15 Things You Must Do Once You Start Making $250,000

SAVING & SPENDING - FINANCIAL HEALTH
Unlock financial freedom with these essential steps once your income hits $250,000.
Updated May 8, 2024
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You may be one of the lucky workers who's seen their income increase in recent years.

But a salary increase could also make things more confusing. After all, what are you supposed to do with all this extra income?

There are plenty of possibilities, so check out these essential steps to ensure you can build wealth and enjoy your money at the same time.

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Max out your retirement accounts

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Investing is a great way to secure your future financial situation and stop living paycheck to paycheck, and one way to do that is by contributing to your retirement accounts.

Max out your retirement accounts, including your 401(k), so you can get the most out of your company’s potential matching funds.

It’s also important to review how much you can contribute. Making $250,000, for example, will stop you from investing in a Roth IRA or other types of retirement accounts with maximum income limits.

Contribute regularly to a brokerage account

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You can still invest in the stock market after you’ve maxed out your retirement contributions in a 401(k) or IRA.

Open a brokerage account to help you invest additional funds in the market. You can contribute money to an index fund or pick specific stocks you want to invest in based on how much you have to contribute and what you want to focus on.

Meet with a financial advisor

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A financial advisor would be a good person to add to your team now that you’re making more than $250,000.

Find a planner familiar with specific aspects of your strategy, such as retirement or short-term investment plans. 

It’s also important to find an advisor who has experience in different areas like investing, real estate, or other topics, depending on what you want to do with your money.

Resolve $10,000 or more of your debt

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Set up a meeting with a CPA about tax strategies

Adam Gregor/Adobe consultation with tax adviser

Making more money could also mean spending more money to cover your tax bills. It’s a good idea to check in with a CPA who understands the different changes your higher income may pose. 

There may be tax benefits and burdens you might not have considered before when making less money.

Buy your dream house (within reason)

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It might be time to sell your starter home and move up in the housing market now that you can afford it.

Consider a house that fulfills your current needs, but remember to factor in the monthly mortgage costs, utilities, property taxes, and other housing costs. 

The extra income can help you move up, but you don’t want to go overboard and not be able to cover the additional expenses.

Invest in other real estate

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Consider investing in other real estate options now that you have extra money coming in. Consider adding a rental property to your portfolio, either with long-term tenants or as a short-term property, such as an Airbnb.

You can also invest in REITs or real estate investment trusts and buy and flip houses for a profit, especially if you can save extra cash by doing some of the work on the house yourself.

Buy a nicer car

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You may have always dreamed of driving a specific car once you could afford it, so feel free to upgrade your vehicle if you have the extra cash on hand now.

Remember to factor in all of the monthly costs of car ownership. You may not be able to afford the fanciest model, but perhaps you can upgrade to something nicer than your current ride.

You should also factor in other costs, such as maintenance, repair, and gas, which may cost more if you use premium options for an upgraded car.

Increase your insurance coverage

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Build up your insurance coverage if anything catastrophic happens so you’re well covered.

You can add to your life insurance policy or increase your health care coverage. You’ll also need to remember to boost your homeowner’s policy or car coverage if you move to a new house or buy a new car.

Take a nice vacation

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Build up your insurance coverage if anything catastrophic happens so you’re well covered.

You can add to your life insurance policy or increase your health care coverage. You’ll also need to remember to boost your homeowner’s policy or car coverage if you move to a new house or buy a new car.

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Set up college funds for your kids

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Consider saving some cash for your kids to help them with a major expense like college. Setting up college funds could help you save cash to pay for their education while keeping them out of student debt.

But make sure to also pay yourself. After all, your kids have plenty of years to pay off their loans if they have to take on debt compared to your need for retirement funds.

Build up your emergency fund

Yurii Kibalnik/Adobe savings inscription on the page

An emergency fund is an important thing to have to cover unexpected expenses such as home repairs, car accidents, or healthcare emergencies.

Experts suggest you have enough cash in your emergency fund to cover at least three to six months of expenses. But you may want to make sure you have closer to six months to pad out your emergency fund now that you’re making more money.

Save money with a high-yield savings account

Yurii Kibalnik/Adobe best high yield savings accounts

Check with your bank or financial institution to find out what high-yield savings account options might be available.

A great thing about a high-yield savings account is it makes money for you without you having to do anything except let it sit there and generate interest.

The more money you can add to it, the more you’ll earn in interest, so consider putting extra cash in it to help you earn more.

Renovate your home

Piotr Marcinski/Adobe fixing kitchens cabinet with screwdriver

Instead of buying a new place, it may be time to give a small refresh or do a major update to your house.

Think about moving forward with that big addition you’ve wanted to add to give yourself more space or hire painters and an interior designer to freshen up the look of your current home.

Pay off debt

Doucefleur/Adobe scissors cutting credit card financial

Debt can be difficult to pay off, especially if you have debt with a high interest rate or have been working for years to try and pay it down.

Use some of your extra cash to crush your debt for good. You don’t want that debt following you around, particularly as you get closer to retirement.

Consider retiring early

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Retirement could be closer to your grasp than you think now that you’re making more money. Instead of retiring in your 60s, you might be able to retire in your 50s or even sooner.

Sit down with your current budget to see how much you can save for retirement and where you can keep it.

It’s important to compare your current budget to your estimated retirement budget and decide if you have the savings and investments to retire early or at least earlier than you originally expected.

Bottom line

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It can be daunting to start making more money and not know what to do with it.

A financial advisor may be a good place to start to get an idea of where you should put your money to boost your bank account.

Stick to a budget to help you plan how much you can spend and save. Don’t think that making more money means you can abandon a basic budget to help you stay on target for your goals.

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Author Details

Jenny Cohen Jenny Cohen is a freelance writer who has covered a bit of everything, from finance to sports to her favorite TV shows. Her work has been featured in The Wall Street Journal, USA Today, and FoxSports.com.

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