Many Australians earning a six-figure income still struggle to feel financially secure. Even with a $120000 salary, rising living costs, taxes, and lifestyle choices often make it difficult to achieve financial freedom. This situation highlights how wealth isn’t only about how much you earn, but how you manage what you keep. From housing expenses to superannuation contributions, a lot of hidden factors affect why people earning high incomes still feel broke. Let’s explore why so many professionals in Australia feel financially stuck despite earning what appears to be a strong salary.
Understanding the Real Value of a $120000 Salary
At first glance, a $120000 salary in Australia sounds impressive. But after taxes, the take-home pay drops significantly, leaving less for savings or investment. The Australian Tax Office collects around one-third of this income, while everyday essentials like rent, transport, and food costs keep climbing. Many households also face rising mortgage repayments due to higher interest rates. As a result, even professionals earning six figures can experience the “middle-income trap” — where expenses grow as fast as income. Understanding your after-tax earnings and budgeting realistically is the first step toward genuine financial freedom.
The Role of Lifestyle Inflation and Debt
One of the biggest reasons Australians feel poor on a $120k income is lifestyle inflation. As income increases, so do expenses — from upgrading cars to taking luxury holidays. Credit cards and personal loans also add pressure through monthly repayments. Instead of investing or saving, many people spend to maintain a certain image. This cycle can prevent you from building long-term wealth. Financial experts recommend tracking spending habits, limiting unnecessary debt, and focusing on creating passive income streams to achieve sustainable financial independence.
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How to Build Real Financial Freedom
True financial freedom is not just about earning more — it’s about managing money wisely. Australians earning $120,000 or more should focus on investments and savings that create long-term security. Strategies like maximizing superannuation contributions, investing in index funds, or buying property can help money grow beyond your paycheck. Financial discipline, emergency funds, and tracking expenses are key. Building wealth requires consistency — small, smart financial decisions over time can lead to lasting independence and less stress about money.
Breakdown of a $120000 Salary in Australia
Here’s a simple overview showing how a $120,000 income gets distributed after tax and expenses in Australia. This helps explain why many workers don’t feel “rich” despite earning a high salary.
| Category | Approx. Annual Amount (AUD) | Description |
|---|---|---|
| Gross Income | $120,000 | Total annual salary before deductions |
| Tax & Medicare Levy | $31,000 | Income tax and Medicare contribution |
| Superannuation | $13,200 | Employer contribution (11%) |
| Take-home Pay | $89,000 | After-tax income available for living expenses |
| Average Living Costs | $60,000 | Rent, food, bills, transport, childcare, etc. |
| Potential Savings | $10,000–$15,000 | Depends on lifestyle and financial discipline |
FAQ 1: Is $120000 a good salary in Australia?
Yes, but high living costs mean it doesn’t always translate to financial comfort.
FAQ 2: How much tax is paid on $120k in Australia?
Roughly $31,000 including the Medicare levy, depending on your situation.
FAQ 3: Why do people still struggle on $120k?
Because of taxes, lifestyle inflation, debt, and increasing living expenses.
FAQ 4: How can I save more on this income?
Set a clear budget, reduce debt, and invest consistently for long-term growth.
