You’ve worked hard, and it’s paid off: Your paycheck has finally hit six figures.

Crossing the six-figure mark can feel like a significant milestone when you consider that the median household income in the U.S. is $60,336. For many, it means feeling more secure or finally getting to kickstart some financial goals.

So now that your paycheck has hit next-level status, what do you do? Here are four money moves that can help you stay on top of your finances as your earnings grow.


The first order of business is to double-check whether you still qualify for certain things based on your higher income.

For instance, if you've been contributing to a Roth IRA, you may no longer be eligible to do so, depending on how big your pay bump is. In 2019, single filers can only contribute a reduced amount to a Roth once they hit $122,000 and can’t contribute at all once they reach $137,000. Married couples filing jointly start phasing out at $193,000 and can’t contribute once their combined income reaches $203,000.

Other areas of your budget could be affected, too. “You might have been getting a subsidy for your health insurance, which will now be smaller thanks to a higher income," says Matt Shapiro, CFP®, member of the Advice Practice team at Northwestern Mutual. "Similarly, your student loan payments might go up if you've been on an income-driven repayment plan."


Once you know what costs will be immediately affected, it’s time to revisit your budget. A sudden surplus of income doesn’t give you carte blanche to supersize your life. "Remember that any increase of your spending is going to decrease your potential saving ability,” Shapiro says.

You don’t have to pinch pennies, but live within your means and don’t let lifestyle creep keep you from other financial goals. "If you run out and buy a new car and splurge on a new sound system and all these other things, congratulations — your raise is gone for the next year,” Shapiro adds.

Rather, think about your priorities and determine how to allocate your new earnings accordingly. For instance, if you’ve been considering a move out of your cramped apartment, it may be a good time for a reasonable upgrade. But if boosting your retirement savings, getting out of debt, or a dream trip feels more important, then you may want to put your money toward those goals.

Earning more also means you’ve got more income to protect should you ever find yourself unable to work. For example, you might want to look into boosting your disability insurance coverage now that you’ve got a bigger paycheck at stake. And if your expenses go up, you may need more emergency savings.

Don't let lifestyle creep keep you from other financial goals.


A major income boost is always welcome — but it could mean a higher tax liability.

If you’re used to getting a big tax refund at the end of the year, that may shrink — or "you could get hit with a tax bill you weren't expecting," Shapiro says. This can be especially true if you've been pushed into a higher tax bracket.

That’s why it’s a good idea to check your W-4s to make sure you’re withholding the right amount. Withhold too much in taxes, and you may not have enough take-home pay to put toward your goals. Withhold too little, and you could get stuck owing Uncle Sam.

Most of us aren't experts on the tax code, so connecting with a tax professional is a good place to start. If you need to make a change, contact your HR department about updating your W-4 form.


How you tweak your budget and tax strategy should align with your bigger-picture financial goals. Retirement should be a priority; if you haven't already started building your nest egg, or are looking to boost your contributions, now is the time to do so, according to Shapiro. Doing that sooner rather than later is preferable because of compound interest. Building your emergency fund up to three to six months' worth of expenses should also be a top priority.

"The key first step is making saving one of your fixed, nondiscretionary expenses, whether it's for retirement, your emergency fund or anything else," Shapiro says. "Before you do any of your normal spending, that money should be out of sight, out of mind."

Then, you can check off the risk-management boxes. "If you have a family who relies on you, that includes making sure you have life insurance and disability insurance in place,” Shapiro adds.

And don’t forget about your other big money goals, like saving for a down payment on a house or a dream vacation. After all, you still have the right to enjoy your extra cash — it’s all about balancing financial security with your dreams.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

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