6 Things You Must Do When Your Salary Reaches $100,000

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Once your salary reaches $100,000, you need to take certain steps to ensure you stay in good financial health.

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Related: 5 Things You Must Do When Your Savings Reach $50,000

There’s a chance you already might be making some of these money moves, even if you’re earning a little less. Make sure you start taking these actions as soon as you begin earning $100,000.

Eliminate High-Interest Debt

Those who just started earning six-figure incomes will need to quickly pay off any high-interest debt. Think student loans, credit card balances or any other outstanding debt where the interest rate is extremely high.

Alissa Krasner Maizes, financial planner and founder of Amplify My Wealth, said eliminating this debt yields the quickest return on investment. Not sure where to begin? Krasner Maizes recommends automating monthly payments beyond the required minimum payment due.

Start with your highest-interest debt and, once you eliminate this debt, move on to paying off debt with the next highest amount of interest. Keep going until you have paid off all high-interest debt — and find yourself debt free.

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Maximize Retirement Contributions

Once you have cleared any outstanding debt, Krasner Maizes recommends maximizing your retirement contributions. Those earning a six-figure income will need to at least contribute the amount their employer matches for their retirement account. 

“Ideally, maximize your contributions to tax-advantaged retirement accounts and consider the advantages of a Roth option as you will pay tax now,” Krasner Maizes said. “As long as you follow the necessary rules, you will not pay taxes on the growth or when you withdraw the money for retirement.”

Update Your Expense Plan

You’ve cleared your debt and maxed out contributions to your retirement fund(s). Now, it’s time to revisit your expense plan, or budget, and update accordingly. 

Krasner Maizes recommends eliminating any unnecessary expenses and tweaking wherever possible to determine how much money you have at the end of the month.

“As tempting as it may be to increase rather than trim your expenses,” Krasner Maizes said, “this will help you amplify your wealth sooner than you can imagine.”

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Fund Your Emergency Fund

Regardless of how much you earn, one of the highest financial priorities anyone can have is to create a robust emergency fund. 

What makes earning $100,000 so beneficial for your emergency fund is the ability to allocate the income increase directly toward it. Krasner Maizes recommends directing your extra income to a high-yield savings account for the purpose of emergencies.

While three to six months’ worth of expenses is often the baseline for these funds, Krasner Maizes said finances are personal. “You should decide how much money you prefer to set aside for your emergency fund.”

Open a Brokerage Account 

If you do not already have a brokerage account, you may consider opening one. Krasner Maizes said to consider automating contributions into a regular brokerage account.

For those financially leveling up, making this move — along with the aforementioned steps — may help decrease the likelihood of financial regrets and allow you to experience financial confidence.

Have an Investing Strategy

You don’t need to earn $100,000 to start purchasing stocks or create a retirement fund. But you certainly should have an investing strategy if you are making six figures.

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Jon Klaff, general manager at Magnifi, said this is a great opportunity to think about your approach to personalized individual investing. Ask yourself what your personal goals are and how you can make investing decisions based on these goals. 

Klaff recommends making diversification a key component of your investing strategy. You may diversify with the purchase of fractional shares to spread investments across more companies, buying funds and investing in bonds or a diversified bond fund to help reduce risk in your portfolio.

Klaff said, “Having an investing strategy helps you to stay focused and avoid group think and short-term trends in the markets.”

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About the Author

Heather Taylor is a senior finance writer for GOBankingRates. She is also the head writer and brand mascot enthusiast for PopIcon, Advertising Week’s blog dedicated to brand mascots. She has been published on HelloGiggles, Business Insider, The Story Exchange, Brit + Co, Thrive Global, and more media outlets. 

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