We were featured in today's studentloanhero.com article -- 5 Smart Money Moves to Make Today With Your New Raise
Full article link here: https://studentloanhero.com/featured/smart-money-moves-with-new-raise/
Original article By Ben Luthi.
1. Set aside extra money in your emergency fund
“I would focus more on the emergency fund if your income is very sporadic or if you’re expecting a life transition coming up,” said Eric Maldonado, a certified financial planner and owner of Aquila Wealth. For example, if you’re expecting a baby, starting a business, or planning to move, it’s a good idea to have a robust safety net.
2. Save for retirement
If you have an employer-sponsored retirement plan, such as a 401(k), that offers a contribution match, plan to save at least enough to get the full match. Then, Maldonado recommended saving money in a Roth IRA.
“You put the money in after tax, so it goes straight from your bank account to the Roth IRA,” he said. “It’s an individual retirement account, so you own it and control it.”
Whatever you choose to do with your raise, Maldonado recommended putting at least a little into your retirement account to take advantage of compounding interest.
3. Pay off toxic debt
“If you have debt that has an interest rate of 10.00% or higher, you want to get that out of your life,” said Maldonado. He specifically called out credit cards and other consumer debt.
4. Invest in yourself
“Put money aside to invest in yourself, whether that’s an online education program, sales training, hiring a mentor, or getting coffee with a business owner in your town that you admire,” said Maldonado.
5. Upgrade your lifestyle
It’s important to find balance, though. Maldonado suggested starting out with 90% of your raise money going toward financial goals and 10% going toward lifestyle improvements. But as your overall financial situation improves, he recommended working toward a 50-50 approach. “Save half and spend half,” he said.
Focus on your priorities
Depending on your financial situation and goals, it’s possible that some of these recommendations won’t work for you. If you’re drowning in debt, for instance, you may not feel like you have room to invest in yourself or your retirement. And if you’re a business owner, you may be investing in yourself more than in other areas.
Take the time to set financial goals but understand that they might change over time. Once you pay off your high-interest debt or max out your emergency fund, for instance, you’ll have more money to put toward your other priorities.