Managing your success
Published 3:49 pm Friday, October 18, 2019
A promotion is cause for celebration. You’ve worked hard to grow your career and should be proud of your newfound success. But with the new responsibilities you’ve taken on at work come new financial responsibilities.
A higher salary (hopefully significantly higher) provides the opportunity for you to reevaluate your financial position and consider where the new cash flow would best benefit you – now and in the future. Here are some ideas:
REVISIT YOUR BUDGET: First things first, you need to see where you stand. With the higher salary, it’s a good time to reevaluate your budget and determine what the additional income means to day-to-day living for you and perhaps your family. This will help you avoid falling victim to mental accounting, where you treat your raise as separate income that can be used more frivolously. It will make you aware of what you’re working with in its entirety.
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PAY DOWN HIGH-INTEREST DEBT: A higher salary is great, but think about your wealth as part of your net worth, which includes your liabilities, too. This means paying down any debt – like credit card debt, student loans and car loans – that’s taking away from building positive net worth. While this may not excite you as much as a splurge, it will free up more disposable income in the future and save you interest in the process.
INCREASE SAVINGS: Lifestyle inflation, where your spending keeps pace or surpasses your new income, is a common problem. Instead, consciously increase your savings – and invest in your future. There are many savings options; it’s just a matter of determining what type of investment would get you closer to your financial goals. This is where your trusted advisor can help you evaluate your options and partner with you to make a plan that achieves your goals.
BUILD YOUR “JUST IN CASE” FUND: A recent study from Bankrate found that only 29% of Americans have the recommended six months of expenses set aside for a rainy day. If you don’t, use your additional income to get there. While you hope good financial times last a lifetime, you never know what may happen – and it’s best to be prepared. That built-in flexibility means you’ll also be prepared to take advantage of unexpected opportunities that may come your way.
REWARD YOURSELF: Finally, you worked hard to earn that promotion, and you should treat yourself to something special. Just remember to be a bit pragmatic about it. If you got a $10,000 raise, don’t splurge on a $10,000 item. You won’t realize the impact of the entire raise for a year and taxes will come out of that, too. So, spend accordingly.
Recently promoted? Here’s what’s next:
• Reevaluate your budget and consider your net worth to get a complete picture of your new financial situation.
• Consider your short- and long-term financial goals, and partner with your advisor to achieve them.
• Celebrate your hard work by treating yourself to some¬thing you’ve been eyeing.
Being thoughtful about your financial goals and how your additional income can help get you there will ensure your continued financial success.
Material created by Raymond James for use by its advisors. The information contained herein has been obtained from sources considered reliable, but we do not guarantee that the foregoing material is accurate or complete. Raymond James is not affiliated with any other entity listed herein. © 2019 Raymond James Financial Services, Inc., member FINRA/SIPC. 19-BDMKT-3511 FJD 7/19
Stephen P. Poitevint, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.
Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc.
Stephen P. Poitevint, Financial Advisor, is located at 908 Tallahassee Highway, Bainbridge, Georgia, and can be contacted at (229) 246-7208 or www.poitevint.com.