual after-tax money and then you look at the mortgage they would need to take on and you think about that with that conversation around mortgage stress.\u201d<\/p>\n Renters can find it difficult on a $100,000 income, too, with a report by Everybody’s Home<\/a> earlier this year finding a single person now needed to earn at least $130,000 to comfortably afford a typical unit and not be spending more than 30 per cent of their income on rent.<\/p>\n A Finder report found the average Australian believed $153,000 was the minimum annual amount to have a good pay packet, while $165,000 or more was needed to live “comfortably”.<\/p>\n Jamieson said he would recommend Aussies understand the first-home buyer programs available in their state and consider federal government schemes like the First Home Super Saver scheme<\/a>.<\/p>\n \u201cIf you can stay within the first home buyer programs, then you often will get stamp duty free, which is a tremendous cost in a lot of states. And then you’re also able to tap into that the [5 per cent deposit] loan scheme<\/a>,\u201d he said.<\/p>\n Jamieson said it was important to recognise your first home probably won\u2019t be their \u201cforever home\u201d and you may need to make sacrifices depending on what you can afford.<\/p>\n In terms of budgeting, Jamieson said the three bucket system could be a good strategy to consider. That\u2019s where you automatically split your play into non-discretionary spending (like rent and utilities), discretionary spending, and then savings.<\/p>\n The \u201cold rule of thumb\u201d was to evenly split these buckets, but Jamieson said this had become more difficult given the higher costs of rent and mortgage payments, so it will depend on what your budget allows.<\/p>\n Tuncoglu urged Aussies to \u201czoom out\u201d and not to just assume the traditional path of getting a good HSC result, going to university, to get a job and a good salary would offer financial success.<\/p>\n \u201cThere’s more to life than just that. There’s more options out there, whether starting a business, whether a trade,\u201d he said, cautioning that in the \u201clong run\u201d you may find the $100,000 or $120,000 salary you earn \u201cisn\u2019t as glamorous as you may think\u201d.<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n Financial adviser Alex Jamieson said it was difficult for single people to buy homes if they didn’t have help from the Bank of Mum and Dad. (Source: AJ Financial Planning) <\/p>\n