Social media went nuts this week when the media reported stories of people who said they were struggling to get by on $100,000 a year.

You can understand why — put like that, a six-figure income seems like a lot of money. Surely these people should be able to cope? But the reality can be quite different and delving into it a little illustrates how an individual's circumstances can vastly affect their quality of life.

If you own your house freehold, the kids have left home and you're working and earning $100,000 you probably won't have a worry in the world.

But if you have a mortgage and kids to look after, $100,000 might not go as far as you expect. If you had a $500,000 mortgage at a rate of 6 per cent, paying it off over 25 years, you'd spend about half your take-home pay each month just on your home loan.

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Then, if that was the sole income for a family, you'd have your food bill — about $800 to a $1000 on average, according to statistics, your power, school costs, rates, insurance ...

You might wonder why we care. Why should it matter how well other people can manage on what they earn? It shows that what's most important when it comes to having a comfortable financial life is living within your budget, however big that is.

You need to understand what's coming in each month, what's going out and what you can afford to spend. When you borrow more than you can afford to repay, it's easy to get stuck in a cycle where the debt snowballs and it's impossible to get ahead.

Many people who start earning more just let their spending increase steadily along with it, so they never actually feel any better off.

Time spent planning and examining your finances will never be wasted.

When you have a clear idea of what's happening now, you can make a better plan for the future.

Jeremy Tauri is an associate at Plus Chartered Accountants.