What should I do after getting a raise?
Cash flow
Pre-allocate the raise before it hits your account. Common splits: increase retirement contributions, reinforce reserves or debt paydown, and intentionally allocate a small portion to lifestyle.
The default failure mode
Without a plan, raises are absorbed into lifestyle in 60-90 days. The increase becomes invisible and the financial system stays the same.
A simple framework
A practical split many high earners use: 50% to financial goals (retirement, reserves, debt paydown), 25% to taxes if applicable, 25% to lifestyle. The proportions matter less than the intentionality.
Keep it boring
Boost the 401(k) percentage. Increase the auto-transfer to brokerage. Adjust withholding if needed. The simpler the system, the more likely it survives.
What people often get wrong
- Waiting to 'see how it feels' first
- Forgetting that higher income can push you into new tax exposure
- Letting fixed costs creep up before the financial plan adjusts
What to think about next
- Increase 401(k) deferral percentage so you still max it.
- Adjust automatic transfers to investing or debt paydown.
- Review withholding for the new income level.
When to consider working with a CFP®
Working with a CFP® can help when these decisions feel intertwined, taxes, investments, cash flow, and life goals tend to move together, and a planning relationship can offer structure, prioritization, and accountability over time.
Frequently Asked Questions
What about a one-time bonus?
Same idea, pre-allocate before it lands. Bonuses often arrive with under-withholding, so model the tax impact first.
Talk to a CFP® who works with high earners.
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